If you’re investing in rehab properties in the Baton Rouge area then make sure you read this blog post because it will give you the top 6 things you need to know about rehabbing an investment property in Baton Rouge…
Rehabbing investment properties can be fun and can make you a lot of money. But you have to know what you are doing, or be very organized to do well. As we all know, TV isn’t reality, and just because those people on HGTV are doing well, doesn’t mean you will.
Make sure you know these top 6 things you need to know about rehabbing an investment property in Baton Rouge.
Top 6 Things You Need To Know About Rehabbing An Investment Property In Baton Rouge
#1. Not Like TV
Tons of people we work with start flipping because they love watching the TV shows about it. The TV shows edit 2 month projects into 30-60 minutes, so they leave out A TON. They show you the big ticket items, the long odds, and all the big wins. They don’t show people scraping off wallpaper or doing drywall taping and mudding for 3 days, because it isn’t interesting. Just because it isn’t interesting, doesn’t mean it doesn’t need to be done. You will soon discover that there’s plenty of mundane work to be done.
The absolutely most important thing you need to do when you rehab is to build a plan to determine your time, your steps, the people involved, and your budget. This usually begins with a scope of work (SOW), continues into a budget, and then that gets turned into a schedule. Your plan needs to be detailed, accurate, and account for situations outside of your control.
Part of your planning process needs to accurately account for the cost of the rehab, including demolition, removal, new supplies, installation, and clean-up. There usually is more that you may not account for. What about builders risk insurance, garbage dump fees, permit fees, overtime for your team, and maybe a pizza lunch to keep everyone at the property for a little longer. These smaller ticket items add up.
Don’t skip the permitting process! This can seem like a costly and time-consuming step but if you skip it, it can actually be even worse! Take the time, build it into your plan, and stick with the process.
#5. Cost Of Downtime
Be aware of the cost of downtime. Many new rehabbers don’t realize how expensive it is to have a property that is not being worked. Every hour that the house sits empty is an hour longer that you are paying carrying costs and delaying your income. You have utilities, no rents coming in, insurance, property taxes, and often loan payments too!
#6. Expect The Unexpected
Perhaps the biggest surprise lesson that new rehabbers learn is that you should always expect the unexpected. There will always be something with each rehab that causes a frustration, headache, delay, or extra cost. You need to factor this into your planning and mitigate as much as possible but be prepared to deal with it – whatever it might be. You may open up a wall to fix a leaky pipe and find that there is black mold everywhere. Or take off siding and find termites. Things rarely go according to planned, and you have to be prepared for that and take it in stride.
Thinking about rehabbing? Good for you – it can be a fun way to make good money. However, it’s not like what you see on TV. So use these top 6 things you need to know about rehabbing an investment property in Baton Rouge to better prepare yourself for success.