To Rehab or Not to Rehab?

Question

Hey All!

I am researching buying a SFH rental property. A lot of people talk about this process as buying a house for cheap, renovating it, and renting it out.

While I am willing to learn, the facts are I do not have any renovation/construction experience. I am wondering, have any of you purchased a newly renovated property and rented it out?

I see some houses for sale that have been renovated, and on the market for over 2 years. It doesn't seem like there is a demand for people to buy these houses in this neighborhood (big military town seems to promote more rentals). I have watched the price on one house go from 60k down to 40k. Do you believe there is an opportunity to purchase and rent a property like this?

Look forward to hearing about your thoughts and experiences!

Thanks!

Julie

Matthew Paul · Answer

If a rehabbed house has been on the market for 2 years , there is only one reason .

They want too much

Jonathan Taylor Smith · Answer

Hello @Julie Desautels - I buy highly distressed properties in desirable areas and rehab them into cash-flow positive rentals (BRRRR). While I now take on 6 figure rehabs, my first was $9K for which my original estimate was only $6K. I grew $10K or $20K per project before topping $100K, so just find a property that does not need much work at the start - and grow your experience and your team along the way.

For a BRRRR deal to be successful, it is critical that you know the rehab cost and what the completed property will rent for. And if you can find already rehabbed properties that you know what the rent will be, there is certainly nothing wrong with that - as long as it will be cash-flow positive.