Rehab Pros and Cons

Rehab Pros and Cons

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A home is acquired with considerable equity but needs improvements in order for a retail buyer to purchase it. The improvements are made and then marketed and sold to a retail buyer

Pros of Real Estate Rehab:
•Ability to make large chunks of cash if done properly
•No tenant issues
•Major roles in the process are able to be contracted out to others

Cons of Real Estate Rehab:

•Managing contractors can be difficult if not educated properly
•Exposure to risk is higher due to usually having to finance the property and/or put money down
•Many feel forced to rehab the property themselves, which takes them out of finding, locking up, and closing on other deals
•Credit is pulled on all loan applications for regular financing, and for most hard money as well. Although with hard money lenders credit is not as much an issue, they usually still want to see strong finances.
•Unforeseen costs and delays can cut profits
•Longer time between start to finish due to rehabbing and marketing time

Marketing Advice of Real Estate Rehab:

•Find several wholesalers who can regularly provide quality deals.
•Look at online bulletins and newspapers for distressed sellers.
•Bandit signs in high investor activity areas.
•Post-it Notes, direct mail, postcards in high investor activity areas as well.
•Realtors who know investing can be a powerful resource and can provide potential deals through MLS (Multiple Listing Service


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