Is Rehabbing Dead?

Question

In this current marketplace, I seem to notice that a lot of investors  are buying and holding more. Less seem to be retailing their rehabbed properties. Do you think rehabbing and retailing is dead, or should we be expecting a bounce back, or has it been effected at all? Let me know

J Scott · Answer

My take is that it used to be easy to make money rehabbing...the market continually went up, so if you waited long enough, you'd recoup your investment plus a profit...

These days, you have to know what you're doing to make a profit, so it's much easier to fail.  That means that while rehabbing is still a very viable strategy, it's higher risk.

All that said, rehabbing isn't rocket science, and I'm guessing that with some study and hard work, you can probably still be successful doing it in many markets...

Dale Osborn · Answer

If they plan on selling - they need to be able to carry back the paper on the property.

Will Barnard · Answer

Rehabbing will never die, it has been here for decades, and will continue, but as Jason eluded to, it is not as simple as tossing a dart at the board and waiting a few months for profits, it requires a good system, good contacts, and the ability to crunch teh numbers properly.

Almost all I do is rehab flip to retail buyers here in CA and will continue to do so. The real key is in the relationships you form. Those who are successful have good relationships with the right people and also have good systems in place.

Timothy W. · Answer

One market I know of that's moving is creating cash flowers out of dogs.  You have to do this right but you can take some dogs that can be bought for nothing, but some low cost rehab in to them and tenant them out for decent cash flow and then sell the whole shebang.  I've done a couple of these here and there.

Dale Osborn · Answer

The main reason there is a lot of holding going on is due to the number of foreclosures on the market. It is driving down the prices so comps for similar homes brings your sales price down to a level that does not make money for you. Therefore, you hold onto it - rent it out waiting for thr market to change. When prices are back where it pays to sell again - then these will hit the market. Here in WA there are new homes that are being sold for less than what some of the older homes in the inventory are selling for. A family member bought at $247K and homes similar are selling for $190K now (2400 SF). Yet a new home (3000 SF) is being advertised on billboards along the side of the road starting at low $170Ks! Best to wait it out until prices are much better.

Joel Owens · Answer

You have to buy right so you don't tie up your capital long term.

Some asset managers at banks are not currently looking at FHA,Conventional,or VA.They don't want hard money tied into LTV conditions.

Rather than taking a chance  on finance they want a cash buyer who can close with 100% certainty before the end of the year.

When next year hits I am sure the Asset Managers won't mind taking a risk on financing for a longer closing time.

Mark N.A · Answer

Along with knowing what you're doing, there's also a correlation to population and demographics.

I do not live in a 'big city', and many wannabe rehabber/flippers around here are now reluctant landlords or undergoing foreclosure.

Prince Amos · Answer

Thanks for the feedback...Love it-
Yes I do believe rehabbing is alive and well-but make sure your numbers are right, and you know what your doing!
Yes its fun to make something a beautiful, and make a distressed property, a new home for a family-its the giving spirit thats makes it awesome. But (yes a big but at that)
don't bite of more than you can chew.Exit strategy first-
followed buy careful planning- you can make it happen!

Ted Harris · Answer

Appears some areas still offer rehabbing as a viable business model but for the most part, buy-and-holds more popular especially with depressed home prices elevating investor returns when compared to CD's, stocks, bonds, etc.

Account Closed · Answer

I'm not a rehabber, but I personally know of a number of local rehabbers doing alright.  I think there are markets that are more favorable for rehabbing, but if you buy right and have a good buyers list I think you can make a living most anywhere.

Is Rehabbing Dead?

Most Popular Reply