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Investment Property What to Repair when Flipping a Rehab Investment

Date Added : August 11, 2010 | Views : 342

One of the most common forms of real estate flipping occurs when the investor



finds a good deal on a property that needs repair, fixes the issues,



and resells the home at its retail value for a (hopefully) substantial



profit.  As with anything, rehabbers come in all shapes and varieties,



and the degree to which they are involved in repairing the property



varies accordingly.  Some will make minimal repairs, spending practically



no money at all, while others may spend $50,000 updating systems, installing



hardware, and so forth.  So how does the investor know how much



effort to put into repairs? 




      The



answer is not a simple one.  Generally speaking, it will depend



on the neighborhood in which the property is located.  The rule



of thumb is: don’t try to make it the nicest home in the neighborhood;



just be sure it fits in, and give it the best presentation you can. 



In other words, if you are in a neighborhood where none of the houses



have a garage, don’t spend thousands of dollars building one. 



Someone looking at a home in that neighborhood is probably not looking



for a garage.  On the other hand, if all the homes in the neighborhood



have central air conditioning, and yours has an old plug-in unit hanging



out of the window, you need to consider the cost of having the air conditioning



updated.





      There



are cost-effective ways to make any property more presentable, regardless



of the neighborhood (in some they are required for success, in others



just a bonus).  Landscaping is the big one.  Generally, you



can do this yourself or with the help of very cheap labor, and it is



nothing more than mowing a yard, planting some flowers, and maybe installing



a fence around a yard.  Obviously, you can only do so much with



every property, but landscaping is typically inexpensive and makes an



enormous impact on the first impression your property delivers. 



Other cheap updates, such as repainting, installing ceiling fans and



light switches, cleaning, are all ways of increasing the value of your



property without really increasing the cost.  A ceiling fan may



only cost you $30 to buy and install, but someone will be willing to



pay $1,000 more for a home with fans in every room.  That’s good



business.





      While



this is by no means a comprehensive list of what to repair and not repair



when fixing and flipping a property, the message to take away is to



make enough improvements that your property is at-or-above average for



the neighborhood.  It doesn’t have to be the nicest outlier,



and it should never be the worst.  Meet the standards of the neighborhood,



and provide a neat and clean presentation, and your property will be



competitive in the retail market.
 

Tell us what you think. J 

InvestmentPropertyMadeEasy.com





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Article By: Jay Redding


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