What is a real estate rehabber?
A real estate rehabber is someone who buys a house for the sole purpose of fixing it up and selling it for profit. Much of the repair and restoration work is usually outsourced to a contractor although some rehabbers put a lot of their own time and energy into the property as well.
Factors to consider when doing real estate rehabbing
Obviously, if you want to get into real estate rehabbing, you need money to purchase the deed of the property and pay for home improvements. In most cases, you won’t see the extent of the damage and amount of repairs needed until you start tearing up carpet or pulling down walls, so having an adequate amount of capital or credit available is a must.
Even if you are a jack of all trades and an experienced handyman or renovator, it is not practical to do everything by yourself. And, chances are, a problem that is beyond your area of expertise will eventually arise and require outside help. Be judicious in choosing your roofers, plumbers, landscapers and other members of the team.
There are also legal considerations for any real estate rehabber. While there is no license required to purchase a home and resell it, you need to secure permits for any work that you need to do near the gas lines or water mains.
Fixing up a house does not necessarily guarantee that it will sell for a profit or that you will be able to recoup your expenses. The house may sit on the market for quite a while, earning you nothing while you continue paying for the mortgage until you are able to sell the property.
How to find real estate for rehabbing
People go into real estate rehabbing for two reasons: 1) they present a huge potential in profit, and 2) they get a sense of fulfillment from turning a run-down property into someone else’s dream house.
When choosing houses for rehabbing, you should go after properties that only require cosmetic work. Homes that have structural, plumbing, roofing, electrical, heating or foundation problems can quickly diminish your capital as they are very expensive to fix.
Crawl into the attic and check for water damage or rotting in the plywood and roof truss. Shingles and coatings can be replaced but if you have to rip the roof off and rebuild it, then it’s time to move on to your next potential deal.
Check the foundation and the areas where it meets the walls, as well as the blocks and posts that support it. Look for misalignment, cracks, separations, moisture and any other damage. Use your nose and not only your eyes when you’re down there. Make sure that the house is structurally sound.
Look for water stains on the walls, ceiling and floors of each room. See if there are patches that have been placed to repair or conceal damage.
You can replace vinyl and carpet that are warped or discolored, but make sure that the flooring is not creaky or rotten.
Remember, there are six major components that you have to check before deciding to buy a house for rehabbing: plumbing, electrical, heating and air-conditioning, roofing, foundation and overall structural integrity.
If you want to learn more about real estate rehabbing, grab a copy of the Rock Bottom Blueprint and take advantage of great strategies shared by real estate millionaires on finding, buying, marketing and selling ripe for rehab properties.
