Are you looking to rehab a home for the first time? Read on to learn some common mistakes you need to avoid. If you are looking to rehab a home you know that investment property opportunities abound all over Southwest Florida and across the country. Many investors are getting into rehabbing, both those new to the game that see the incredible potential and those that may have tried their hand at it before. However, as a rehabber there are some critical mistakes you need to avoid or you could find yourself going broke before you even really get swinging.
For a start you must make sure your numbers are right. Not just in terms of what your repair costs will be on a particular investment property, but in terms of what you can realistically rent or resell it for when you are done. Unfortunately, you cannot just take most sellers word for what an investment property will be worth after repairs.
If you don’t have intimate knowledge of the area make sure you at least get a ‘subject to’ AVM appraisal or consult with a local professional. If you are planning to flip you should avoid getting involved in long chains that have several other investors who are expecting a hand out. Try partnering up with one of the top court auction buyers in the area and use their knowledge and experience to get the best deals.
One common mistake that those new to the business make when getting into investment property is buying homes that have permit and code issues. If a deal looks too good to be true because it has extra space or an addition, make sure the permits were pulled and approved before you buy. Sometimes these go unnoticed when title work is done, but become an issue after you purchase or when a new buyer is trying to get financing on your investment property. This can prevent you from selling and worse yet the daily interest on fines can quickly add up to hundreds of thousands of dollars.
Structural defects are another big issue those buying investment property face. You always need to get an inspection done, no matter how attractive a home looks. What you can’t see is often the most critical and expensive problems. This includes foundations, roofs and the notorious Chinese drywall. While there can be great bargains to be found on investment property; deals that have structural defects, the complexities and risks usually outweigh the rewards and should be steered well clear of unless you have a lot of experience and have access to low cost contractors.
If you any concern regarding your investment property, feel free to contact us