Pros And Cons Of Rehabing??
hello,
im looking to getting into rehabing homes. i've been doing remolding for over 20 years. just starting to get into real estate, i see a good opprotunity for some one with my experience in remolding through rehabing. looking to see if anyone can give me a list of the pros and cons of rehabing.
The pro's is that you have done this for 20 years!!!! The pro is that after 20 years you ought to know what it takes to make a property "pop" more than 90% of the rest of us out here!! ! You out to know the "in's and out's" . With your experience there are NO con's as long as you know how to find and Recognise a deal. They are not are not as easy to find as one would hope for!!!! ues your tallent and do not sell yourself short!!! i will be calling you for tips on how to not get "high-grossed". The real profit is knowing how to fix up what needs to be done, to make what you have stand out against all the other similar property's out there in the same price cattegory!!!
WD
i have allway's said that no-one can do anything cheaper than the one who has the skill. you![ Edited by WheelerDealer on Date 05/07/2004 ]
WheelerDealer is spot on (as the British like to say).
You need to find deals, recognize if they really are deals (that is where your experience comes in) and then how to market the property after you have worked a little magic.
The only caution I would offer is remember you are improving the place so that someone will move in and pay you enough so you have a profit. Watch out for over improving a property to the point where it sells quicker but the buyer just can not see clear to paying for the items you upgraded.
As you know homes at different price levels need different quality or standards to sell. Know your market.
If you want to sell for all cash on conventional terms then you will have a different market then if you are offering terms or otherwise helping the buyer. Learning about how finance works will be an asset.
You might want to hook up with an investor who has skills you do not have for a project or two. Focus slightly less on the profit you will earn and view the deals as a learning opportunity. If you are really good the investor will find a way to make it a long term relationship. For these deals keep your cash out of the mix. Go for an investor who has cash and knows how to market.
Quote:
On 2004-05-07 03:57, bgimic wrote:
hello,
im looking to getting into rehabing homes. i've been doing remolding for over 20 years. just starting to get into real estate, i see a good opprotunity for some one with my experience in remolding through rehabing. looking to see if anyone can give me a list of the pros and cons of rehabing.
Remolding?????
Sorry, but I don't give someone a blanket thumbs up just because you have been remodeling for 20 years. It is one thing to remodel a home for a customer who is paying you to do a remodel to their desires, it is quite another thing to know what to remodel and what to leave alone when it comes to an investment.
I'm not saying you are going to lose all your money or don't know the difference between the two, but I know plenty of people who know how to swing a hammer who don't have a clue about how to run a business, the same goes for making the move from remodeler to real estate investing.
That's the biggest CON I can come up with.
Wow, coudln't agree more.. I put myself through college doing work for the customer end of remodeling.. as far as the investment side..haven't had the plessure yet.. but I would i would know what to fix an what to leave alone..
It depends on what you mean by rehabbing. If you are talking about rehabbing and selling for a profit, I personally would not do it. I posted a question a few months back that basically said "Why rehab and sell when you can rehab and rent?". I got one vague answer in favor of selling , and several in favor of renting. I asked this question because I have personally done both, and I have found rehabbing and renting to be FAR superior to selling. Of course, like in everything, you will have the few who happen to have an inside track to great opportunities before they become available to the general public, but how can you help someone to develop inside sources, even if you didn't have an objection to such practices? There are some people who rehab and sell totally by hard work in research and sweat, but I still have found it far more desirable to rehab and then get an indefinate and increasing cashflow instead of a neverending search and repair strategy.
Davmill,
The problem with renting is cash flow and tying up your credit. IF those aren't issues then by all means rent.
I personally like rehab, there is value that is not apparent to others and the margins are often higher.
I would suggest a book, Buy it, Fix it, sell it, & profit by Kevin Myers.
ALso remember that every dollar spent between the curb and the front door counts for two on the inside
[addsig]
Stockpro99,
I'm glad you enjoy rehabbing and I hope it works well for you. I'm not sure what you mean by tying up ones credit by doing rentals though. I've never asked a mortgage broker if there is a maximum that can be borrowed, but I would assume it is unlimited. That is, as long as you have the cashflow to cover the payments, and demonstrate experience in what you are trying to do. It really is as simple or maybe more so than rehabbing. You buy, you fix up, you do a cashout loan(which the tenant pays back for you) and you collect the rent. The great thing is, you get a very predictable return, with virtually no work (if you choose to do so). indefinately. You keep collecting rentals until you get the total cashflow you want, and then you watch that cashflow increase as the mortgages are paid off and rents hopefully rise. Of course, the key is cashflow. Some parts of the country make it challenging to have a positive cashflow on rentals, but most don't. You do have to know your rental market though to know exactly what type of houses, neighborhoods, price range, etc.,etc, etc.,. will give you great returns. By the way, I do own the book you mention, and it was a good read but I gave it away to a friend who is trying to rehab since it didn't help me with the niche I work in.
i am presently building a "new construction home" and rehabbing a pre-existing home. the plus in n/c homes you don't have to back track in building by tearing out the old and puting in the new. the plus in rehabb. {in my area} i don't have to deal with codes {i don't do structual rehabbs.} and the profit margin is as great and in most cases greater in rehabb. if you buy correctly.......kenmax.