The real estate industry is extensive and consists of numerous income generating avenues that one can venture in. One such method of earning extra income, while putting your creativity into use, is rehabbing properties. Basically, this is a process which entails the purchase of old homes, at lower prices of course, and then conducting the required repairs so that you can finally sell at a profit.
Before you venture into this business, it’s mandatory to ensure that you have adequate knowledge and skills in negotiations and renovations. Being too naïve and expecting to make profits without handling the task in a sober manner can be quite disastrous. Some important factors, therefore, need to be taken into consideration for the business to be successful.
Buying Flawed Properties
The first step is to make the purchase. It’s wise to search for home owners who are selling. Don’t go for houses that are updated and well maintained but rather those that are generally flawed. Another equally effective method of getting hold of such homes is through advertising. Place adverts in both online and offline classifieds. Make sure your contact information is clear in the ads.
Assess the landscaping, exterior, and interior for all potential defects. In case you are unfamiliar with the inspection process, or are uncomfortable with it, seek the services of a professional inspector. Conduct a detailed research on the selling price by estimating the market value of similar properties in the area. Calculate the cost of repairs to determine your profit margin. Purchase the property.
Renovating and Selling
Once you’ve made the purchase, start the renovation process. Make all the essential updates and give the property a modernized look so that it can be eye-catching to potential buyers. Target the kitchen cabinets, bathrooms, mirrors, carpets, walls, floors, and ceilings. Electrical wiring, plumbing, and other technical aspects should be delegated to professionals. Make the exterior appealing by trimming fences and adding other special features such as flower beds.
Now you can sell. You can either sell the property directly or hire realtors. The former option is the best since it will enable you to save a lot of money that would have otherwise been paid as commission fees to the realtors. Take professional pictures of both the interior and exterior while providing all relevant information that will entice buyers. Don’t put the target price on the ads but go a bit higher. This way, you’ll be able to leave room for negotiations.
Rehabbing properties is without doubt a great way of earning money in real estate. However, tread carefully because the road is full of twists and turns that can easily lead to unbearable losses. This is why one needs to conduct a detailed inspection before making the purchase. There are many unexpected repairs that can cost thousands of dollars thus denying you of any profits. On top of this, place extra efforts so that you can sell the property as quickly as possible to avoid incurring additional expenses like Capital Gains Tax.