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Hi all,
Looking for some discussion on rehabbing ideas and techniques.
Seems like the market is ripe for this activity, with all the foreclosures and houses that need some fixing.
Currently I’m doing more rehabs that I’ve ever done, flips with bank properties (shorts and REOs) and they’re working pretty well, but always open for ideas. All of mine, we buy, rehab and sell or rent retail. Don’t sell wholesale, but do buy wholesale.
Here’s some of the stuff I’m doing…..
Typically, I’ll pick up a back property for cash (either mine or private lender) fix it up and sell it. Doing houses that retail in the $120 to $350 range in the Tampa Bay area. I like to see $30K or 20% of the retail price after all expenses before going in.
I dont lift a hammer and farm everything out with mostly handymen, and occasionally will do joint ventures.
The bulk of my rehabbing are fixing up the kitchens and baths, and making the rest of the house clean (paint or whatever).
Some of the mistakes I’ve made…..
Converting a garage into a master bed/bath (just too much hassle for the profit. Way easier to just find a 3/2/2 and clean that up.
Putting in central AC: Also too expensive and a hassle. Much easier fixing an existing unit.
Reface cabinets. Often for little more, can put the entire kitchen in.
Hiring handymen that need supervision.
I could go on and on…..Some of the best things I’ve done…
Open up the kitchen (knock a wall down to make it open) and put in a new kitchen with granite. (They sell really fast)
PaintWhat are you doing? Where do you see the best return on rehab efforts? Goods and Bads?
See the Buying and Selling section of THE DEPOT — there is an audio set called REhabbing for Fun and Profit. Might get some ideas there.
I never liked rehabbing so I can’t help with this topic much. I prefer faster and easier ways to make money with fewer 3rd party influences ( buyer needing bank financing). Looking back, I hate that I sold the houses I rehabbed. They could all be producing cash flow for me now.
You might rethink your exit strategy!!
In the Movers and Shakers online seminar there’s a segment on buying REO’s using IRA money, then selling them with seller financing or a lease option. There are some EXCELLENT ideas in that.
Credit markets are changing rapidly so be careful not to get too many properties going which will require that the buyer gets bank financing. Financing might dry up with even more uncertainty in the economy and the government.
Jackie
Jackie,
I hear ya, and thanks much for the comments.
I never liked rehabbing either, but there’s opportunity there, and that’s why I’m doing it. These REOs and Shorts are cash only but are so cheap and reasonable profits with little work (for me). I also have a few lenders that are currently lending on these, so not hard to flip, and at close to retail.
But, yes, I rarely like more than 2 or 3 of these at once, just in case.
And the bulk of my stuff is buy and hold, and the vast majority is seller financing. I rarely finance my buyers, but occasionally do, and will give them lease/options (contract for option).
But, I like ideas. Thanks again.
I used to do a ton of rehabbing. I enjoyed it back then. Not so much anymore.
I found the best way to handle a rehab was to have great people to do the work. By that I mean people who know exactly what you’re trying to accomplish, can make suggestions where needed but will respect your decisions.
You’ll pay more for this kind of contractor but you’ll spend less time babysitting them. It’s up to you to decide how much your time is worth.
I keep track of the time and material on projects, so I know how long it will take, and what I will need in material, for a typical worker to replace plumbing, paint a room, rip out carpet, etc.
It sounds like you have a good grasp on what you need to do to make the house sellable. Right now it’s all about the appraisal and the financing (if your buyer is using a bank). Make the house consistent with what other houses in the area have for amenities. Go through all the big gun custom rehabber house tours to know exactly what you have to have to sell quickly. Pay attention to paint colors. Paint is the cheapest and easiest way to either quickly turn someone on or off to your property.
I’m sure I’m not breaking any new ground here. Paying attention to the detail, having a plan and sticking to the plan will get your rehabs turned quickly.
What if you could make the same amount of money OR MORE without buying the house and without doing any rehab and in less than 30 days?
Doesn’t that sound better than rehabs?
Get options and do a highest bidder sale.
There’s a big opportunity to get options on houses you can buy subject to a mortgage so that means you can do a highest bidder sale for the down payment and it’s much easier to sell sell sell.
To date we have rehabbed 2 properties and though the work is enjoyable, have found it to be too much work for the rate of return and need to continue earning the bulk of our income elsewhere. I suspect that though we have turned a profit, we need to find other income streams. My husband owns a commercial construction company and was also doing much of the rehab carpentry work himself which required too many hours.
As a novice investor I need to understand the term “getting options” that you use, Jackie.
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