Now is the Time to Rehab

Posted by admin on Jun 13, 2012 in YouBuyHouses Blog | 0 comments

A buddy of mine owns a successful small business. 4 years ago he bought a new piece of land and stated getting bids on building an entire new facility there. The best looking bid came in right around 3.5 million. He starting hearing rumblings of the the economy taking a downturn so decided to sit on his project awhile.

A couple of weeks ago, he got the job rebid. The same specs, indeed, the same contractor came in at 2.6 million. He is pretty happy.

Times are tough, especially in the building trades. You may not be planning a big commercial construction project but even residential rehabs are being done cheaper than we’ve seen in years.

Let’s take a look at the situation: The real estate market in this part of the country is still depressed. Should you wait to buy until it recovers? NO! You should buy while things are on sale! Buying while prices are depressed and then selling when values recover is slam-dunk investing.

I’m not suggesting paying full price for anything, not even at the current lowered value. Investors need to buy at a discount of the current After Repaired Value. What I’m saying is if you buy a house now at, say 70% of its current value, fix it up, rent it for a couple of years and then sell at 100% of it’s recovered value…you will be grinning.

So, it’s smart to buy now. Check. It’s also smart to fix now. There are a lot if highly skilled guys out there looking for work. If you have the work to offer, you can get a great deal. I’m not suggesting cheating anyone or picking someone’s pocket. I am saying the law of supply and demand is going to work in your favor. You can get better work for less money than anytime in recent history.

Let’s take a minute to talk about negotiating with contractors. I think it’s a mistake to let the contractor name the number. I always show him the job in detail and then ask if he can do it for x dollars. That way I don’t have to work at moving him off of his price, he has to try and move me off mine, and he knows I’m serious about my number. By the way, all of our deals here at YouBuyHouses.com come with a professional Statement of Work that specs the job out completely including cost estimates. It’s easier for you and your contractors.

So there you have it, folks. Tis the season to buy and fix and then buy and fix another. This market won’t last forever, get in the game.

Stay Tuned…
Drew