One of the most common methods that real estate investors in the Denver area use to make a profit is doing what is known as a Rehab. Sometimes this is also referred to as a “Fix and Flip”.
A Rehab can be a very lucrative and fulfilling way to create profit in an up or a down real estate market. Or, it can be the biggest nightmare this side of Elm Street. Much of the outcome depends on your planning strategy, and the savvy of the professional advice you choose to enlist along the way. In my many years in the Denver real estate market, I have noticed a few surefire ways to mess up a rehab, so here they are for the using, free of charge!
Choose a rehab project based solely on the recommendation of your (out of work) brother in law.
Recording every episode of Extreme Makeover does NOT make you a rehab expert. Be careful of well meaning advice that is based on opinion. You will do well to search out experts in the Denver area for their professional advice.
Purchase a rehab project without having a firm grasp of comparable sales.
Rehabbing is a numbers game, so make sure you know the numbers! You will want to get comparable sales from the Denver area MLS to look at data based on location, size, location age, Days On Market, finishes, number of bedrooms and baths and location. Did I mention location?
Choose paint and finishes because your aunt thinks it’s “cute”.
When a Fix and Flip project is ready to sell, it needs to be attractive to your target market. Colors and finishes must be chosen based on information of this target market, not opinions of people who do not have a clue. (see above item #1)
Project Costs- Choosing to “just wing it” instead of creating a firm plan.
Your cost WILL tend to run higher than planned. If you do not keep a very firm grasp on the numbers, you will end your rehab career as quickly as it started. Seek advice (hyperlink to Facebook or something) on the big money gotchas.
Neglect to find a good Denver area Realtor for advice on re-sell strategy.
Professionals are called that for a reason. They make money, and help others to make money, in their chosen field. A good Realtor that can give advice on all of the above items will make you much more money than they will cost you. That’s a proven statistic.
Tags: Denver Real Estate Investing, Denver Rehab, Fix and Flip
