How to Get Started In Rehab Real Estate


rehab real estateYou want to rehab houses, but where do you start? We see the fix-and-flip “reality” shows that, somehow, manage to have no basis in reality. How hard can it be to buy a house, rehab it, sell it, and retire to a life of luxury on the French Riviera? On TV, it all happens in thirty or sixty minutes. Easy, right?

Before you start it is imperative to have your own financial house in order (See last week’s article). Jumping into rehab without a solid foundation will make it very difficult, if not impossible, to succeed.

Rehabs fall into three basic categories:

  • personal use
  • rental
  • flip

    Each type carries a different level of risk. My recommendation for most people is to start by rehabbing a house for their own personal use. It carries the least amount of risk since you will not have the added carrying cost of a second property. If you live in the house while you are renovating it, you just have your regular living expenses.

    There are other advantages to living is a house while rehabbing it. You do not have the same time pressure. When you are rehabbing a property with the intention of flipping it, you are losing a little piece of your profit everyday. Holding costs are a ticking clock, time is money. When you experience a delay, you lose money. If the market makes a quick sale difficult, you lose money. The risks associated with flipping are enormous. The current real estate market conditions just make it worse.

    Make It Your Own

    When you are renovating a house with the intention of flipping, you need to keep the end user in mind. This usually means making conservative choices that will appeal to the widest number of potential buyers. If the house is going to be your residence you have the ability to incorporate your own personal taste. If you want purple walls with a pink ceiling, then go for it. Rehabbing a house for your own use allows you to create a home that fits the way you live.

    You still need to keep resale in mind if you have any intention of selling in the near future. Determine what you resale timeframe might be and work with that in mind. If it is going to be a long-term hold you should do whatever makes you happy and fits your lifestyle.

    Learn As You Go

    No matter how much you study and prepare, first time rehabbers will make a lot of mistakes. It’s much easier to learn from those mistakes if you are not under the constant pressure of having to complete a flip. My first rehab was a major learning experience. I had the luxury of time. I was able to take the lessons learned and carry that knowledge forward into future projects. If that first rehab was intended to be a flip I would have lost a lot of money and it probably would have been my last project.

    Instead of trying to earn a million dollars on your first deal, look for one that can propel you to future success. Start small and keep the project within your ability. With each success you can move into bigger and tougher projects. As your ability grows, your profits will increase and your profits will soar.

    Happy rehabbing!

    I honestly think it is better to be a failure at something you love than to be a success at something you hate. – George Burns

  • About Author


    1. Pingback: Getting Started In Rehab Real Estate | The Long List of Odysseus Medal Nominees | Realtors and real estate, mortgages, lending, investments

    2. Good points. I think an extra word of caution is in order for flips… be careful. With banks tightening on loans and the average time a property on the market across the US is somthing like 75 days or so (I heard recently), I’d suggest rehabing a home you might also be able to profitably rent if worse came to worse.

      Steven Boorstein

    3. Connie Brzowski on

      Hey Rich~ how did I miss this one??

      Very good points and excellent article~

      BTW, if you run across that magical flip that puts you on the Riviera, be sure to give your old pals a call 🙂

    4. Great article, I couldn’t agree more. I have been flipping houses and 40 rental properties. I made all the mistakes on almost all of them, but the biggest tip I can give anyone is to control your labor and material expense.

    Leave A Reply

    Pair a profile with your post!

    Create a Free Account


    Log In Here