Rehabbing Costs: When is Too Much, Enough?

The recurring issue for all of us rehabbers is trying to find the right balance of how much work and materials you put into a rehab, versus how much you can sell the property for once its done. On the one hand, a completeley redone house, right down to the smallest detail, will sell better and quicker, but can eat through any potential profit margin on your project. But if you don't recondition the property enough, it can sit unsold for much longer periods because there are plenty of other properties available to buyers that have had more and nicer finishes. Why would a buyer pay the same for your rehabbed house when they can get one down the street which has been refinished to an even higher condition?
So the key is being able to strike the right (best?) balance between cost of rehabbing and your potential profit from the project. Some of the rehabbers we know like to go all out and make the property the 'shining star' on the block. I like that idea too, and would do it like that every time if there were enough margin in the deal to make that work. Sometimes, however, to make a property newer than new, the repair and upgrade costs could far exceed the potential sales price of the property. The other end of the spectrum is the mindset of going in and doing minimal work on the property. Painting inside and washing the windows might work if the property is already in fantastic shape. In reality, there are very few of these kinds of properties around. Almost any house you buy as a rehabber will need some work (except of course if you plan to wholesale the property, but that's a subject for another time).I like to aim for somewhere closer to the complete re-do end of the spectrum. This includes not only an eye-popping kitchen, but paint, windows, flooring and even some nice landscaping. As your Realtor will always tell you, curb appeal is vitally important. After all, how can the buyer purchase your property if they won't even get out of the car to go inside and have a look? This also gets back to the basic skill that every rehabber should have: "Know Your Market"! We have all heard that knowledge is power. But in this case it is even more important that that. Knowledge is the tool which will help guide you to correct decisions about your rehab property, and will help you to avoid the tragic outcome of a house that won't sell quickly, or sells for much less than you need it to. ~ Posted by JT

Investors and Short Sales

We find that most sellers of short sale homes didn't start out with the realization that they could, in fact, relieve their stress and anxiety so quickly. In our investing business, and in today's real estate climate, we have by necessity become short sale experts.
Our investing includes a number of purchases which have come to us through short sale purchases. Yes, they take a certain amount of time to acquire, but in the long run, we get an opportunity, and the sellers of the home are relieved of their burden. Here's how it works:A home owner who is underwater finds out about us, and contacts us. We take a look at the home, and, often, it suits our needs as investors. Either way, we put the homeowner in contact with our amazing and talented short sale team, Short Sale Angels. What they do is list the property and help us write an offer on the home. Since banks require that a property be listed in order to approve a short sale, this facilitates the short sale, and the homeowers are not left stranded and waiting for the bank to come and kick them out of their home.Sometimes, instead of the home owner contacting us, we find a property through usual channels such as the local MLS, or because a Realtor contacts us with one he or she feels would work for us.What we really like about the process is that we can do much the initial counseling and support for the home owner who is in need, and direct them to a variety of services provided either by our team or by our associates. One of the most important things to accomplish as a successful investor is to be prepared to be of service to the home owners you want to work with. We believe in solving THEIR PROBLEMS FIRST. If you can do that, you will always be somebody who has earned and kept their trust.~ Posted by GRR/GSH