Rehabbing for Profit

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Is it possible to buy, rehab, and sell a house for a quick profit?  It sure is, but you better make certain to do a few things right otherwise you could be on the losing side.  I’ll give you five simple guidelines that should help you put some cash in your pocket and keep everyone involved very happy.

 

  1. Buy It Right – In reality, you will your profit when you buy, not when you sell.  If you overpay for the property, you don’t stand a chance.  A good rule of thumb is to factor in your acquisition costs, carrying costs, and rehab costs, planning on at least 3 months until you can sell (figure worst case scenarios to be safe).  Whatever that number is, you should shoot for a minimum of a 20% return.  If you can’t achieve that – you should move on because you can get burned.
  2. Don’t Overpay for Labor – This is the number one way to kill your deal.  I recently rehabbed a condo that I bought to resell.  I got three quotes for painting the entire condo.  Two of them were for $5000, and the third quote was for less than $1000.  It pays huge dividends to get numerous quotes, negotiate, and get quality labor for low prices.  There are a lot of people looking for work right now, so don’t just pay the rack rate!
  3. Expect the Unexpected – Life and Real Estate are similar; things can happen that are good or bad.  Plan on it.  That’s why you plan on minimum returns of 20%. In case extra costs come into play, you’ll still have a cushion to be profitable.
  4. Sell It Right – By pricing the home slightly below market value you can get a new buyer to pull the trigger and get you a check at closing sooner rather than later.  Everyone wants a deal, so why not price it to move it – and to get in and out of your transaction.  The happier your buyer is throughout the deal, the more likely they will make it all the way through to closing.
  5. Buyer’s Creditworthiness – Always opt for a cash buyer if you can find one.  In the more likely event a buyer who needs financing heads your way, do your homework.  Speak to the buyer’s mortgage broker and get a feel for how strong the buyer really is before you agree to take your home off the market only to be disappointed later if they can’t get funding.

 

Happy Rehabbing!

 

Gabe Mellein is the broker of Gulf Pointe Properties,   He has 8 years experience in the SW Florida Real Estate Market.  He is a member of The Naples Area Board of Realtors, Bonita Springs – Estero Association of Realtors, Realtor Association of Greater Fort Myers and the Beach, The Florida Association of Realtors, The National Association of Realtors, and is nationally certified in Feng Shui for Real Estate. Need help Selling, Buying, or with Property Management?  Please contact Gabe for FREE advice at:  239.825.2234, Gabe@GulfPointeProperties.com or www.GulfPointeProperties.com

 

 

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