Should You Begin A Rehab In Winter

Performance Property Real Estate Question

Q: Gerald, I have a fix and flip house under contract. Should I start the rehab now in the middle of winter? Larry, Old Tappan, NJ

A: Almost all challenges you face in life are situational. Whether you should start doing the rehab right now in the middle of winter depends on several factors including your cost of capital, your daily holding costs, the availability of electrical power at the property and labor availability. If your cost of capital and/or holding costs are high, it may make sense to get started on the rehab immediately because every day you wait is more money out of your pocket. Dilapidated properties often don’t have electrical power and doing the rehab and keeping the home warm enough for people to work in the home may be difficult although a generator may address that problem. However, running generators can be expensive so using one may increase your overall renovation costs. Lastly, there are contractors who don’t work in the dead of winter particularly if it is cold and there is no heat in the home you are going to fix and flip. Obviously, you’ll need to make sure you have contractors that are willing to work in winter and you need to find out what it will cost you–your labor costs may be higher in the middle of winter because there may be less available contractors to choose from. Thanks for your question, Larry.

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