Rehabbing real estate can be a great opportunity, but the nature of the business is that it’s risky, too. Here are 3 things to keep in mind when you’re starting out.
Location matters. Location is everything. The quality of a neighborhood is a huge factor in determining the value of a home. It doesn’t matter how well you rehab a property, if it’s in a bad location you’re not going to get your money back. Homebuyers simply don’t want to pay big bucks to live in a shady area, even if the house is top-notch. School districts, neighborhood safety, and nearby amenities create buyer appeal. So keep in mind, you always want to invest in a bad house in a great location, never the other way around.
Stay away from structural problems. Even though you’re looking for fixers, you don’t want a total teardown that you’ll have to rebuild from scratch. Finding structurally sound homes is key. A single broken support beam can be a major red flag, and can lead to tens of thousands in extra costs. So try to find homes that need the right kind of fixes, like those with old carpet and wallpaper, outdated flooring and cabinets, or houses lacking in curb appeal.
Expect the unexpected, and be prepared. With great risk comes great reward, but be sure to diminish that risk by being thorough with your inspections (especially if you know ahead of time that the property you want to flip has plumbing or electrical problems.) It’s important that you test absolutely everything in the house before committing to buying. The last thing you need is to miss a small problem and have it turn into a large-scale, large-cost repair.
With these tips in mind, you’re now better prepared to start your flip. Work carefully and pay attention to potential troubles. If you can survive the ups and downs of the first few flips, you’re sure to be a success in the business! Good luck with your future rehabs and be sure to write in with any questions or comments.