Investment Property Makeover: A Budget-Friendly Rehab Blueprint

Investment Property Makeover: A Budget-Friendly Rehab Blueprint: One of the pricier projects a real estate investor can undertake is rehabbing investment properties. This undertaking can be overwhelming and tricky, especially for beginner investors. It consists of purchasing a property, renovating it, and selling it for full market value or renting it out. Rehabbing requires attention to detail and time to master. It remains one of the more lucrative investment options in real estate. That’s why investors flock to this type of investment.

Investment Property Makeover: A Budget-Friendly Rehab Blueprint

☛ Step One: Make an Offer:

The first step is to make an offer. This stage requires you to run the numbers on a deal to evaluate exactly what type of offer you can introduce to the seller.  It is the foundation of a good deal.  It is the secret sauce.  Here are 3 tips on making a good property choice once you have done the research on your target market:

☛ 3 Tips on Making a Good Win Win Offer

Remember, a win-win offer is about creating a deal that benefits both you and the seller. By understanding the seller’s needs, offering flexible terms, and showing that you are a serious buyer, you can increase your chances of making a successful offer.

💎Pro Tip: When doing your walkthrough of the property the seller or realtor may try to chat during your inspection.

  • At times they may try to talk to distract you from noticing obvious property defects.
  • Remember you are there to carry out a job, so make sure you are laser-focused.
  • Later that distraction can cost you $5000-$10,000! Excuse yourself and walk away from them and make sure to revisit the area that triggered the interruption.
  • Also, take lots of pictures, notes and even videos to avoid a second trip.

Remember time is not your friend so make good use of it.

☛ Rehab Cost

Rehab can cost anywhere from $20,000 to $75,000 or more. It’s your task to find a rehab project within your budget and skill set.

  • As a rule of thumb, it is a good idea to start by assessing how much capital you have available.
  • Especially, if you are borrowing funds for the purchase and rehab.
  • Lenders expect that you have a bit of skin in the game.  So expect to put in a deposit or have cash to play.
  • Once you know what your cash situation looks like, you can narrow down the size of the property and rehab project you can handle.

Here’s what the cost breakdown may look like on a few rehab examples.  (Note: These are national averages and may vary depending on where your market is located.)

If you are new to rehabbing, we suggest you start with level 1-2 rehabs. Build up to the other levels when you get some experience under your belt.

  • Remember the more hands-on you are the better prepared you will be moving up the line for your next few projects.
  • It’s crucial to add up all the costs of potential renovations before you put a down payment on a property.
  • Don’t let the dreamy idea of owning a rental property suck you in.
  • Instead, be brutally honest before you commit. Doing so may actually pay off in the long run and save you from making a mistake.

“If people are unforgiving upfront about assessing the costs of renovation, the value of the property and the neighborhood, and how much money they have, they can come out ahead and buy more house than they otherwise could ever afford,” Bradley Inman, CEO of, told This Old House.

☛ Common Fixer Upper Project Considerations:

☛ Most Common Rehab Projects

💎Pro Tip: try surplus and liquidation clearance building supply warehouses.

  • At times, you may find used cabinets sets for under $1500.
  • If you are planning to do a few rehabs in the next 12 months, it’s wise to visit these surplus warehouses.  So, you can stock up on cabinets and other used building materials.
  • It is a good way to save moving forward.

☛ How Long Does It Take to Rehab an Investment Property?

It can take anywhere from six weeks to six months to rehab an investment property.

  • There are several factors you can use to determine how long a project will take. 
  • That includes the size of the property, the extent of work, and how many team laborers.
  • To get a more concrete understanding of a rehab project, look at each of these factors before purchasing a given property.
  • Additionally, make sure you are on the same page with the contractor.
    • Make sure he can give you a good time estimate.
    • Using a “Scope of Work” report itemizes all the tasks to complete the rehab, but it also provides a complete time schedule.
    • Download the report below so you can use it on your next project.

Click Here for Your Our Property Rehab Checklist and “Scope of Work” Report

☛ Contractor Report Card:

Here are a few items to consider when looking for a contractor:

Once you’ve found several contractors, the next step is to have each one submit a formal project bid. This will enable you to handpick the contractor that best fits your needs and budget.

💎Pro Tip: Never…ever…ever give all your rehab funds to the contractor.

  • We had an investor that gave $75,000 cash to an unvetted unlicensed contractor.
  • They dropped off some materials at the site and were never seen again.
  • Even if you are paying with your own cash, you should always use the draw method of dispersing cash.
  • Every time the contractor completes one phase, you need to sign off on it, so they can move to the next phase.
  • Always use a bank check, check or pay by card.  NEVER CASH!!
  • Most professional contractors follow this system.

☛ 10 Rehab Steps to Follow

Follow these steps on how to rehab an investment property:

💎Pro Tip: Green and energy-efficient systems are in favor and will impact your investment returns.

  • Buyers will sometimes pay extra for a property with a low carbon footprint and energy-efficient systems.
  • Items like solar power, water reclamation system for watering the grass and other creative ways to conserve and reuse resources is a clever way to make an old house into a progressive one.

☛ 7 Property Rehab Tips for Newbies:

Rehabbing your first investment is no easy feat. You will feel like your are drowning sometimes, but that is normal.  Just keep moving towards the finishing line.   The following helpful tips are for your very first project:

☛ Rehabbing an Investment Property: 5 Mistakes to Avoid

As you gain understanding, you will become more secure with the methods of rehabbing investment property.  However, that may not make your first rehab any less terrifying. Read through these closing mistakes to avoid before embarking on your first investment property rehab:

☛ Final Thoughts

In conclusion, rehabbing investment properties on a budget is not only possible, but it can also be highly profitable with the right approach. The key is to prioritize, plan meticulously, and make smart, cost-effective decisions that add real value to the property. Remember, it’s not about how much money you pour into the project, but rather how wisely you use your resources to create a desirable property that attracts buyers or renters. With the strategies outlined in this guide, you’re well on your way to mastering the art of budget-friendly rehab. So, roll up your sleeves and let the transformation begin!

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