by Paul Esajian | @pesajian
Key Takeaways
- Rehabbing in real estate is the restoration and the improvement of a property.
- Learn how to rehab a house in nine simple steps, even if you’re on a budget.
- Pick up tips on how to successfully rehab a house from start to finish.
One of the more costly projects a real estate investor can undertake is to rehab houses. This endeavor can be both daunting and challenging, especially for beginner investors, as it consists of purchasing a property, renovating it and selling it for full market value. Rehabbing requires an attention to detail and a lot of time to master, but it remains one of the more lucrative investment options in real estate. That said, a common inquiry among beginner real estate investors is how to rehab a house on a budget.
Rehabbing a house takes time, working capital and experience; it’s not something you want to jump right into if you’re not prepared. Instead, investors are advised to mind their due diligence before getting started, including reviewing all their options. While rehabbing can fetch profitable returns, it’s a complex exit strategy that shouldn’t be taken lightly.
What Is A House Rehab?
A house rehab is the process of taking a property and restoring and improving upon it. This usually helps boost the property into satisfactory, or even superb, condition without drastically changing the floor plan. According to Homeadvisor.com, the national average for this type of undertaking costs $39,567.
Before commencing a real estate rehab, it’s important for investors to first understand the intricacies of such an undertaking. First off, there are three categories of rehabs: personal rehab, rental rehab and a fix and flip. This is important for investor to comprehend, as each approach will differ in how profits are made, as well as the costs that go into the project.
How Much Does It Cost To Rehab A House?
A rehab can cost anywhere from $20,000 to $75,000 and up. There are three basic expense types investors should account for: materials, labor and permit costs. To find a rehab project within your budget, it is a good idea to start by assessing how much capital you have access to. This will help you narrow down the size of the property and rehab you can take on. Next, begin touring potential properties and always keep an eye out for which type of projects will need to be completed to renovate the property. From there, investors can nail down the specific cost of rehabbing the house.
How Long Does It Take To Rehab A Home?
It can take anywhere from six weeks to six months to rehab a home. There are several factors investors can use to determine how long a project will take including the size of the property, the specific renovation projects, and your team of laborers. To get a more concrete understanding of a rehab project, look at each of these factors before purchasing a given property. It can also be a good idea to research how quickly properties are being sold in your market, as this will hint at how long it may take the property to sell once the rehab is complete.
How To Start Rehabbing Houses?
To start rehabbing houses, investors should first research their market area, assess their financing options and assemble a team to work with. A great place to start is by attending a real estate networking event in your area and getting to know other real estate professionals. Many aspiring investors also find it helpful to find a mentor in the industry who can provide guidance on getting started. As you familiarize yourself with the overall work involved in a rehab, you can then get started by searching for ideal properties.