Uh, sure it is…

As experienced home flippers we have more than once come across that seller or wholesaler advertising their property as “No rehab needed” or “Move-in ready condition!” Sounds like a great deal doesn’t it? While we are sure there are legit houses out there that really could be purchased and resold with very little effort on the rehabbing end, you might feel like you are playing a game of “Where’s Waldo” instead of investing in real estate.

First, if a property needs absolutely no rehab (little or to none) and can be bought and resold for a profit, then why doesn’t the seller just sell it to a retail buyer at a higher price and leave out flipper? A good example is if a wholesaler says he has a property for sale at $50K that is worth $70K with no rehab. Then why doesn’t that wholesaler selling the property to a retail buyer for $70K and leaving flippers of the deal? This would make more sense in a business aspect. The very fact that a wholesaler is trying to sell for a lower price instead of immediately reselling the deal to a retail buyer for what he says it’s worth might be the tale tell sign you need to know that the isn’t as lucrative as they would have you believe.

Secondly, if the seller says that the house only needs $1-3K in repairs, they normally mean just “paint and carpet” rehabs. We have never found this type of a rehab. This is why we feel $1-3K rehabs are just a myth.

Part-Time REI, along with Bigger Pocket’s J Scott, would at the bare minimum do these rehabbing suggestions.

• Exterior Paint unless it’s vinyl or brick siding.
• Interior Paint is always a must.
• New Flooring in the shared living areas and bedrooms, vinyl flooring in the kitchen and bathrooms.
• New Appliances: Without appliances, a house probably won’t be able to sell with an FHA loan. Adding a fridge, dishwasher, microwave and washer/dryer isn’t that much more expensive.
• New Electrical Fixtures make an old house look updated.
• New Plumbing Fixtures can bring an air of renovation to an older house.
• Roof Maintenance-an inspector will catch roof issues
• HVAC Maintenance—keep them cleaned and maintained.
• A thorough cleaning is most important.
• New Light Switches, Outlets, Covers, Registers, Smoke Alarms, will change the whole look of the house.

Now, even a bare bones rehab with only these things would cost $10-11K with decent and insured contractors. Keep in mind that literally just doing interior paint and new carpet is likely to cost more than $3K for a typical 3 bedroom house. See where the whole “myth” thing is coming into play now? So, next time a wholesaler tells you that a house “only needs 1-3K worth of rehab,” a big red flag should be going up in your mind. And the flag is called the “no rehab needed” myth.

To learn more about Part-Time REI visit us at http://part-timerei.com/

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