A real estate rehab project can be a lucrative business opportunity, but many newcomers don’t know where to start, with grandiose beliefs that they can simply purchase a property, rehab it, sell it and live a stress-free life from that point on.
Many reality TV shows will make it appear as though successfully fixing and flipping a house takes all of an hour to do.
The fact is that you need a strong foundation in order to turn a rehab project into a successful sell. Otherwise, you’ll wind up spending money on something that gets you nothing but a pulse-pounding headache in return.
Know What Type of Property You Want to Rehabilitate
There are three types of rehabs that a buyer should consider. They are: personal use, rental and flip. Each type carries with it a unique set of risks. Rehabbing a home provides the least amount of risk because of the lack of the cost of paying for both the rehab property and your home, when you can simply live in the home as it’s renovated.
With a home, you also don’t have to deal with time pressure. Rehabbing a flip property demands holding costs, which cause you to lose money when a delay occurs. Flipping also comes with the risk of sales difficulties caused by an altered real estate market.
Take Charge of Your Rehab Home
The benefit of living in the house you plan to flip is that you can make it your own if it’s a long-term hold, decorating the interior and exterior to your personal tastes. However, you should also keep in mind what will appeal to the broadest number of potential buyers and make rehabilitation choices based on their perceived tastes.
Turn to Rehab Funding Companies
As a first-time rehabber you may not be comfortable handling all financial aspects of a rehab property alone. Thankfully, many companies such as Select Funding in Chicago offer rehab loans to help you fund your rehab project and understand exactly what you’re doing.
The important thing is to remember to learn as you go. All first-timers make mistakes in just about every moneymaking opportunity, and you shouldn’t be concerned about making millions off of your first successful sale.
Instead, focus on building your skills to help secure a successful future, taking into account what works and what doesn’t work in your strategy.