Did you know that rent growth on residential real estate investing rehabs has increased by 8%, according to Fortune magazine?
A recent study on rehabilitation demonstrates that rehabbing existing units, renovating, and transferring them to new occupants offers substantial benefits to the economy. The findings further suggest that rehabbed housing can return up to $0.55 average of investment.
Put simply, buying a broken property and investing money and time into it, and flipping it as a beautiful home sound like a profitable venture. Real estate investing Rehab is a profitable and adventurous investment strategy. By understanding this wealth-building process, you not only gain knowledge of how flipping works but also improve your rehab investor IQ.
Of course, you learn a lot about the real estate and construction world. We say this because real estate investing rehab has the potential to earn a good profit. However, real estate investing rehabs or flipping houses is rewarding only when you understand the market and know how to seal the deal.
If you are interested in real estate rehabbing, there is a lot to learn. Let’ delve into the discussion and determine how you can make the best investment by rehabbing properties.
Finding Your Niche in Real Estate Investing Rehabs
Rehabbing in real estate refers to a process of purchasing a property, completing a renovation, and selling it for profit. Many people call this process “house flipping’. This type of project in real estate can take a few months if a property requires major renovations. However, if performed using the right strategies, it can offer a wide range of profit margins while allowing investors to expand their network and portfolio.
You must consider your niche when rehabbing or flipping properties to not only secure fast deals but also stay ahead in the competition. For instance, identifying the right property type is as important as finding the right buyers. Decide whether your interest is in investing in commercial properties or residential properties. You can also choose to invest in multi or single-family property. The reason why you need to consider property type is the varied dynamics of both the residential and commercial markets. Also, this is one way you can keep your eyes on a geographical niche.
How You can Bootstrap to Real Estate Rehabbing Properties to Make Cash
As we mentioned, a real estate investor can make a lot of money or profit if they use the right strategies. Regardless of any ups and downs (which are temporary) in the housing market, the property prices often come back to original due to ever-increasing demand.
Stepping into the real estate world through rehabbing requires you to take certain important factors into account. If you’re a beginner, it is better to hold a passive or active real estate investment strategy. All you need is to do some market research and use the must-have real estate investment tools.
How to perform Successful Real Estate Investing Rehabs
Assess the Property Condition
After purchasing a rehab, the first step is to carry out a detailed home inspection. If you are diving into your first property, you can hire an experienced inspector (based on referrals or online reviews). From the basement, walls, backyard to the roof, the inspector can assess everything in your rehab property.
Some of the important things you must include in your rehab checklist are:
- Air conditioners
- water issues
- The sewer line or septic system
Consider the Rehab Loan Option
Keep in mind that you need short-term money to buy a property, and then repair, or renovate it. If you own a restrictive property qualification, the traditional mortgages and qualifications can make everything challenging for you. This is when you need to consider rehab loan options that suit you the best. Rehab loans like Investment Property Line Of Credit or hard money rehab loans can offer financial assistance.
Hire the Right Contractor
The renovations of your Rehab depend on your contractor. That is why make sure you run a background check of the contractor before hiring via websites, referrals, and reviews. Sign a contract that details everything, including your objectives, pay schedules, and scope of work.
Consider Receiving Multiple Quotes
The cost of some fixes and repairs may vary based on the location and condition of the property. Even if you’re familiar with the cost of renovations such as flooring, or roof replacement, get multiple bids to ensure you deal with fair pricing in the market. For that, you can call different contractors and obtain multiple bids for different repair jobs.
Consider Price Points
What price point does suit you?
Know that price point widely varies within a city or even neighborhood.
Your job is to study and understand property values to recognize and grab good deals. Determining the price point can also help you estimate the budget for repair and rehab, along with the total value of improvements.
Manage Different aspects of Rehab
This is relatively a lengthier stage and requires your due diligence to run a thorough check on the renovations and repairs.
Your Rehab comprises five different stages;
- Trash cleanup: It is the removal of all the damaged items, including toilet, walls, floors, dead trees, and fences)
- Framing issues: The stage is for taking care of your house’s skeleton
- Electricity, plumbing, and HVAC: A building inspector visits the rehab property after this stage to see if contractors have done the installations properly.
- Trimming, fixing, and painting: These are the last stages in rehabbing and can help you improve your property’s overall look.
- Insulation: Once your property’s plumbing and electrical inspection is complete, only then start insulation. Depending on your property’s location, you may have another round of inspection to check if the contractor has done proper ducting, wiring, and piping.
- Have a Final Walkthrough of Rehab
Of course, you trust your contractor, but it doesn’t mean that you should leave everything on him. To ensure nothing goes unnoticed, you must conduct another walkthrough of your Rehab after the initial inspection is complete.
Stage your property
Finally, you have made it by coming a long way. Now it is the time to stage your property for sale. Prep your house to attract and give your potential buyer an idea that your property is worth investing money for. Remember that staging is all about making your prospective buyers feel like living in this house.
Things to Consider When Rehabbing Properties
Never invest in a rehab property without assessing or estimating the damages and repairs. Take an expert’s advice and leave room for some overages and unknown repairs so that you don’t have to sacrifice your profits.
Seasoning refers to the time when you become the owner of a property. If your property doesn’t meet the seasoning requirements, it will not get the mortgage lenders’ loan. That is why you must have a comprehensive plan to tackle seasoning.
Overall, real estate investing rehabs is not always easy for beginner investors. You must have the ability to deal with the legal requirements and challenges of physical dwelling if you want to make money or become a successful real estate investor.
Thus, the given details can help you make the most of your rehab investment, but it is good to seek help from the professionals to do the job.
Hi, I’m just an inspired recent real estate beginner investor named Miguel Rivera from a modest town neighborhood called Pigeon Hill in Aurora, Illinois, the City of Lights! I have 3 years in so far investing in real estate and excited to continue to walk my chosen path to reach my ultimate financial goal of living off my rental income before I reach 35 years old! Driven by infinite growth potential and guided by my mentor, I managed to get started and make it work with just a modest salary, practically no education in the field, learning and applying some key habits. This website is a collection of all things that I have learned so far that I wish can help other recent real estate investors! Click here to view more about my story.