Okay so you have found your perfect house in need of rehab. You are ready to turn a profit. Here you go knee deep working with Contractors, Realtors, Private Money Lenders, Landscapers, Home Stagers, Investors, Inspectors, and Lawyers. Ugh!
Just be sure not to forget the most important person in a successful rehab… Your Buyer!
Just who is going to buy your beautiful work of art you have just spent the last six months working on? Before you even think about taking on a rehab project this should be the first question you answer. And waiting until you complete the project is not the time to ask it. Considering who will buy is by far the most important part of a successful deal.
Know Your Target Market – Who is your buyer? Young Professionals, Families, Active Adults, Second Home Snow Birds? Find out where your buyers are and how to reach them. Are there enough well qualified buyers out there for a home like yours? Doesn’t make much sense if your target market is young families and the neighborhood schools are far away or lacking in reputation and quality.
Know Your Pricing – Does your target buyer make the income needed to purchase your home. Ideally you want to be certain your property is priced, after rehab, well within the range of affordability for your buyer. Remember you are also competing with area rental properties. If you are priced too high, in today’s market especially, buyers may just rent instead of buy. You can use numerous websites to help with area prices, Trulia.com, Zillow.com and Realtor.com are just a few.
Know Your Area – How is the shopping? Young families will want to make use of area parks, libraries, ball fields, and recreation. Do your research online and find out where all the facilities are you will not only educate yourself but you can also use the information in your marketing and sales presentation. Drive around the neighborhood at different times of the day and talk to as many people as you possibly can who actully live there. You would be amazed, most people love to talk about their homes. This is the best way to get the real scoop both positve and negative!
Know Your Realtors – Try to choose a Real Estate professional who specializes in your target market. You should always choose a Realtor in your selling efforts; find a Realtor who specializes in your area. They can provide you with tons of information on income, crime rates, sales rates, comparables, shopping and schools. Remember most anything can be found online including the Realtors who do the most business in your area. Meet and interview two or three Realtors before you decide on one. Get to know what methods they use to market their properties, what is the potential sales potential for a home like yours. Ask them to be brutally honest! You do not want to find out your home is priced too high or the average home takes 8 -10 months to sell after your rehab is complete. A Realtor who specializes will know these numbers cold.
Know Your Competition – Have your Realtor give you a weekly update of all listing and sales of the homes in your area. Ask for the new listings, contingent sales, pending sales, short sales and foreclosures. You will also want info on New Home developments that are close by. Although any home or apartment in your area is considered competition it is best to focus primarily on a one mile radius. If there is not enough activity within a one mile radius then you may need to spread out from there. Your goal is to always provide better “value” than the competition.
Many rehabbers have extensive knowledge of building and remodeling because many of them are contractors. If rehabbing is your choice of Real Estate Investing I encourage you to develop a marketing and sales mindset which will serve you well when choosing your next project.
Remember the quicker you make the sale the sooner you can go on to the next deal.