Rehabbing properties is more or less like
flipping properties to earn profits. Flipping involves buying assets below
market prices and sells it on higher prices to earn commissions. Real estate
investors usually purchase residential units for this purpose as prospective
home buyers prefer to choose a house that is spacious and well equipped with
all modern life amenities. The process involves quick fixing of major
structural issues followed by selling flipped residential unit as soon as
possible. In contrast rehabbing involves more efforts and thorough renovation
of house. The process starts with choosing a right house, which has strong
potential to make good profits.
Real estate investors purchase a
residential unit with the aim to evaluate total cost to improve property before
finalizing the deal. Experienced investors who are good at making such
investments sometimes prefer to carry out minor home improvement work
themselves but in some cases they pay money to handyman professionals to
renovate residential units for them. At the end, when all major issues are
fixed, investors can start searching for potential buyers by making online
advertisements or in news papers. Both
the processes are little bit risky and it is not a simple shortcut for everyone
to become a real estate investor. But only those who have right skills of
making profits with such real estate property deals will get success with such
property deals.
Rehabbing residential units has become a
hot choice among real estate investors in last few years. Media and online
marketing campaigns also play an active role to make it famous across the
world. Like all other real estate investments, house rehabbing also has its
pros and cons. Following are common advantages and disadvantages of Rehabbing
properties.
Advantages of Rehabbing Houses
Amusing
and Healing Experience
Several people might not consider it as an
advantage but it will always gives you good feeling and excitement to move the
house from a condition where it need some touch-ups to a house that contain
elegance and comfort. If you are professional real estate investor who love to
decorate houses in unique style and design then it will be a great opportunity
for you.
Chances
of huge profits
The activity also enables investors to make
huge profits as compared to wholesaling properties. As well as it also let them
earn big lump of money as compared of fixed rental earnings.
Flexible
for multiple Markets
Another major advantage of choosing
rehabbing houses is that an investor can implement this process in any real
estate property market whether the market is progressing or in loss. This real
estate investment has different approach as compared to others that are made to
earn profits when market is in fast progressing phase. Usually investors purchase
property units with the aim to earn profits when the market shows good profit
earning opportunities. Whereas investing in rehabbing properties, investors are
adding value to residential units to improve profits rather sitting idle and
wait till market recovers.
Flexible
for multiple Markets
Another major advantage of choosing
rehabbing houses is that an investor can implement this process in any real
estate property market whether the market is progressing or in loss. This real
estate investment has different approach as compared to others that are made to
earn profits when market is in fast progressing phase. Usually investors purchase
property units with the aim to earn profits when the market shows good profit
earning opportunities. Whereas investing in rehabbing properties, investors are
adding value to residential units to improve profits rather sitting idle and
wait till market recovers.
Disadvantages of Rehabbing Houses
High
Risks
It is considerably risky as compared to
other real estate investment options because real estate investors are spending
extra money to improve appearance and standard of living of a residential unit
you have purchased for rehabbing. You have to be very careful in choosing
residential unit in order to avoid failures.
Extra
Money is involved
Rehabbing properties means you are going to
spend considerable amounts of money. Investors have to spend money on renovating
homes in addition to price of purchase of residential unit. The best way before
making such type of real estate investments is to find what types of rehab
loans are provided by financial institutions. Check whether you are qualifying
for it or not. Try to obtain big reserve of funds in form of loan because you
may not be able to calculate total cost of home rehabbing unless you will start
the project.
Time
Involved
Real estate investors always try to reduce
time bracket of investments they are making. Especially if they are planning to
purchase a house for flipping or rehabbing, they attempt to complete all
essential maintenance and renovation work as soon as possible. Their primary
aim is to make profits, but usually such projects need more time from purchase
to sale. It may be possible you will not get any profits for six months or more
as it always takes more time to rebuild or renovate parts of houses.
Making investments in real estate sector
has gained tremendous popularity among investors across the world. Market
offers several types of real estate investments for investors. But investors
have to consider few important things like capital amount they can invest and
type or real estate investment. The best way to choose making a real estate investment is to do a little search about its pros and cons. It will really
help them to avoid risky investments.
