Rehabbing Houses: Common Rehab Mistakes to Avoid

Rehabbing houses has become an exciting and profitable trend. However, it is not something you can just run out and do, it is important to learn and avoid some of the common pitfalls you might face while on your way to making a mark in the rehabbing business. Here we bring for you some of the common mistakes you can avoid while rehabbing houses.

1. Not doing your homework

You need to understand that rehabbing house is not a rocket science; however, if you don’t do proper study and homework, it might prove detrimental to your finances. You would need to sharpen your knowledge and expertise on real estate industry. There are many ways you can do this – reading news on real estate, magazine, internet newsletter on the industry, etc.

2. Being emotional with a given property

An investor needs ensure that he is in the business to make profits and hence he needs to always ensure that he is not emotional attached with any property. Each investment you make, you need to evaluate the pros and cons of it from an economic point of view.

3. Wrong estimation of property

Wrong estimation of the property is the direct result of lack of information and knowledge on the subject. In rehabbing market, your profits are directly proportionate to the knowledge you have on the subject.

4. Not treating it as your business

A lot of rehabber doesn’t treat their work of rehabbing houses as a small business. This is one mistake that many people make where they don’t realize their investment is like a small business. Even a little mistake can ruin your entire efforts, time and investment.

5. Getting Insurance

This is another common mistake of rehabbing houses that people make; they don’t get their property insured. You need to ensure that you not only insure your property but also read and understand the policy before signing the documents. And, just in case, if you understand something mentioned in the policy, hire a professional assistance to make things clear.

6. Hidden property damage

This mistake could prove to be fatal to your business. You need to develop a skill to figure out hidden damages in the property you are looking to invest. Smart choice would be to get a second opinion from a fellow professional before jumping into closing the deal.

7. Not having a budget

The business of rehabbing houses demands its operator to have some sort of budget. You might come up with some unforeseen expenses which can’t be avoided. And, if you do not have extra capital on the side, you might be left high and dry by the situation and finally give up.

8. Paying contractors beforehand

Contractor in the business of rehab has a central role to play. You need to develop a long term relationship with the contractors, which might take some time. If you are dealing with them for the first few time, ensure you schedule a payment and never make any payment upfront before the work is done.

9. Unable to maintain the property

This is another big mistake that a rehabber commits while buying and holding a property. As mentioned earlier, having not enough budgets can ruin your profits. Likewise, if you don’t maintain the property in its prime condition, the value of it will go down and you will incur losses.

10. Not taking action

While you try to put all the pieces of the puzzle together to the best of your ability, if you don’t take action to initiate a transaction, you have pretty much wasted your time, investment and efforts.