Due to the popularity of rehabbing homes, this exit strategy can be an intimidating prospect for aspiring real estate investors. However, be careful not to let common misconceptions prevent you from pursuing your goals. Before you decide on whether or not you’re ready for this, let’s get a few rehabbing home FAQ’s for newbies to guide you with.
1. What Is The ‘70 Rule’ In Home Rehabbing?
The 70 rule in house flipping can determine the maximum purchase price of a given property by accounting for repairs and closing costs. To calculate it, multiply the after repair value (ARV) by 70 percent and then subtract estimated repair costs.
2. Can You Really Flip Houses With No Money?
It is entirely possible to rehab houses with little to no money; you need to be ready to pursue creative financing options. Investors can rely on private money, a business partnership, or even hard money lenders to finance deals.
3. How Much Money Do You Need To Start Rehabbing Homes?
The money needed to start rehabbing houses will depend on your financial situation and the real estate market. Keep in mind there are a number of sources to help estimate costs and raise capital.
4. Do You Need A License To Flip Houses?
There is no specific license to rehab houses. However, regulations will vary depending on your state. There are also a number of certifications investors may find helpful, such as a contractor’s license or real estate license.
5. What Is A ‘Scope Of Work’ In Home Rehabbing?
A scope of work is an essential document that carefully lists the projects to be completed on a rehab property; no property rehab checklist should come without one. One might even think of a scope of work as a “home rehabbing checklist” of sorts that helps the investor communicate to contractors exactly what needs to be done and how. The scope of work document will take this list further by specifying exactly how each line item is to be repaired or rehabbed, with detailed instructions on how to do so, including what materials to use.
6. How To Locate A House To Rehab?
Many investors will tell you the hardest part of successfully rehabbing a property is finding the right house to flip. The reasoning behind this is twofold. Housing markets can be extremely competitive, and you need to make sure the purchase price is low enough that you can still turn a profit after covering the cost of the rehab. Locating the perfect property can be tricky, but the process will fall into place as soon as you learn where to look. Be sure to have your financing lined up as you begin looking for potential properties.
7. How To Choose A Reliable Contractor?
If you are new to the real estate world, you may try searching for house contractors to help you on rehabbing the properties you’ve selected before you purchase a home. And for each property, get a bid from at least three contractors. Ensure that a contract of agreement is signed upon choosing the right one.
Finally, you may seek out advice and knowledge from quality resources. Ideally, find a mentor that can show you the ropes. Having someone to turn to when you’re reaching your breaking point will be extremely valuable!
If you need more info on rehabbing home FAQ’s for newbies, talk to us – CPD Homes, LLC! We are buying houses in Cleveland, and have been helping families and homeowners since 2012. We’ve been working with home sellers dealing with – inherited properties, divorce, behind on mortgage, major repairs needed, sudden move, or for whatever reasons why homeowners sell their homes, CPD Homes is here to help. We buy houses in any condition and all price ranges! So call us today to discuss your property at 216-619-4387 – or click HERE to drop in your information and we will get back to you with a CASH offer! We are here to assist you!