Rehabbing: Fixing Up Cosmetically Distressed Properties

Excerpt from Millionaire Real Estate Mentor by Russ Whitney

It’s a rare property that won’t need some sort of fix-up before you can either sell it or rent it. Plenty of people use this as an excuse for avoiding investing in real estate, but if you can see the upside, you’ll realize that knowing how to do fix-up can make you millions on deals others pass up. One of the most basic ways to invest in real estate is by buying cosmetically-distressed properties, fixing them up, then either selling them for an immediate profit or renting them for the long-term cash flow and for building equity. This is how I got started, and it’s how countless numbers of investors who are millionaires today got their start.

According to Russ Whitney, there’s another important reason to know about rehabbing real estate. You should be able to discount the price of any property by the repair estimates—and in many cases by more than the actual cost of repairs, because the amateur eye rarely sees that just $1,000 in paint can add $15,000-$20,000 in retail value. So whether you’re buying to rehab or for a quick flip, you need to know how to estimate repairs. Practice doing estimates every chance you get, even on properties you’re not interested in buying. The more you do it, the faster and more accurate you’ll be. You’ll negotiate better deals when you can honestly show sellers how much things cost.

When I [Russ Whitney] first started, I wasn’t at all handy. I didn’t know how much materials cost, didn’t know how to do repairs, and didn’t know how to put together estimates. But I learned. I had contractors give me estimates, and I would meet with subcontractors to pick their brains. I would have several subcontractors give me an estimate on the same job so I could see what was different and what was the same about their bids. It didn’t take me long to figure out that most estimating is common sense. I realized that I could clean, paint, and do basic fix-up work and save thousands. I could never do plumbing, electrical work, or roofing, so I subcontracted those jobs out and still made huge profits because I understood how to price them. Eventually, I started subcontracting everything out, because my time was better spent negotiating real estate deals that would net $15,000 or $20,000 rather than saving $10 per hour on labor costs.

Whether you’re a skilled craftsperson or have ten thumbs, whether you love working with your hands or hate to get dirty, you can rehab properties and significantly increase your profits.

If you found this excerpt from Millionaire Real Estate Mentor valuable, you’ll want to read the entire book. In his always practical, easy-to-understand style, Russ Whitney explains how to achieve financial freedom through real estate investing. To get your copy, visit www.russwhitney.com.