Whether you’re a real estate investor or a homeowner, the chances are that there will come a point in time where you have no choice: you need to rehab your home. Thus, it’s one of the more commonly asked questions in the real estate world.
If you’re looking to sell your house, potential buyers are going to want to know that it’s been well-kept throughout your time living in it. Dilapidated shingles, a moldy roof, or even a rotten staircase to your front door can be a turn-off to a lot of people. This is a shame, and it doesn’t have to be that way, because you can make more of a net gain by paying to fix any problems and then selling the house for a nice profit, as opposed to your lack of interest in fixing your house driving the price down.
Here are four tips on how you can rehab your home:
Evaluate the property
In terms of evaluating a house with the goal of rehabbing it, this calls for far more work than simply walking it through once or twice. For a true evaluation, you’ll need a professional inspector to help identify issues with the house that need to be addressed. Usually, these inspectors are looking for deeper issues than mere cosmetics, such as plumbing, heating and air conditioning, and the house’s foundation.
Stick with the 70% rule.
In real estate, the 70% rule states that the person rehabbing the house should not pay more than 70% of what the house will be worth after the rehab is complete. This is also known as the after-repair value. Essentially, it means that if you’re going to rehab a house, your costs to do so should not exceed 70% of what the house would sell for after you’re done with the rehab project. Failure to adhere to this rule could leave you in the red when it’s all said and done, and nobody wants that!
Work from the inside out.
Sure, it helps make a good first impression to have a beautiful exterior of your home if you’re trying to sell it, but if your house doesn’t come equipped with functional plumbing and air conditioning systems, that sleek look isn’t going to be of very much value. Most of the costs that come with rehabbing a home are related to fixes inside the house, and these are the most important fixes of all and they include everything from the flooring and walls to the very foundation of the house. So, make sure to allocate the majority of your budget to fix your house’s interior, and then use what’s left to tidy up your roof and sidings.
As is the case with most things in life, your likelihood of a miscalculation is drastically reduced if you just take a little bit of time to double and even triple-check all your improvements and adjustments. Most of the time, you’re likely best off having the professional inspector do a final walkthrough to confirm everything beyond a reasonable doubt.