Looking to rehab properties for profit? If so then this blog post will help you know what to do, what not to do, and will give you 4 Crucial reasons not to over do it on rehabs (because it will cost you a lot of money and headaches if you do)…
There are tons of TV shows about rehabers fixing up homes and flipping them, and they can be pretty entertaining to watch. Unfortunately, too many people see rehabs as an easy and fun way to get rich quick, which rehabs are most definitely not! Yes, it is possible to make good money on rehabs but it’s also possible to overdo it and end up losing money. Here are 4 Crucial reasons not to over do it on rehabs.
4 Crucial Reasons Not To Over Do It On Rehabs
#1. Diminishing Returns
On a rehab, you set a budget of money and time – how much money you want to spend and how much time you plan to spend it in. Unfortunately, it’s very easy for that budget to go out the window and you may end up spending more money and more time than you intended. Any given property in a particular location can only reach a certain fair market value, no matter how much TV quality work you do to it. So at some point, your decorative touches don’t increase the value of the home and you might as well light that money on fire!
This can happen for any number of reasons but it especially happens when you over do it because even simple additions to your plan can increase the money or time you need to spend.
#2. End Buyers Want To Customize
Buyers want a house they can move into right away. And some buyers might want a house that is done up really nicely, although most buyers are looking for something plain that they can add their own personality to.
In fact, some buyers may even change the décor as soon as they move in, so your expensive and fancy paint job or cupboard doors might end up being covered over! Just stick with plain and neutral decoration to stay in budget.
#3. Time
One of the most overlooked reasons for why you shouldn’t over do it in your rehab is because you only make money when you sell. The longer you are on the property working, the longer you delay your income. And during your entire rehab timeframe, all of your monthly expenses like mortgage payments, property taxes, and utilities are piling up and taking a bite out of your bottom line.
You need to put together a straightforward plan, get in there, do the work, and then get the house sold ASAP. Overdoing it will only delay you.
#4. You Are A Rehabber, Not An Interior Decorator
You are in the rehab business, not the home decoration business. Your job is not to shock people with how beautiful the house is or how good your taste is in paint; rather, your job is to create a nice house that someone will want to pay you for. Period. Get it done!
Summary
It’s easy to go overboard and do too much on rehabs but if you follow these 4 crucial reasons not to over do it on rehabs then it should help you make more money and keep more of that money as profit.