"Rehab," "sweat equity," "cosmetic potential," "curb appeal" are all phrases you will consider if you are flipping houses. Rehab is an essential part of creating that narrow margin for your profit.
First let’s define “rehab.” This is short for rehabilitation. If a person goes through a personal “rehab” they are hoping to get back in the condition they were before their health deteriorated. Likewise, when you rehab a property you are hoping to restore it to its original glory.
Understanding property rehab is imperative if you plan to be profitable in your REI business. Too much will deplete your budget (and kill your profits) and too little will leave you with a property you can’t sell.
Finding the fine balance between the two extremes is often not as easy as the TV shows on flipping houses make it seem. Interestingly, some of the worst offenders are Contractors themselves. I have seen more experienced builders and remodel professionals lose all of their profits to over-improving a property.
So what’s the solution? The key is to remember that rehab = repair. It’s that simple. There are a few exceptions to this rule where an improvement would be a wise choice. I discuss this in detail in Module #6 of my mentor for life!® online training center.
Always focus on your market. For example, there are certain things that you will do if rehabbing to keep and rent a property. And there are other considerations if you are flipping houses for quick resale. The set of values held by renters may differ slightly than those held by home buyers. Know your market and plan your rehab accordingly.
I like the expression: “Bang for your Buck.” I always attempt to get the most out of my rehab dollar. The following is a short list of some of those “eye poppers” that cost very little to achieve:
- Paint is cheap. Color is free. Stay neutral.
- Counter tops are one of the top attractions.
- The front door & lock set is worth perfecting.
- Landscape clean up, trimming and greening up.
- Door handles and knobs should all match up.
- Refinish old hardwood floors.
- Eliminate all lingering unpleasant odors and replace with sweet smells.
- The first thing people notice when they walk in is the floors.
- Color coordinated fixtures are important.
- Repair all significant damage. Nothing kills a sale like something broken.
As I said, this was a short list, but you get the point. If you are flipping houses, you must present a product that prospective buyers can call “home.” Any remainders of the old tenants or home owners is generally not a good thing to leave. Let the buyer use their imagination on a clean slate – your newly rehabbed home.
Do you have any rehab nightmares from flipping houses that you care to share? Enjoy 30 days of FREE rehab training on me! Visit: www.invesdoor.com/30-days-rei-rehab-training/