In today’s market many people are deciding to either improve their current investment properties or buy a fixer upper to rehab (restore) and rent. While rehabbing was and still is a good investment strategy, to succeed and end up with a good cash flow you need to take it slow, develop a budget and—most importantly—stick to that budget no matter what.
Here are some points to consider when planning to rehab an investment:
- Draw up your budget, taking into account that there are always unforeseeable expenses while restoring any property. Make sure you budget in the cost of home insurance.
- Examine your property and draw up a prioritized list that details exactly what needs to be done to make the property rentable—no more, no less.
- Take care of serious issues first, like wiring, leaking pipes, roof repairs and installing smoke alarms. All of these will only protect your investment.
- Next, focus on improvements that will increase the perceived value of the property, like replacing kitchen appliances, updating the bathroom or painting the exterior. Make the rental look good by investing your money into things that potential renters care about.
- You can stretch your investment money and stay within your budget if you focus on what the property actually requires to be rentable and not what you would like to do with it. You can make further improvements at a later date. Right now it’s all about return on investment and how quickly you can start seeing a profit.
- Protect your investment with unoccupied property insurance, like that offered by Policy Expert, until the property is rented.
These simple steps—making a budget, sticking to that budget, working to increase perceived value and protecting the property—will make sure you spend your investment money wisely.
