Getting a rehab loan and buying property should be a business transaction, not an emotional roller coaster. When buying property—especially with a loan—avoid letting how you feel about a property effect your judgment. This is not to say you must not actually like the property and have some sort of attachment to it, but do not fight to gain a loan too hard or you may flop.
You must calculate all related expenses for a property before making an offer on a loan. Investors will do their own investigation of the property to ensure it is a reasonable venture. It is always safe to assume the costs and time duration of the repair process will be more than you anticipate. Failing to do so can lead to a failure in the rehab loan. Nearly every single feature of a house is likely to need repairs, this means everything between the roof and the foundation may need work to keep the property up to code.
Never just go by what you and the investor can see. There are problems that even home owners do not realize while living in the property, but they may try to hide problems from you. Things like mold, termites, and rotting wood can be hard to detect without a full property inspection. It is never a bad idea to have someone conduct a thorough investigation but if you cannot get that done before you purchase the property, do not be afraid to ask questions and look around and behind everything you can.
It sounds crazy, but you can do too much to a property before selling it. When rehabbing a home, it is important to make it slightly more tempting than the surrounding properties so you can justify a higher sell price. Compare your property to others in the area and the market and find one or two unique things you can include in your property as a selling point—but keep it low budget when possible.
You may be tempted to save money by doing some of the repairs yourself. This is usually a bad idea because you are probably not a professional. Let the pros do their job so it’s done right the first time. Upon hiring a contractor, always practice good business skills. Do not pay them before the job is finished, this is not to say they only get paid when the entire property is repaired. It is best to set points at which they will get paid upon completion of certain tasks.
On a final note, always make sure the property is inspected upon completion to ensure you are not missing something and even once that is accomplished do not fail to keep the property well maintained while it is on the market.
Rehab loans and rehabbing property is a wonderful investigation as long as you’re careful.