In real estate investing, it’s not unusual to have a property rehabbed. Fixing or remodeling a house has become a usual process in buying and selling properties, that every real estate investor always considers it in their system of real estate investing.
Rehabbing can be defined as the connecting thread between an investor’s buying strategies and his or her exit strategies. Rehabbing is commonly mistaken as an exit strategy, but this is not so. Rehabbing is more like shaping the deal for an exit strategy.
There are two types of rehab:
In fixing a house, you would ideally only spend around $10,000 or less. If it exceeds that amount, it would be wise to remodel the house instead. Be efficient on your expenditures for rehab.
Poor or No System for Rehabbers
The one major problem of rehabbers is that there is not really a system to rehabbing. It is unlike real estate investing wherein there are numerous systems that you can apply to get a deal. In rehabbing, there are a lot of factors to consider that creating a unique system is difficult.
Why is it difficult?
One thing that makes it difficult for rehabbers to have a system in fixing or remodeling the house is because you have to base mostly on estimates when making an offer to the seller. There are times when there is a wide gap between real numbers and estimations.
It is also hard to remember details on specific properties. Rehabbers have to take note of every detail if they’re going for the right price.
These uncertainties increases the odds of missing important information, and it could cost you thousands of dollars. There’s a chance that you could lose a contract or make a poor deal because of bad estimates.
The General System
The general system in inspecting a house for a rehab sounds easy, actually. But in reality, it will take a practiced eye for details and a lot of effort. There is a need for diligence and double-checking.
Start with the outside first. Go around the house twice; the first round looking straight and up, the next round looking straight and down. Afterwards, do the same when checking the inside. Inspect every room twice, positioning yourself at the center. In inspecting both the outside and the inside, take note of what’s good, what’s in bad condition, and what’s missing.
In checking the inside of the house, the rooms that you have to inspect first are the following:
· Curb appeal
It’s also good to put in some add-ons to the house, and add value to the property. Check to see if you can add or change doors, windows, porch rails, and others.
In order not to forget some details, you can take pictures and make sketches of the parts of the house, too! This way, you also get to visualize how you want the house to be in the end.
Work Your Rehab System!
While it is difficult to make your own rehab system, it is nonetheless possible to make one. It is important to work together with contractors, repairmen, and the rest of your rehab team.
Learn what you can from them. Consult with them over the estimates, the costs, and how to be efficient with both money and time. Construct time-tables and prepare price lists beforehand if you have to.
Just remember to be in control with time and money. Rehabbing will take a lot of both. Spend only enough. Spending more money is not good, of course, and spending more time will incur more expenses. Control and efficiency is definitely needed in rehabbing.