Rehabilitating a home can not only be cost effective, but it can be a rewarding experience as well as a monstrosity to transform into something beautiful! This is an introduction to the important steps of rehabilitating a home from start to finish.
Instructions:
- Hold finance. If you happen to have the cash reserve, you can obviously omit this step. However, before you start anything, you need to know how the house is bought, and how you will get the money to make that real fix-up’s required. Do not forget to consider holding expenses (monthly payments, utilities etc.) while you have the house.
- Find a home. I recommend doing a lot of your own consulting and real estate consulting. You get paid for your knowledge and you need it! Make sure you are familiar with the area and know the compositions (what houses usually sell in that area). You should make sure you do not overpay!
- Negotiate its price. A good rule of thumb is to not spend more than 70% total of what the house will eventually be sold to. For example, if the house is in a neighborhood where they sell nice homes for $ 200,000, they just want to invest a total of $ 140,000. If the home requires $ 40,000 in repair, the maximum amount you can pay the home is $ 100,000. Always budget your cushion repair and consider sustaining costs as well!
- Start working immediately. They have an organized and well thought out work out plan for the house. Most of the people who do not rehab, is in their timeline. Timeline is as important as actual repairs. If you keep the home too much, cut your profits. Make it done in the shortest possible time without compromising your work.
- No rehabilitation of your home. One the same token, not under rehab too. You want your house to match the others in the neighborhood, but it stands out as the nicest as well. Curb appeal is crucial. Not by doing so and putting on expensive materials that are only found in homes, a home at $ 200,000 will not get a profit on that.
- Groove areas. The most important areas to consider are kitchens, bathrooms, master bedrooms and landscaping. If these areas are given to work in other rooms, you will surely lose out. A good rehabilitation focuses on the right areas.
- Place your home on the market. Another place investors fail, is to decide not to make use of a real estate agent. More investors who have tried this recommend not to do it! 98% of buyers buy with real estate, and real estate agents often sell homes 15% more than one for sale by owner. Insurance makes it worth paying the 7% commission! You are still ahead 8%!
- Once you find a buyer, work with them! About not negotiating, you want to sell this house and move on to the next one. If you are dickering about $ 5,000, you may lost the buyer and the house could end up sitting in the market for three more months.
- Sold! Once the sale is final, you can move on to the next one. Make sure your bank profits and be smart with them. Find out what percentage you want to put back in real estate and start the process again!
Tips & Warnings:
- Keep the timeline
- Stick to your budget.
- To do their homework.
- Do not be too ambitious
Categories: Blog