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:

• Fixing
• Remodeling

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:

·        Kitchen

·        Bathrooms

·        Closets

·        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. 

Most of the real estate properties you’ll encounter as a beginner or experienced real estate investor will need a lot of fixing, inspection, and costs. Finding a good property wherein the expenses won’t eat you up is challenging, and you have to make certain that you buy properties that you will be able to sell.

There are four main exit strategies in real estate investing:

• Wholesale, which will give you an active income
• Retail, which will also give you an active income
• Rental, which will give you a passive income
• Private Lending, which gives you portfolio income

Other techniques in flipping or keeping the property are just that — techniques. These four are the main exit strategies that real estate investors should focus on.

In applying these exit strategies, you first have to take a look at the property you’re buying. In real estate investing, you make money when you buy a property, not when you sell.

7 Steps In Buying a Property

1. You have to first tell the world that you by houses. So start by marketing yourself as a buyer.

In marketing yourself, you will be able to get more resources in looking for leads. Do not do so much advertising on ads and newspapers. They can help but not as much as getting leads from referrals and drive-bys. Most leads are generated from contacts and networks you have. Marketing yourself as a buyer will set you in this pace.

Concentrate on getting a pool of referrals. Make a marketing business card and also prepare a professional business card as you go along marketing yourself.

2. Develop two important skills in looking for good deals:

·        Identifying distress properties

·        Identifying distress sellers

You don’t just choose any property that you lay your eyes on. You have to pick them wisely. Remember, you make money when you buy, not when you sell.

In identifying which homes to pick and get fixed, inspect them diligently and wholly. Check if you should either fix the home or have it remodeled.

In looking for the owners of the properties or houses, there are five ways to go about it:

a.)   talk to the neighbors

b.)  check tax records

c.)   check for deed records at county clerk’s office

d.)  address correction request

e.)  check the utility companies

In checking for the owners, you will recognize distress sellers when they’re going through a divorce, job loss, failed business, or anything that has rendered them unable to make payments.

3. Find motivated sellers.

Making a deal with motivated sellers makes real estate investing easy for you. In finding motivated sellers, all you really need to do is ask the seller why he or she is selling the property.

4. Do the inspection.

When doing the inspection, check every corner and every side of the house. Check first if the property is really fit to be in the neighborhood or if it’s in the right place. Then check to see if the house needs to be fixed or remodeled.

Above all, see to it that you can take care of the expenses and that you’re sure you can sell the house.

5. Present your offer quickly.

In the real estate business, it is wisest to offer your deals fast, usually within twenty-four hours. Successful real estate investors would always say to make the deal and sell the property quickly. The same goes with presenting your offer to the seller.

6. Negotiate and Escrow.

Negotiations and completing the deal are inevitable, of course. Learn to say it right and how to do it right. Get to know the seller, his reasons for selling the property, and help him attain his goal of selling it that will benefit the two of you.

7. Check the title.

Always check the documents of the property. Check the title and deed of the property. Make sure it’s clear who the owner of the property is.

It is already a fact that there is a tremendous increase in foreclosures in the real estate market. This is primarily due to the generally slowing housing sales and the increase in the rate of monthly mortgage payments.

For real estate investors, this is an opportunity to reap lots of profit, and there is not only one but eight — eight! — ways to do it!

1. See if the owner of the house would like to sell it.

Without having to go through the trouble of getting the lenders involved, you can invest in the property directly with the owner. If the owner wants to sell the house, then what’s stopping you from investing in it?

2. Try to get a loan modification from the lenders.

A lot of houses are being repossessed nowadays by the banks and lenders, and around eight out of ten go back to them after auctions because the homes have low equity. Due to the increasing repossessions, the lenders would be more than willing to have the houses sold as soon as possible.

So if the owner of the house himself wants to sell it, then the lenders will be hesitant to repossess the home. They will offer a loan modification as a way of supporting the sale. A loan modification is done when the lender sees that the homeowner has sufficient income and can pay next month’s rent. The lender and the owner will then work the finances out to make it possible for the owner to sell the house. 

3. Short sale!

There are times when the owner would want to sell the house but that there is little or no equity to the house. When this is the case, the best thing you can do is do a short sale. The lender will agree to make a discount on the balance of the loan so that the owner can proceed to sell the house before the auction.

4. Call the lender and see if they will sell the loan to the house to you.

When the owner doesn’t want to sell the house, and if he or she refuses any help from you or any load modification, the best thing to do would be to negotiate with the lender directly.

Ask the lender if you can buy the loan to the house from them. You will be a note buyer in this scenario. In most cases, the lender will agree to your offer so that they won’t have to repossess the house.

5. Go to the auction and bid on it.

This goes without saying. You might have missed some good catches. When you see a good house to invest in, bid on it. Take care not to bid on houses that have no equity.

There will be a disadvantage in bidding on a house during the auction, however. You will not be able to inspect the house as you would like to. You will only be able to see the outside. You won’t be able to assess the house in this case. 

6. Make an offer to the lender after the auction.

While it’s not okay to bid on houses that have no equity during the auction, it doesn’t mean that you will entirely ignore them. Watch as the house goes back to the lenders (because there were no bids), and when you find it good enough for you, see the lender after the auction and make an offer to the lender.

7. Buy the house from an investor.

A lot of real estate investors wholesale property. There will not be much of a problem where two investors working on a deal are concerned.

8. Follow up on bankruptcy cases.

While bankruptcy stops foreclosures, houses that have been declared with bankruptcy can be brought back to foreclosure. Be sure to follow up on bankruptcy cases because the owners might just come to you for help when the foreclosure starts again.

You will see that these processes are closely ties to each other. This is proof that the most important thing in investing in real estate and making a profit out of investing is to look into the details and play it smart. There is an opportunity in every deal.

Successful real estate investors have always said that the key to success in the niches of real estate is having a system. It has been proven by many. There are also others that recommend making a unique system of your own.

Beginners in the world of real estate, however, may have problems in making up their own system. They may not be able to make one by themselves. Some would then resort to following the systems set by successful real estate investors. 

But there is one way that they can cope and realize their own style in this business. The way to start this is to be an entrepreneur.

As an entrepreneur, you’ll be able to approach your business in a systematic way, even without a system of your own. The lack of a system at this stage is not that important yet, because as you grow as an entrepreneur, a system unique and applicable to you will just come up.

The entrepreneur approach is almost the same in every business. The first thing you always have to consider in doing business is thinking of what your client really wants. First hear out what your client says he wants, and then think about what he really really wants.

For example, a client of yours is asking for advice to get more sales. So you start to think: getting more sales would mean a new and great advertising strategy. But as you look deeper into it, your client really wants his company to grow, through new advertising and more sales. And when the company grows, your client will be able liberate himself/herself through an exit strategy, having more money and living life more.

In knowing what your client wants, you’ll be able to make solutions for them which can help both of you set up your own systems in time.

The Four Personalities

An entrepreneur is four people in one. He or she has four personalities in him or her.

• The entrepreneur is a dreamer.

An entrepreneur is a dreamer, and he dreams big. He dreams of a great company that is going to be successful. He dreams up great strategies that might be impossible but improbable. He dreams of a lot of big things. These dreams will be his sketch of what to accomplish in the future. Without dreams, there will be o vision… and it might very well become a boring world.

• The entrepreneur is a thinker.

Naturally, he who thinks moves one more step forward. As the entrepreneur dreams, he starts to think if this dream was possible in anyway. With this, he will ultimately create a vision of what he could accomplish, and will accomplish.

• The entrepreneur is a storyteller.

A storyteller would tell his story in complete detail, and he very much finishes the story. An entrepreneur is the same. The entrepreneur thinks of every detail and every step that he has to take in order to reach the ending. The ending for an entrepreneur, of course, would be a successfully attained goal!

• The entrepreneur is a leader.

The entrepreneur is a leader, wherein he has a mission in life and he can lead others along with it. An entrepreneur strives on towards his goals, leading his staff along that road and working with them to fulfill it.

In real estate, an investor has to be a real entrepreneur… in the real sense of it. It’s not just about knowing what an entrepreneur does, or how he gets a deal. It’s about becoming one, being one.