How to Fix Up a Home for Resale

One of the best ways to make money as a real estate investor is to purchase a dilapidated and run down home and then fix it up, better known as ‘rehabbing’ a home. Even if you are not good with a ruler and hammer, do not worry. You can actually spend less than forty hours a week and hire people to do all your work and yet still end up with over $30,000 to $60,000 in profit. However, keep in mind that the entire project itself will probably take anywhere from half a year to a full year to complete.

The main fallback of rehabbing a home is the money involved, especially if you choose not to do the work yourself. You are talking anywhere between 10 to 20 grand. Sum that up with the purchase price and you have arrived at quite a hefty amount of money owed. That is why it is important that you become an expert at mortgage financing, loan obtainment, and financial management.

The hardest part about starting off is estimating the cost of repairs. After you have fixed up a couple homes, it will become easier to do. For your first couple projects, do not choose property that has any major structural damage. Start off with homes that need just pure and simple repairs like some painting, fixing a leaky faucet, etc. Furthermore, don’t waste your time on projects that will render less than 5 to 10 thousand in profit. You may easily end up spending up all the profit in repairs. Typically, you should estimate your profit at being approximately 20% of the property’s fair market value. So if are working with a house worth $100000, you can expect to make around $20000.

By pre-calculating repair costs, you can make a more accurate guess about how much money you will make. What you need to do is total up the repairs, add it up to the cost you paid for the home, and then subtract the sum from the value at which you hope to sell the house. When coming up with a resale value, it is generally wise to use a conservative value. Even though you will probably sell for a higher price than your estimate, it never hurts to underestimate your gains, just in case.

If you can do the work yourself, then great. If not, you are going to need to locate and hire subcontractors. Either look in the newspaper or just spread the word that you are looking for one. Once you find some, allow them to place bids. You do not want to just find one and go with whatever price he or she offers. By taking in bids from several contractors, you can find the best deal.

Once you are ready, start repairing. There are many things you can do to repair a home:

· Repaint rooms.

· Put in new carpet.

· Add new ceiling fans and light fixtures.

· Set up new kitchen counters.

· Replace the sinks with a stainless steel sink.

· Add central air and heat.

· New windows.

· New sidings.

· Add a new roof.

· Replace rotten boards.

· Put in a new front door.

· Add some shutters.

· Trim and clean up the yard.

· Modernize the bathroom and kitchen.

· Replace door knobs.

· Fix leaky faucets.

After you are satisfied with the repairs, it is time to advertise. Start off by placing a sign on the lawn. Then set up an ad in your local newspaper. If you really want, contact a realtor that can put the property into their MLS database. Soon enough, you will have buyers nagging at you for a chance to purchase this great looking home.

The truth is that any home can be improved to a certain extent. The key to really succeeding at rehabbing and selling property lies in finding the ones that hold the most potential. What sounds like a better investment: a home with all new carpet and ceiling fans or a home with dirty and dilapidated carpets and no ceiling fans? Think about that for awhile and then get back to me!