| Rehabbing
is taking a run-down, "ugly" property commonly known as a
"Fixer-Upper", and turning into one of the most beautiful
houses in that neighborhood, while creating equity along the
way.
Creating
equity by increasing the value of the property and then
turning that increased value into cash by selling or
"flipping" the property. Or you can just keep that jewel in
your portfolio of long-term investments as a rental.
If you keep
it as a rental you get maximum appreciation, stream of
income, and tax write-off.
How
Ugly is Ugly?
TAs a
rehabber you will be also exposed to rehabber's lingo. In
the business of rehabbing we have several degrees of
ugliness:
|
1. The
Ugly Duckling. |
|
|
This is
the type of house that is cute but doesn't have a lost
of curb appeal because is outdate but, minor repairs
will make this type of house the Cinderella of the
neighborhood. |
|
2. Smelly
Cat. |
|
|
Now we
are moving down the notch. This type of house has a
lot of things wrong with it including the fact that it
smells like dogs or cats were living inside and doing
their business. This type of houses require a lot more
bleach elbow grease, and work. |
|
3.
Junkers. |
|
|
Enough
said, everything that can go wrong will go wrong with
this type of property. Major remodeling job but you
can still come out alive with a healthy profit if you
bought it right (remember: buying right is the most
important step). |
|
4. Blower
Uppers a.k.a. Knocker Downers. |
|
|
May-day,
May-day, abandon the project! Starting from the
structure everything is bad. There is no way to make
any money in this deal, not even if given to you. |
What
is the Key to Rehabbing?
The key to
rehabbing is buying the property at wholesale prices (deep
discount) and turning into a profitable venture after
acquisition costs, expenses of repairs, holding costs, and
taxes are deducted.
Financial
Analysis Example
Whether you
intend to rehab your ugly house for a quick flip, keep it
long term, or live in the house, you want to be able to
profit or build equity. You want to be sure that, at least,
your costs will be returned by an equal increase in the
value of the property.
Our
beginners software package,
Quick Estimate
Express,
will allow you to determine the viability of any prospect
property that you may find to engage in this venture |
