Residential Remodeling is a popular way to make money through real estate. It is also referred to as real estate rehabbing and involves purchasing a distressed property at a discounted price, fixing it up to add value and then selling it at a higher price. Many would dabble in this form, but fail to reach their intended result because they haven’t thought the process through. It sounds simple but it involves more than just buying, fixing and then selling. To name a few, it involves other factors such as knowledge, patience, capital and skill.
The following mistakes can happen to any investor when rehabbing in real estate. Keeping an eye out for these top 5 mistakes will increase your chances of a successful investment.
Most often, the desire to remodel is there but the money needed to make it happen isn’t. Before everything, you have to make sure that you have enough funds to purchase the property, cover taxes of all kinds and do renovations. All of these will factor into determining your price and seeing if you’re going to make a profit or just break even.
Time is also a key factor in residential remodeling. Time is needed to find the right property to purchase, do necessary renovations, perform inspections, prepare the house for viewing and meet and negotiate with potential buyers. Consider how much time it will take for you to do the remodel, factor in the money you need to spend and see if this is a way for you to make a profit.
In most cases, people who do remodels do factor in time and money into the price. They also use online tools in determining the value and the price of the property they’re going to remodel. This is a good idea to start with since online tools have been proven to be reliable. But, the better idea to end with would be to consult a seasoned local realtor to determine a price that’s specific for the area the property is in.
Doing a remodel on your own with little to no knowledge of how to do it is a big NO-NO. For example, you can’t just do renovations by yourself if you don’t know a thing about construction. You also cannot do a remodel if you don’t know the legalities that come with it.
As you may have guessed, your team should comprise of people who understand what you need in order to do a successful flip. Take a good amount of time to talk to attorneys, CPAs, contractors, realtors and lenders in your area.
You definitely need an exit strategy when things don’t go the way you planned. Having one or two exit strategies is a smart move to make. You can consider leasing the property, renting it, or selling it an investor.
If you want to liquidate the investments you’ve already made, selling your remodeled property to an investor for a rental who will offer you a competitive deal is the best way to go.
For your next residential remodel project, do a very thorough research and consider the top 5 mistakes we have listed for you to avoid any mishaps or loss of profit. Need some more advice? Feel free to check out our other blogs which you may find helpful!