Almost every landlord would want to rehab their house before they look for tenants to rent it out. That goes the same for homeowners, especially when they want to make a profit out of it or simply just to sell it faster.
House flipping is starting to become a trend in the real estate industry and the majority of house rehabbing comes from real estate investors wanting to make more out of a distressed property. Although making mistakes is okay in this industry, it is important to dodge as many mistakes as possible and learn from others’ experiences.
Rehab process is not clearly defined.
Making a plan will save you a lot when rehabbing. Make a list of how you want the property to be fixed. It is only logical to make the necessary “big” indoor fixes (i.e. broken roof) before going for cosmetic repairs (i.e. repainting of walls). Nobody wants scratches or cement spills over your lovely newly painted walls.
Fixing a major indoor problem should always come first.
Repair costs are often underestimated.
It is an unwritten rule that whenever you are making estimates on repair cost and time, always expect that it will be more than what you think. This is done to give yourself an allowance and not be shocked when the receipt comes knocking.
Diligently do your research and don’t just pluck a number out of thin air. Your effort will save you more time and money and will also give you a very good idea of the costs and time needed rather than blindly guessing.
Repair value is poorly calculated.
The most common mistake investors make is estimate their property’s value based on properties within the area rather than what the property actually costs.
Of course, this is your property and you can sell it at any amount you want. The question comes down to, “is the buyer willing to pay for it?” This can be settled by having an appraiser assess your property’s actual home value based on reasonable comparative sales.
When doing a research on your own, always consider seller’s contribution and not just the price listed.
Taking on all the necessary work by yourself.
As an investor, you have wide set of skills and knowledge regarding property improvement. Sure, it is costly to hire a contractor and you also want to see for yourself how the transformation happens.
Think twice; will the time you will be spending in rehabbing it yourself compromise for the money you will be spending? Consider how a contractor can save you more time and energy which allows you to focus on other tasks. This allows you to do more and ensure you are not getting behind on other tasks.
You try to improve the property too much.
When does it become too much? Do some research about the community and the neighborhood. Most of the time, the community is not as cozy as you think it should be. Match your property with the same standards the nearby houses have.
You want to cut as much money as possible. Investing above ok standards will give you a hard time to recover the extra money back once you list it on the market.
There you go. We wish you the best luck now that your property is good to go. Just always remember, okay is good, anything in excess or anything that lacks is bad. Restore it to the way it used to be. No need to make it fancier. Let the owner do the personalization.