Investing in a property for the purpose of upgrading, improving, and then selling it for a profit is often the stuff of dreams. Real estate rehabbing isn’t for everyone, but if you’re looking to break into the business, you may find some wise advice is in order before you jump headlong into the process. Too often, real estate rehab looks easy on the surface, but there are some important “tricks of the trade” we experts can share with beginners.
It never hurts to minimize your risk at the outset.
Start by purchasing and rehabbing a house that you will use yourself. Without the time constraints associated with “flipping” a house and without the stress of bearing the burden of paying on a second property, you can acquire and hone your skills. The pressure of limited time or limited funding can allow you to learn right away if you have the necessary patience, skill, and knowledge of projects in order to turn your dream into a reality. If you intend to make real estate rehabilitation a major source of income for you and your family, you will certainly want to know what you’re up against from the beginning.
Learn some valuable DIY skills.
Any rehabber, seasoned or novice, knows that the difference between profit and loss pivots around one’s ability to cut rehab costs. In other words, what DIY skills do you have that will reduce construction costs and put more money in the investor’s pocket. Many experts agree that there are three skills a rehabber should have, at a minimum: tiling, electrical, and painting. Tiling is one of the most important and beneficial DIY skills you can learn because it adds an aesthetic. Hiring someone to complete tiling jobs can add up over time when it isn’t a difficult skill to hone. Likewise, basic electrical, such as replacing a ceiling fan or knowing enough to determine when a licensed electrician is worth the most, can save you serious time and real money. The ability to paint well is another important skill. Not only does painting add “visual pizazz” indoors, but it can also add to curb appeal when it comes time to sell.
Invest in the right tools as you go.
While I certainly understand the drive one might have to run out and purchase all kinds of tools, it’s really hard to say what you might need down the road and what might be a superfluous purchase. Instead, purchase items you need for a project and try to find durable tools that don’t break the bank. Watching some DIY YouTube videos for common repairs may help you decide what items you may need and what may make more sense to rent until you grow your business. In other words, try to make great tool acquisitions through due diligence, based on the scope of work you are doing. Great bargains aren’t bargains if they don’t last or fail to work during the rehabbing process.
Be careful about your purchases.
As a beginner, it’s important to continue educating yourself on the hard and soft cost of rehabbing. Each potential rehab property deal needs to be analyzed correctly and carefully in order to confirm it will be a profitable deal when it is sold. Consider taking a real estate investing course or a house-flipping mentoring program that will help you learn the basics. There are many so-called experts out there dispensing information, but remember that making ugly homes look beautiful is one thing; flipping homes for profit is a different deal altogether and requires a unique set of skills and a clear perspective. Real estate investing is not about taking chances. It is about understanding your direction and mitigating potential risks.
Always pull the necessary permits.
Too often, rehabbers fail to understand the importance of obtaining a permit during the rehabbing process. Even some veteran rehabbers fail to do what’s necessary for the town or city to sign off on work so that it can be done safely, legally, and duly supervised. Failure to follow through on pulling permits can delay a project, create fines, and make issues with potential buyers or lenders during the selling process.
Build connections with vendors and contractors.
It’s important to have vendors and contractors you can rely on. While you may think you’ll be able to complete projects efficiently and completely, you never know when you will encounter an issue that requires you to reach out. Good contractors and vendors are always busy because they are good and have a positive reputation. Make sure you have a range of companies and individuals who can assist you in case you find your original choice is too busy to help you with your project. Being successful in any industry means networking, and perhaps none so true as with the real estate rehabilitation business.
What questions do you need answered? We’d love to hear from you.