Starting in rehabs
I have made a few posts regarding my intentions down the road through real estate investing. I would eventually like to do rehab homes while managing my rentals. There has been much said for focusing on one thing and devoting all my time to being successful at a particular endeavor. That I do agree with. BUT, how do rehabbers exactly get started? Do you shadow other rehabbers on their projects? I am just trying to get a path down and am having a hard time understanding how to get to rehabs. Do I just start there with my savings? I do not plan to be a wholesaler but I notice some (maybe most) rehabbers do some wholesaling deals when the opportunity is presented.
Any response would be greatly appreciated.
I would highly recommend reading books, following RE investor's blogs, read through threads on bigger pockets, attend local AREIA events, research your market, take a local investor out to lunch..... there is a ton of ways to gather information and learn this business.
Once you spend some time researching and reading, you'll be able to start putting the pieces together by asking questions here.
In my opinion, the upfront time investment will reduce the risk with your $$ investment later.
I bought some of the cheaper "Guru" courses and got some basic knowledge. I have learned more from Bigger Pockets though.
Justin made some good points. I will add if you are married, make sure your spouse is on board. I lost mine's support after loosing on my first rehab. It cost me about 2 years to get her back on board.
Don
Jarred, I learned a ton from reading Bigger Pockets and dozens of books that I bought from Amazon and Ebay. I started out with buying houses from my savings and then got a few houses with a loan. Flip houses and reinvest the profit and keep repeating while adding rental houses to the mix.
@Sanjiv Neal
That is exactly my game now. I don't look forward to being a landlord. But, my wife and I are looking at carreer changes. I think if i was full time at it, things would work out better.
Don
Steep learning curve.
Expensive hidden costs.
Always 10 times more to do than it looks like.
Costs spiral fast.
Jarred, I'm a bit new to the forums but I read your post and wanted to share my thoughts... Getting into rehabs can be made easier with a solid contractor who is a team player and executes his role efficiently. You can find the best deal ever but if your contractor is working with only himself in mind then expenses can rise through the ceiling especially when you put value on your time.
Also being able to get houses in desirable areas at discount prices is very important. Don't make the mistake of rehabbing a property near your home for the convenience factor if your local market is not desirable.
If you buy and rehab a property but it's in an undesirable area you will have a difficult time finding a qualified buyer who can cash you out. Instead renting or owner financing (I prefer owner financing) become the only real options and both will take you a long time to reacquire the capital for the next project. I'm speaking from experience here, this is exactly the position I find myself in currently.
My advice would be to find a good contractor, a desirable market, funding for the purchase and rehab, and then the property.
Staying active here at BP Nation and reading and posting in the threads is a great start to any RE education. Coming to the BP Summit in Denver is yet another great step in the right direction!
To get started in rehabbing, you need to know what you need to know and then learn it. There is a lot to learn, but it is not rocket science.
Here is a starting point for you, research the how, where and why and then apply it:
1. Building your team
2. Property and market analysis
3. Funding your deals
4. Estimating repair costs
5. Hiring and managing contractors
6. Entities and Insurance
7. Contracts and Negotiations
8. Exit strategies
Several people have asked me about the details of item 1 above, here they are for the public:
1. RE Sales Agent (who will run comps, give opinions of market conditions and property values, and list on your exit), escrow company, title company, rehab team, including electrician, plumber, rough carpenter, finish carpenter, tile/stone installer & supplier, carpet installer & supplier, landscaper, cabinet maker, counter top supplier and installer (granite, cesarstone, etc), relationship with big box store employee in commercial sales (Lowes, Home Depot), roofer, RE attorney, CPA, RE agents who can bring you acquisitions (REo agents, short sale specialists, direct marketing specialists), and the list goes on.