how bad should the condition of the property be?

Question

Hi,

I have been wholesaling for a couple months now and I initially thought that properties should be in terrible condition for a rehabber to be interested. But, I have talked to a few rehabbers and they say they will do some light rehabs.

Can anyone provide some examples of a light rehab and how much a light rehab usually costs? What is the bare minimum of how much a rehabber is willing to spend on renovating a property and doing a cash-buy so that it is worth the time and effort?

Steve Babiak · Answer

I'm happy to do $0 in rehab -  I just don't ever expect to find any of those.  If you're selling to somebody who does fix and flip, they usually earn their profit by raising the property value above their purchase price via the rehab improvements - so if there is no need to rehab, the house should just sell retail to an owner occupant directly.

Robert Jackson · Answer

I am finding in my market, that if it a REAL good deal, they jump. It is so competitive, it's like they don't want to miss out

Andrew Massaro · Answer

Though not a rehabber, I am close friends with a guy that does at least 15 a month.  He tells me he wants a house he can be in and out of in 30 days.  That includes the purchase, rehab and close.

My experience working with, and selling to, rehabbers, they'll take anything if it's worth it.  However, most that I deal with do not want huge projects.  $10 - $40k is what I'm seeing...

J Scott · Answer

It's not that rehabbers don't want to do light rehabs, it's that they often aren't very profitable, as these properties have a much larger pool of buyers prior to rehab.  A typical rehab for me is $15-60K, but I'd happily do a tiny $500 rehab if I could maintain similar profit margins.  But, the margins generally don't exist in the nearly move-in-ready properties.

For me to make my desired return in my market, I generally need to spend at least $10 per square foot in rehab.

how bad should the condition of the property be?

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