Learn How To Start Investing In Real Estate
Learn How To Start Investing In Real Estate

Prehabbing: The DIY Real Estate Exit Strategy

Written by Paul Esajian

Have you ever found a great property you wanted to wholesale, but ended up backing out of the deal because you feared an investor wouldn’t want to purchase a dilapidated looking home? Have you ever had a property that would have been perfect for a rehab, but you weren’t in a place where you could spend a lot time on one project? If you answered yes to either of these questions, prehabbing may be your perfect exit strategy.

Prehabbing is somewhere in between rehabbing and wholesaling, and is a great way for both novice and seasoned investors to make a hefty profit in the real estate investing industry. While rehabbing is a fine real estate exit strategy, it can be difficult to get the hang of. What’s more, it can take anywhere between four months to a year for all to be said and done. Prehabbing, on the other hand, can be completed in a weekend. If the thought of having to channel your inner contractor makes you want to ditch your investing dreams all together, prehabbing is great because you can update the entire property, all without ever swinging a hammer.

How To Make Your Next Prehab Your Best Prehab

A full rehab shows off a home’s charm the moment a prospective buyer walks in the front door. However, if you are the one who designed everything, you likely added a few personal touches to the renovations. While your taste is surely elegant and refined, not all buyers like the same thing, therefore limiting the pool of prospects. Prehabbing removes the guesswork, as you are adding fundamental features that appeal to everyone. It is all about showing off a property’s potential, and sometimes that means doing the bare minimum.

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The Basics

When it comes to prehabbing, there are some things you simply cannot afford to ignore. Here are three tasks you must complete on every prehab project you take on:

  • A New Paint Job: Nothing makes a house look more run down than an old, peeling paint job. Give a property the attention it deserves with an interior and exterior coat of paint. You don’t need to spend an exorbitant amount of money on the paint itself; chances are the next owner or investor you sell the property to will change it. Simply buy enough to get the job down. A fresh coat of paint allows people to get a glimpse of what the property will look like when they move in.
  • Clean Up: Sometimes you have to get your hands a little dirty. Consider renting a small residential dumpster, which you can typically find for under $200, to clear junk from both inside and outside. Trash anything that makes the house appear unappealing. This is not the time to get sentimental. A solid clean up goes a long way in the prehabbing world.
  • Landscape: Curb appeal can make or break any prehab deal. There is no need to get fancy when it comes to the landscape, you just need to put in enough effort to make it look clean and maintained. Nothing is worse than an overgrown front yard or one with brown, dying grass. Invest in a weed wacker or lay down some new sod, and find the green thumb you never even knew you had.

Walkway in backyard

The Extra Mile

If you want your prehab to sell for an even bigger profit, consider these DIY projects to make your property stand out. While these projects are not priorities, a more seasoned “prehabber” might want to go the extra mile:

  • Carpeting: Although some homeowners appreciate indoor carpeting, a majority of buyers prefer a home without it. Not only do hardwood floors seem to be the buyer’s preference, they also bring a great ROI. Experts agree that hardwood floors are a “wow” factor that can, conservatively, bring back 1.5 to 2 times their cost when it comes time to sell. If you don’t want to put in new floors yourself, you can always just remove the carpeting to show investors what is underneath.
  • Animal Deodorizing: Old carpets tend to come with unfortunate smells. If you don’t want to take on the project of getting rid of the property’s carpeting, consider at least cleaning/deodorizing it. If you are prehabbing a property just enough to rent it, free the home of old aromas.
  • Health And Safety Issues: There are certain safety inspections that every home has to pass. If you deal with these issues so that your potential investor doesn’t have to, they will be more likely to want to do business with you. Safety/health issues might include ridding the house of mold, mending a roof leak, fixing a broken stair banister, or removing old popcorn ceiling, which is known for being the cause of different health problems.

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Sizzle Features

Once you’ve completed the basics and even gone the extra mile, some investors consider installing “sizzle features.” Sizzle features are a unique addition to a home that separate it from all the rest. These are not necessary for a prehab, but they are sure to help your property sell, especially if there are a lot of homes on the market.

  • New Front Door And Garden: A home’s front door says a lot about the house as a whole. Make your home look brand new by installing a new front door. It might just take a new coat of paint, but updating the front door is a profitable sizzle feature. Currently, the most popular front doors are steel, which experts say have a 101 percent return on investment.
  • Backyard Sanctuary: Turn your property’s backyard into an inviting sanctuary with a few simple changes. Perhaps you can install a gazebo, or even do something as simple as hanging a strand of twinkling LED lights. It doesn’t take a lot to make a backyard feel welcoming, and potential buyers will respond to your attention to detail accordingly.
  • Wallpaper: 10 years ago, wallpaper was looked at as something outdated and corny, but in 2016, it is making a comeback. Make a house feel like a home by putting up wallpaper on an accent wall. These days, there is metallic, textured, bold, elegant, and mural-like wallpapers to choose from. Use it in the bathroom or the breakfast nook to show potential buyers that wallpaper can be hip and fun.

Ultimately, prehabbing is all about sweat equity. The more you put into it, the higher your profit will be. As long as you complete the basics, you should be able to find an investor willing to close the deal. All it takes is a week or a weekend and this DIY exit strategy will soon become your favorite.

What DIY projects did you complete on your prehab? Share below: