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6 Important Lessons from My First Rehab

by Andy Martin   

My name is Andy Martin. I am a Project Manager for a construction company. I work full-time and run a window cleaning company on the side while looking for houses to rehab and flip.

I closed on what was to be my first rehab on March 1st. I purchased the home from HUD for $64,500. The rehab consisted of replacing the roof, HVAC units (no duct work), carpet, new ceramic tile, new kitchen appliances, new drywall in one room, new counter tops and new tile in a shower. There were a lot of miscellaneous things as well.

This ended up being a six-week project and a $18,000 price tag (including closing costs, Realtor fee, house payments while it did not sell, insurance, etc.).

We just closed on this house on the 12th. of August for $90,000. Total profit at closing: $7,500. (No where near what I wanted!) We actually sold to another investor who wanted to lease option it. One of the first things I read was that it was better to off a house that will not sell, than to keep it and lose money.

I know this seems like a lot of work for that amount of money. It was! I learned so much and I got the first one out of the way. I figured that it was $1,250 a week, which is not to bad. How much time would I have to put into my full-time job to get a $7,500/year raise?

Things I learned on my first rehab:

1. I heard of the 70% rule after I closed on it. I paid too much.

2. I was told to market it the minute I got it. I waited.

3. I fixed it up like I was going to live there. Spend less money.

4. We marketed it with a Realtor for three months. Then went with a "For Sale By Owner" magazine. (This worked GREAT) We should have done that first.

5. We figured on selling it for Fair Market Value. Should have figured under Fair Market Value.

6. We also hit a dead market the minute I listed it. Not my fault.

After all this, I still call it a Success Story because I did it at a time when the market was dead, and I still made money. I had fun and I learned many, many, many lessons for the next one. Now for a night of all I can eat sushi!

 
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