Investors – Have A Systematic Plan When Restoring Rehab Properties


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During the real estate market boom, rehabbing had almost taken the form of a hobby. Investors spent a considerable amount of time and resources restoring rehab properties that had fallen into disrepair in the hopes of selling them at breakneck prices. This worked quite well when property values were at their peak. Investors poured money into rehabs without much thought because it was safe to assume that after the property was finished it would be sold for a profit. Of course, in today’s market this is no longer the thought process. Property values are currently at all time lows and selling rehab properties for a profit is no longer considered child’s play. This doesn’t mean that the rehabbing model should be abandoned altogether. It just means that it should be done with a lot more caution and moderation.

The first and most important step in ensuring that an investor doesn’t over spend on a rehab property is to define a reasonable budget right from the start and stick to it. The budget shouldn’t push the envelope of total operational costs and in turn, should fall comfortably below the expected selling price in order to provide a profit.

Once a working budget has been established, it is time to start making calls to contractors in order to compare prices and pick the best estimates. Establishing long-term relationships with the same contractors can save a great deal of capital in the long term.

Developing a systematic plan to carry out the rehab project can prove to be a cost cutting measure. Doing the right things in the wrong order can cost an investor a great deal of capital. One of the first phases of the project should involve tearing down obsolete structures or anything that requires demolition. Attempting a demolition project after other structures have already been built can prove to be a headache. After demolitions, work has to begin on exterior structures including roofs that require repair or replacement. Next, any repairs to wiring, piping, heating and air conditioning. Any repairs or replacements of doorframes, window frames, and any dry walling should follow this. The very bottom of the to do list should involve completing the finishing touches like tiling, installing new cabinets, installing appliances, carpeting and painting.

It is important to get the accounting correct right from the start to ensure that the costs of restoring rehab properties doesn’t come anywhere close to the expected selling price. If it does, then it’s not a project worth undertaking.

Asking questions with these tips in mind will help save real estate investors thousands. For more ideas related to real estate investing, call or visit us a Homevestorsfranchise.com. We are the nation’s number one home buying franchise with over 15 years of experience. Our company has a vast assortment of real estate investment and real estate franchise opportunities available
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