New Funding Resources 
Mark Twain famously quipped: “Nothing in life is guaranteed except death and taxes.” As real estate rehabbers, we face that uncertainty every day. Our profit calculations are based on the myriad estimates that depend on factors beyond our control. Learning to manage this uncertainty is learning to manage and minimize your risk. Today I want to talk about one component that is especially tricky to control – your rehab costs. Estimating renovation costs correctly is the key to your success as a real estate investor. Yet, these four costly items are often overlooked and, as a result, may significantly reduce your profits.
Managing Rehab
How Fast Can You Repay Your Hard Money Loan?
“I need a hard money loan for three months maximum,” I hear our potential borrowers say all the time. “I have the right partners, the right contractors and we will be moving fast.” “How many properties have your flipped in the last two years?” I always ask them. The answer is typically none.
Grow Your Hard Money Rehab ROI – Continued
This article is a continuation of our series on increasing your hard money rehab ROI. In the previous installment, we’ve discussed ways to strategically allocate your hard money rehab dollars to the areas that have the most impact on your sales price. Today, we will be tackling additional strategies. As a hard money lender, I’ve seen many of our experienced borrowers make their rehabs look more expensive than they actually are by getting the right materials and playing with modern design trends. Here are three best tricks of the trade to give you the bang for your rehab buck.
How To Use Hard Money to Rehab for ROI
The key to a successful rehab is to control your costs. That doesn’t mean, however, that you should use the cheapest materials. The trick is to think wisely and choose when to spend your rehab money and when to go with a budget option. As a hard money lender, I can testify that in our business it’s all about ROI. The goal is to create the most upscale look-and-feel for your property while keeping your costs down. Our most successful clients do so by concentrating their rehab money in strategic areas, using the right materials to get the most bang for the buck and by simply displaying good taste. Let’s unpack each of these recommendations.
Pulling Permits for Your House Flip: Things NOT to Do
When planning construction costs for your house flip, you need to decide in advance whether you need a construction permit or not. Pulling permits requires opening your property up to an inspector who might ask you to bring many areas of your home “up to code.” This adds extra expenses to your renovation. On the other hand, not getting a permit might result in retroactive changes to the areas you’ve already completed. As the result, not only your costs increase, you might also experience major delays. One of the worst mistakes a rehabber can make is to plunge in the house flip process without carefully considering whether to get a construction permit or not.
Estimating Rehab Costs: Things NOT to Do
Investing in real estate is a fantastic way to supplement your income or to build long-term wealth. Like with every other business though you’ve got to keep your eyes on the profit. When estimating rehab costs you need to account for three major components: the price you’ve paid, the costs you’ve incurred during the renovation process and the sales price that your property fetches on the market. Our previous blog installment highlighted common pitfalls in evaluating the after-repair value of the property. Today’s article is focusing on major mistakes in evaluating the costs of owning and rehabbing your investment property.
