7 Tips for Reaping Huge Profits as a Rehabber in Today’s Slow Real Estate Market

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While there are several ways to profit in real estate (short sales, landlording, multi-family, subject 2, lease/options, wholesaling, mobile homes, etc.), rehabbing is still the most popular. I presume it’s because investors get excited about it by watching shows like “Flip That House” and “Property Ladder” where people go in, buy a property, fix it, resell it, and make the big bucks.

I also presume rehabbing is so popular because it enables investors like you to reap large profits in a relatively short period of time. But the truth is, it can also be dangerous if you don’t know what you’re doing, especially in today’s buyer’s market. To help you ward off any problems, I’m about to give you “7 Tips for Reaping Huge Profits as a Rehabber in Today’s Slow Real Estate Market”.

But before I give you the tips, you must know that rehabbing is being seriously affected in today’s market, both positively and negatively. First, the positive: There are record numbers of foreclosures that you can scoop up at record low prices. This is a biggie! Now for the negative: In most parts of the country, there are fewer qualified buyers and higher inventories, thus making it tougher to re-sell your property quickly.

Folks, you must ADAPT to this new market! And here are 7 tips for doing just that…

Tip #1: You need to buy at a deeper discount. If you are buying properties at 70% to 75% of value right now, you need to buy closer to 65% of value so that you build in enough room for profits when you turn around and resell the property. You say Doug, “How am I going to buy at 65% of value? I have a tough time at buying 75% of value.” Truth is, it’s becoming much easier because there are so many more motivated sellers out there and either the same number or even a shrinking number of investors to have been scared away by the current market conditions. There’s less competition. This is your chance to capitalize.

Tip #2: Second tip, buy houses that are 20% above or below the median value in your market. This is where the greatest pool of buyers are. If you are worried about turning around and reselling a property, you want the greatest number of buyers. Just makes sense.

Tip #3: Focus on desirable houses in desirable areas. These houses are always easier to sell no matter what the market conditions are. In most areas, a desirable house would be one that’s 3 bedrooms, 2 bathrooms, with decent size bedrooms and bathrooms. I’ll let you decide what’s decent by comparing properties in your market. A couple of indicators of a desirable neighborhood: 1) a low crime rate, 2) good schools.

Tip #4: Now onto the selling side. In most cases, you’ll need to sell at a discount in order to sell quickly. Five to ten percent off is a good guideline. That may sound like too much of a discount, but if you look back at your purchase, you’ll see that you actually bought the property at a lower amount. And since you’re selling it at a lower amount you still preserve your profit margin.

Tip #5: Make your property as attractive as possible on the resell. This often means staging your property, and making sure that everything is completely finished. Nobody wants to buy an incomplete property, especially in a buyers market, when they can go to your neighbor down the street and buy a property that’s completely rehabbed. By staging, I mean bringing in furniture and decorations. It may cost $1,000 or $2,000 extra but often times it can make the difference in a quick sale versus a slow sale.

Tip #6: Get your house on the MLS with a Realtor as soon as possible because the MLS provides you with the greatest amount of exposure and the largest number of qualified buyers. You may hate Realtors, but good luck selling the property For Sale By Owner unless you are very experienced at it. Even then, you’re going to have a tougher time.

Tip #7: The final strategy for profiting in this new market as a rehabber is to take your calls from buyers live. I know it’s more time consuming but you don’t want the best buyers to get away from you. That’s definitely something you want to look into as opposed to letting all these potentially hot buyers hit your voicemail. The longer you wait to call them back, the cooler they get, and the more likely it is that they’ll buy from someone else.

Well, that’s all for now. These tips should help you not only survive, but thrive in the new marketplace. And if you insist that you don’t want to rehab properties until the market settles, simply focus on wholesaling, rentals, multi-family properties, subject 2 deals, lease/options, and/or mobile homes. You can find plenty of deals to wholesale, take over subject 2, lease/option, and do short sales on in the Motivated Sellers section of myHouseDelas.com.

All good investors have more than one tool (such as rehabbing) in their tool belt, and so should you!

Until next time, happy (and profitable) investing!

Doug Smith
President
myHouseDeals.com

P.S. If you haven’t signed up for a 30-day free trial to myHouseDeals.com, do so now by going to www.myhousedeals.com/freetrial. I’ve recently added $1,253 worth of free gifts that you get when you sign up. I know you’ll love (and learn a lot from) them!

P.P.S. Bonus Tip #8: I’m listing this one last. But it’s probably THE most important tip. Learn how to do short sales NOW. We are experiencing record numbers of foreclosures across the country. Most of these homeowners want to sell before they lose their home, but they have NO EQUITY. The bottom line is that current market conditions make this is the best time in recent history for investors like you to reap huge profits by negotiating short sales on these properties and turning around and wholesaling them to other investors. The whole process of finding these sellers, negotiating a short sale, and then wholesaling them to another investor (with no risk involved) is outlined at www.myhousedeals.com/shortsalesystem.

Doug Smith

Author: Doug Smith

MyHouseDeals was founded in April of 2005 and has since provided information on thousands of bargain-priced properties with over $7 Billion in equity (and growing!) In addition to property lists, we help investors succeed by providing valuable tools, resources and education. Most of the properties on MyHouseDeals are single-family houses. Many of these properties are wholesale deals, which are for sale by other investors. Others are motivated seller leads, which are for sale by homeowners who are often in a bad situation. These properties are typically discounted by far greater amounts than bank foreclosures.

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