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Does Custom Rehabbing Make Sense?

Published on Wednesday - June 15, 2011

Wondering how you can move more properties and get a higher price for them?  Have you ever considered doing custom rehabs?

Of course for the most part speculative buying is not a wise real estate investing strategy at all.  However if you have a buyer in place already and you enjoy doing rehabs then some custom rehabs may offer more volume for flipping houses and larger profits.

Homes are much more affordable today than they have ever been, however many buyers are scared of biting off more than they can chew with a handyman special or do not have additional lump sums of cash to cover rehab projects, but would love to buy a home if they could finance the work in and end up with a new looking home.

So if you have a large number of these buyers in your area you may consider doing some custom rehabs.  Though of course you should be wary about doing anything to a home that could limit your ability to sell to someone else should they fall through.  Still if you are going to paint, lay new flooring and replace cabinets or bathroom fixtures anyway, why not give buyers their choice and make a bigger premium on your real estate investing deals?

Adding real value with rehab work can make it much easier for buyer to obtain financing on the properties your real estate investing business is marketing.  Or if you have been entertaining the idea of rent-to-own you will find that affordability is so great in many areas that you can build on a higher payment to quickly recoup any monies invested in rehab work.

You may even have contractors you use now that have extra materials on hand that they would be glad to use up or perhaps they are happy to take on extra work, even if it means them getting paid over a period of time instead of all upfront.

Think about it.  Custom rehabs could give your real estate investing company a unique selling proposition and provide much higher spreads if done right..

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