Completing a successful Fort Worth rehab project is so much more difficult than most investors imagine. You have to find the perfect mix of the right property and the right improvements while keeping an eye on your budget and the quality of the work being performed. When everything comes together and works, there is plenty of profit to go around, but the slightest error or omission can cost you big time.
The good news is that in most cases, the errors you make are avoidable and will only be a bump in the road. Check out the four most common Fort Worth rehab mistakes below and how to avoid them.
Not Doing Due Diligence
The first step in any Fort Worth rehab property is the purchase and it’s common knowledge that you want to acquire the property as the lowest price possible. Unfortunately, sometimes in a rush to get a good deal, investors lose sight of what exactly they are buying and without proper due diligence, you could easily end up with a property that is nothing but trouble. Take a step back and understand everything that you can about the property. Never skip the inspection, unless you plan on completely knocking the property down because issues with the foundation, roof or mold are highly costly and incredibly time consuming.
Additionally, issues on title or with zoning can be a problem; an unexpected lien can take weeks to remove even if you have contact with the lien holder. When it comes to buying Fort Worth property, you should know everything about the property, the purchase history and the neighborhood. It’s far better to lose a deal or two doing due diligence than it is to purchasing a lemon of a property.
Setting an Unrealistic Budget
It looks pretty awesome when your favorite TV investor walks into a property and throws out a repair number, but that’s not realistic. You don’t get to see them visiting the property several times with their contractor before nailing down a budget, and if you are unrealistic about your budget, you will only hurt yourself. The best Fort Worth rehab projects result from a detailed outline before you even make an offer. Always keep a buffer to brace for any unexpected surprises and the resulting overages. With your buffer, your property should still have enough room for a potential profit.
Your goal with every Fort Worth rehab property is to improve it to a point where a potential buyer finds it desirable. Even though simply putting some work in and hoping for the best may be sufficient to complete the project, it won’t be enough to create a profit. The most successful and lucrative rehabs are those with perfect work quality. Luckily, you don’t have to break the bank for high quality work; often the little things are what the buyer notices most. Paying attention to the finishes in the living room, the fixtures in the bathroom, the flooring in the kitchen and how well rooms are painted are all examples of quality work that doesn’t have to be expensive. With poor quality or shoddy work, even the location and price of your property may not be enough to turn a profit.
Listing Too High
Once the work is complete, it’s time to sell the property and while it used to be enough to list at any price and wait for buyers to come in, that isn’t the case today – even in buyers’ markets. To get the highest profit from your rehab, you need to list at a price that is in line with the market. Many investors want to push the envelope and list above market, but in doing so, they lose the initial surge of interest. Listing too high results in real estate agents and buyers dismissing your property until you have reduced the price.
Unfortunately, it often takes weeks to realize you’ve made a pricing mistake and during this time, you’re still carrying costs on the property while other homes in your area are being sold. Take the advice of your real estate agent when it comes to pricing, as they give you unbiased truth about your property that you may be too close to see. Even with the most incredible improvements and amenities, to be successful, you need to list in line with the market.
Rehabbing is one of the most popular sectors in real estate right now, and it can be a great way to create considerable wealth. However, you need to know what you are getting yourself into before you do anything because the reality of rehabbing is far different than what you see on TV. Once you’ve done your homework, avoid these four mistakes for successful rehab projects.