When Should I Rehab a Property?
Ok, so you've found a great deal and a motivated seller ready to hand you the keys.
At this point you may be are confused as to whether to wholesale a property for quick cash or to rehab that property, which will obviously take longer but should yield a larger profit.
To help you make up your mind, we will point out the some key differences between the two.
Wholesale 1.
Quick cash.
Need I say more? If you want to get your money now then wholesale it is! So obviously if you are in a position where you need cash for some reason or for living expenses, then wholesale a real estate property is the way to go.
2.
Check your pockets.
Do you have the funds for acquisition, repairs, and holding costs? Again, wholesaling is the way to go if you don't.
3.
Tired of rehabbing (I've been there)? Busy with other projects? Wholesale when you don't want to do the rehab.
Also, if you think it's an area where it would make a better rental than a rehab for retail, flip to a landlord looking for cash flow rather than maximizing the ARV (After Repair Value).
4.
Tough credit marketing for homebuyers - definitely rehab! Ask me how I know this...
Rehab 1.
Rehab for maximum profit.
It could take some time but it's worth it - if you do it right.
2.
How's your bandwidth? If your deals are scarce, that means you'll have a lot of time in your hands.
A good way to spend time would be to rehab the deals you have.
3.
Do the math.
If the potential profit is good, but not good enough to make your profit goal plus a wholesale buyer's minimum, then rehab.
4.
Explore.
If it's in a desirable area, then rehab that desirable house! Improvements will increase your investment property's value exponentially and make it easier to sell.
But rehabbing is not just an exit strategy, it's a business! You make money by doing your research, developing a detailed rehab budget and operating plan, and managing the process.
You need to know your market, repair costs, and the ARV.
You should purchase your target far enough below ARV to make sure you have plenty of room for contingencies and a reasonable profit for your efforts.
Then, you need to sell FAST!
At this point you may be are confused as to whether to wholesale a property for quick cash or to rehab that property, which will obviously take longer but should yield a larger profit.
To help you make up your mind, we will point out the some key differences between the two.
Wholesale 1.
Quick cash.
Need I say more? If you want to get your money now then wholesale it is! So obviously if you are in a position where you need cash for some reason or for living expenses, then wholesale a real estate property is the way to go.
2.
Check your pockets.
Do you have the funds for acquisition, repairs, and holding costs? Again, wholesaling is the way to go if you don't.
3.
Tired of rehabbing (I've been there)? Busy with other projects? Wholesale when you don't want to do the rehab.
Also, if you think it's an area where it would make a better rental than a rehab for retail, flip to a landlord looking for cash flow rather than maximizing the ARV (After Repair Value).
4.
Tough credit marketing for homebuyers - definitely rehab! Ask me how I know this...
Rehab 1.
Rehab for maximum profit.
It could take some time but it's worth it - if you do it right.
2.
How's your bandwidth? If your deals are scarce, that means you'll have a lot of time in your hands.
A good way to spend time would be to rehab the deals you have.
3.
Do the math.
If the potential profit is good, but not good enough to make your profit goal plus a wholesale buyer's minimum, then rehab.
4.
Explore.
If it's in a desirable area, then rehab that desirable house! Improvements will increase your investment property's value exponentially and make it easier to sell.
But rehabbing is not just an exit strategy, it's a business! You make money by doing your research, developing a detailed rehab budget and operating plan, and managing the process.
You need to know your market, repair costs, and the ARV.
You should purchase your target far enough below ARV to make sure you have plenty of room for contingencies and a reasonable profit for your efforts.
Then, you need to sell FAST!
