Real Estate Entrepreneurs

 

Home rehabbing investors are individual entrepreneurs who find housing properties that need rehabilitation. Their sole purpose is to purchase the property, fix it up and refinance it. House rehabbing can be very lucrative if the properties are chosen wisely and the financing is right.

 

Without proper financing, the rehabber's ability to act quickly, purchase the property and renovate it can be severely limited. There are different standards and strategies that real estate investors use when evaluating properties. The following standards are judged for the worthiness of any rehab project:

 

You should look for the worst house on a decent block ...

 

1) Whether your strategy is to "flip" properties, or to hold them for their rental cash flow, it's important to be able to draw potential buyers, or strong potential tenants, as quickly as possible. Therefore, you should look at properties on streets that are maintained properly.

 

2) Make certain that there is no structural damage to the property. That could be a fatal blow to your investment.

 

You make your money when you buy a property, not when you sell it!

 

There are many formulas used for the successful purchase of a rehabbing project. There must always be a comfortable cushion between the purchase price and the selling price of investment property. This cushion price will help you achieve a successful investment, even if you have repair cost over-runs or hold on to the property longer than you had anticipated.

 

Every day that the property is not sold or rented comes right off your bottom line. The interest, taxes, insurance and utility bills compound each day. Buying the property at the right price will protect you from Murphy's Law.

 

What is a "hard money" or "rehabbing loan"?
"Hard Money" loans or "rehabbing loans" as they are sometimes called refer to non-conventional real estate loans. They are usually funded by private money sources and specialty lenders. Interest rates and points on such loans are usually higher. Terms usually range from 3 to 12 months. Hard Money loans have one basic requirement. There has to be some substantial equity in the property to give the lender a reason to invest their funds in an otherwise risky venture.

 

So, why would you utilize a hard money lender? The property to be purchased might be presently vacant and in need of repairs. It may be older property in a failing neighborhood which has the potential for revitalization. It may be a foreclosure and can be purchased on a short sale.

 

Or you may just need a quick closing to secure a property before you find an investor/rehabber to which you want to wholesale the property to.

 

Or you may want to purchase a run down piece of property, rehab the property, and refinance it for rental income. In all these cases, you would need a hard money loan because conventional financing is just not an option or it would take too long to secure.

 

"Hard Money" is just a cost of doing business and an effective method of doing business as a real estate investor.