2020 has been a year of great uncertainty and loss. The aftermath of the economic crisis unfortunately meant the foreclosure of thousands of commercial and residential properties.
This has also led to a rise in the number of distressed properties, which means that if you’re a real estate investor, you could potentially find some real estate gems. Just because a property is selling at a low price doesn’t necessarily mean it won’t be lucrative. Here are some tips for choosing a bankable rehab property:
Look for a property you’d want to move into
This doesn’t mean you have to look for a new home. Whether you plan on flipping the property or just adding it to your real estate portfolio, it needs to be in a reasonable condition. Choosing a property that’s run down means more time and money spent on bringing it to a usable condition. Rehab properties attract buyers and tenants, so you might want to reconsider your intended use for the place.
For larger homes that are meant for families, consider the location as well. Access to parks and shopping areas is important. And if you’re looking at a commercial property, you need to make sure the location is suitable for the kind of tenants you want to attract.
Always get an estimate
Whether you plan on paying out of pocket for the repairs on the rehab property or you require a loan, always get an estimate from a contractor before taking the plunge. You could end up buying a property that requires more invasive repairs than you had anticipated. A contractor will also be able to give you valuable advice on whether the property even is worth the effort.
Short term rehab projects are the better choice
When a property is undergoing repairs, it isn’t generating any returns. The longer the repairs last, the longer it takes to make any money from the property. Always opt for properties that require repairs that can be completed in a short amount of time. After all, you need to take time value of money into consideration as well!
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