The Avid Rehabber for Profit
The Avid Rehabber for Profit
Watch HGTV or DIY and you’ll see tons of different shows about rehabbing homes…from Atlanta to Las Vegas to Waco, Texas; people can’t get enough of these shows. While these shows condense the rehab process into a tight 60-minute package, many investors lose sight of all the hard work required to make a rehab successful. The reality is you can’t just purchase any property, make some upgrades and then sell for a profit. They key to a successful rehab is maximizing your returns. In order to be successful, there are some basic rules you need to make yourself aware of and follow so that you don’t end up in a situation where you lose money on the project. In order to create a successful and profitable rehab you want to stay focused on a certain essential elements.
- Plan and Prepare: You want to make sure you look for any/all potential pitfalls that could happen during your rehab project. Spend time researching the market and the property so you understanding what you are getting into. It is very important that you immerse yourself in everything regarding the deal and don’t be pressured by time sensitive agreements. This is an area where you need to take your time and understand everything about the deal. If you make a bad deal it could potentially set your rehab business back for a time. Ultimately, it’s OK to pass on a deal you don’t feel comfortable with. These days, it’s a lot easier to gain the necessary details and information in a short amount of time – so, don’t skip this process – be as informed about the deal as possible.
- Make an offer that makes sense: Sounds simple enough, but you want to do more than simply getting the offer accepted, you want to get it at a price that is beneficial to you. The key is to understand your seller. Certain deals require different ways of dealing with your seller – so be prepared. Making a deal that is smart and makes sense involves getting a price you are comfortable with for the property while still making a healthy profit. Sure, you may need to negotiate on certain deals, but acquiring good negotiation skills can knock off an additional 10-15% on the property thank if you didn’t negotiate effectively. The key is to research the seller and do offers are smart for your bottom line.
- Be smart about what work you do: The most successful rehabbers know the market and realize what work will generate real profit. That also doesn’t automatically require you to put in the most expensive items. Understand what your potential buyer is really looking for and understand the market, while still allowing yourself to add your own styles to the project. Additionally, you need to always keep focused on your budget, or a project can quickly out of control. Buyers are only interested in the end result, so before you go about working your plan, make sure you plan your work – the right work.
- Do you have a good team: The most prosperous rehabbers know that there is no “I” in “Team,” so it’s vital to put together good people around you to help make the project successful. From your general contractor, to your painter, to your electrician, having solid and talented people working on your project can make all the difference in the world when it comes to a profitable rehab project. Make sure you perform your due diligence when it comes to hiring that works on the property. It will make the project outcome more advantageous to you and your buyers and make life easier for you.
- What is your money clock: Every day you hold on to a property it costs you money if you have put hard money into the project. That means you need to begin marketing the finished property as soon as you are confident it is ready to go. Take advantage of social media and focus on the advice of your real estate agent. Just as important is to remove all emotions when it comes to listing for the right price. The right price will move the property quickly, so you should create a focused vision of the price you want to sell it for and when to list it.
You won’t have to close as many rehab projects during the year if you make sure you get the most out of your profits on every deal, Start applying these 5 tips on your next rehab deal, and you will notice a transformation. If you need help on a rehab project or want to put in an offer for a house to rehab, J and C Home Buyers LLC can help:
John Boyer, Realtor Agent Owned Premier Group