Biggest Rehab Mistakes
It’s easy for real estate investors to make mistakes when rehabbing investment properties, but some errors will cost you more than others. The four biggest rehab mistakes include, in no particular order:
Many new investors make this mistake because they think the property should look as good as their own home. And this includes splurging on items like granite countertops, hardwood floors, and other bells and whistles. For remodeling an investment property, it isn’t necessary that you pull out all the stops to transform it into the most beautiful home. For example, laminate wood flooring is an inexpensive alternative to real wood; it’s also easier to maintain and install.
But don’t cut all the corners when rehabbing a property. As an investor, you want your property to sell at a significantly higher value than you bought it for, and that may not happen if you risk under remodeling. This is where you learn the difference between inexpensive materials — and cheap. If you cut costs at every opportunity, you may end up with a cheap looking property that’ll fall apart sooner rather than later.
Overestimating the property value
You might go into the project thinking you’ll transform the project from drab to appealing (mistake #1: over remodeling) and overestimate the value of your investment property. Consider other environmental and structural factors when investing in a property to avoid making this mistake and potentially losing money.
Underestimating the holding time
Of course you want your property to sell shortly after you put it back on the market. But you can’t predict the demand for properties, and the market fluctuates constantly. There may be some times when you remodel a property and resell it in a matter of weeks; other times may be months. It all comes down to studying your target buyers and their wants and needs, even though you can’t truly determine when they’ll want your house. So just be prepared.
The reality is that these mistakes probably can’t be avoided, especially in the housing market. It’s fickle. However, you can do your best to learn from your mistakes so you make less of them.
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