Rehabbing is a great way to get started in real estate investing. Doing it properly will help you avoid becoming overwhelmed – and keep your budget intact. Here are six basic parts of the process that are consistent among successful real estate rehabbers:
Part 1: Before Work Begins
• Rekey or change out all locks (make extra key copies) and place a lock box on the front door. If the property is in a depressed area, board up the windows.
• Put all utilities in your (or your company’s) name and schedule them to be turned on the day you close.
• Getting the permits out of the way will free you up and help you avoid potential problems.
• Some work can begin pre-closing. Foundation repair, if necessary, is critical before doing any other work.
• If the property needs pest control services, have them come by before you start work.
• Have a plumber and electrician go through the property to completely shut things off before you begin related work.
• If the seller allows it, start tearing down cabinets, etc. Get a cleanup crew to pick up the debris. Sanitize the house.
Part 2: Roughing Out
• Replace plumbing under the house or route additional plumbing if necessary.
• Remove rotted framing and subfloor. If damage is structural, get the right permits and people to repair it.
• Replace damaged exterior doors, ensuring that they are to code.
• On a standard rehab, replace only those windows that need it.
• Prepare the exterior for painting or replace with siding. Replace and paint exterior trim, including soffits and fascia.
• Curled, warped or faded roof shingles signals a replacement job. Get a good roofer for extensive repairs. Replacing a few shingles, flashing or vents can be done inexpensively.
Part 3: Mechanical Systems
• Hire a chimney sweep to inspect and clean the fireplace.
• Have a specialist inspect and clean out the heating, ventilation and air-conditioning (HVAC) system.
• Have new plumbing and electrical installed to code. Be sure you have all permits and get the work inspected before moving on.
• After inspection, install insulation in exterior walls.
• Repair or replace driveway, patio and walkways.
• If the septic system needs repair, be sure it’s reported in the purchase contract and negotiate who is responsible for the cost.
Part 4: Unfinished Surfaces
• Replace or repair drywall in walls and ceilings.
• Replace the garage door if necessary.
• Examine and replace gutters and downspouts.
• Install wood floors, if worthwhile.
• Replace or reface cabinetry.
• Repair or replace interior doors.
Part 5: Finished Surfaces
• Paint the interior and exterior.
• Replace countertops with your chosen material.
• Replace flooring with your chosen material.
• Ensure that all plumbing is installed properly and leaks are eliminated.
• Install cover plates, jacks, lights, smoke detectors, etc.
• Install new thermostat and vents.
• Finish or refinish wood floors last, to minimize damage from traffic.
Part 6: Final Details
• Little additions, like doorknobs, hardware, house numbers, towel bars, etc. can add to the appeal – and the budget. Take care not to overdo it.
• Install appliances. It’s often cost-effective to work through one supplier.
• Install carpet, if any. Neutral colors are best.
• Have landscaping done after the major work is complete to prevent damage to the lawn.
• Perform final cleaning.
• If desired, a local designer is inexpensive and can help stage the property for extra appeal.
• Do a final walkthrough to ensure nothing is overlooked.
Many people get their start in real estate investing by buying a house wholesale or in foreclosure and rehabbing it. Following these key parts will help keep your enthusiasm up (and your budget down).
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