As you are starting out on your road to become a successful Real Estate Entrepreneur, you are going to eventually purchase a property that has a lot of
Rehabbing can make you money but you as an investor have to be careful. Two of the biggest mistakes made by 1st time rehabbers are TIME & MONEY.
Although your actual time commitment is minimal, these projects from purchase to sale, take a significant amount of time. To finish your rehab project, plan six months to one year. That means you may not see any profit for a while. Hopefully, your projects will finish much faster, but mentally commit yourself to problems and delays that will hurt your projected completion date.
The second negative is MONEY. Unless you have a partnership arrangement, you will have to come up with money for these projects. MREIA consistently puts $10,000 to $20,000 in repairs alone into a house. Add that to your purchase price and you can see you'll need access to quite a bit of cash. Plus, that money could be tied up for 180 days or more.
These negatives aren't anything you can't overcome. You'll see how important it becomes to have a well thought-out plan to minimize the negatives and accent the positives of rehabbing a property.
Estimate Repairs - Rocket Science?
Once you have found a property to rehab, you need to get a good, not great, idea of how much money you are going to need to repair. Dealing with sellers they always place the repair costs to a minimum. What ever amount they say I double it. Estimating repairs isn't as difficult as you might think. Once you rehab a couple of houses, you'll know what you're repairs will run. This is where a check or punch list becomes invaluable.
Your Finished, NOW it is time to get PAID!
The marketing strategy is to develop several plans to help you get to your objective - MONEY now or in the near future. You, the rehabber have several options:
- Rent It!
- Traditional Landlording
- Section 8 or Plan Ocho
- Sell It!
- For Sale By Owner (FSBO)
- Hire a Realtor.
- Lease Purchase It!
- Combination of Renting and Selling!
Rehab Process Outline Here it is:
- We are going to find a distressed property that has mucho equity!
- Buy it using a formula (MAO Rule) that calculates your holding & rehab costs.
- Rehab the property to bring it back to neighborhood standards or beyond.
- Develop a marketing strategy that will attract either an investor or owner occupant.
|Written by +Bob Burns.|
Telephone #: 305-300-6242
MREIA's Web Page: www.miamireia.com