3 Mistakes New Rehabbers Make
Q: My business partner and I are doing our first rehab. Do you have any tips to help us avoid mistakes other new rehabbers make? Carl, Point Pleasant, NJ
A: Here are 3 mistakes that new rehabbers make that you should try to avoid: 1) underestimating rehab costs—no matter how many property rehabs you do, property renovations always seem to cost more money than you initially think they will, so it’s very important that you leave room for cost over-runs in your rehab planning 2) over improving property–when you rehab a property to sell, your goal is to maximize your profit which requires keeping your costs to a minimum. You should rehab a property to fit the character of the particular neighborhood where the property is located, but don’t overdue it—you can always spend more money on renovations, but those additional renovation costs won’t necessarily increase the after repair value of the property 3) the biggest and most common mistake new rehabbers make is mismanaging contractors. If you can’t manage contractors, you should be doing property rehabs. With any contractor, I strongly suggest you require they sign a detailed scope of work in writing with a payment schedule tied to the successful completion of milestones that are agreed to in writing before any work has begun.
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