Secrets of Rehabbing Real Estate

Does real estate rehabbing appeal to the adventurous handy-man in you? Rehabbing refers to the rehabilitation of a building. A person who does rehabbing is called a rehabber.

Rehabbing can be very profitable. It can also be fun and rewarding on many levels. However, rehabbing is not easy and requires knowledge and experience to be truly successful.

Rehabbing tips:

One of the most important parts of rehabbing is learning to determine what repairs a house needs and to establish the costs of the renovations.

The plumbing and electrical systems, the roof and the structure/foundation are areas with the potential for very expensive repairs and will all require permits for rehabbing.

• Plumbing – Open the cabinets under the bathroom and kitchen sinks. Are there any signs of leaks; warped flooring or discolored areas? Inspect around showers, toilet and bathtubs. If the house has a basement, inspect the area directly beneath all sinks, tubs and toilets.
• Electrical– Does the house have a fuse box or breaker box? Are the wall or outlets two- or three-pronged? If there are any exposed electrical wires, are they cloth covered or sheath covered?
• Roofing– Are any shingles missing? What type are the shingles and do they meet current building codes? Inspect the fascia, soffit and gutters for wood rot or termite damage. Inside, look at the ceiling (or in the attic) for any water stains.
• Foundation and structure– Walk around the exterior of the house and look for any cracks or gaps in the foundation. If you suspect structural or foundation problems, hire a specialized inspector.

The next areas to consider are often referred to as “cosmetic” repairs.

• Does the house need repainted inside and/or out? Select neutral colors for both. A fresh coat of paint is well worth the expense in instant appeal for any potential buyer. Inside, paint the ceilings the same color as the walls, but in a slightly lighter hue; this makes the room appear larger.
• Cut down any weeds or over-grown lawn. Landscaping is essential for curb appeal. If the house looks like a jungle from the street, potential buyers might never stop to see the inside.
• Do the bathrooms and the kitchen only need a new coat of paint, or do they need a complete renovation? A nice kitchen is very important – women love nice kitchens and statistics indicate women are the primary decision maker in most real estate purchases.
• Does the carpet need to be replaced or just a good cleaning? If there is hardwood beneath the flooring, it might be worth the expense to remove the carpet and refinish the hardwood.
• Also look at the windows, doors, lighting fixtures, furnace and hot water heater. They may need to be replaced for aesthetics, efficiency, safety or compliance with local codes.

Many rehabbers use a detailed and itemized list when they are inspecting a possible rehabbing property. This eliminates the chance of overlooking a potential expensive repair and makes it easier to establish the total cost to rehab a property.

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