Orange County Real Estate Investors say, if real estate investors have to make a decision about whether to prehab or into rehab, that is more than likely the first issue every Real Estate Investors faces if acquiring real estate property.
The Wholesale Deal – Orange County Real Estate Investors
Orange County Real Estate Investors say, if not able to get a Wholesale deal, the next step would be to determine an alternative exit strategy.
After doing a Prehab, it means to commit sweat equity to the property.
A Rehab is renovating the property.
A Real Estate Investor would do minimal effort, the leasing value of the property will be much more than what was paid for get the property. The visible appeal of a Prehab is at the ROI – Return On Investment – as it consists mainly of sweat equity.This would require paintingcleaning, small repairs and some landscaping. The resale value of a Prehab can instantly increase with a few slight upgrades and improvements, at times there’s little to no additional expenses.
Rehabbing entails purchasing a distressed property, it requires renovating it then selling at full market value. Though Rehabbing allows for large profit margins from Real Estate Investment, it also happens to be one of the very complex exit strategies and is normally booked for more seasoned Real Estate Investors.
Rehab deals normally fall into 3 categories.
- Personal Rehab – If you reside in the property while at the same time making advancements.
This by far offers the least amount of risk.
- Rental Rehab: A rental Rehab has similarities as a flip, this consist of making the necessary upgrades to be able to rent out a device into future tenants.
- Flip: This means to improve the state of the property to be able to capitalize on property value. But a flip necessitates to hold price, which sometimes eat away at your initial profit.
Orange County Real Estate Investors say, rehabbing is the very best deal for novice Real Estate Investors because it has minimal risks, while at the same time combining the speed and efficiency of a wholesale deal, in the end giving Real Estate Investors higher profit margins.
The decision to Prehab or Rehab many Real Estate Investors will have to make but it’s crucial to have an exit strategy before entering any Real Estate Investment deal.
When Real Estate Investors decide on an exit strategy, it provide a specific plan for each property and at the same time giving the Real Estate Investor a clear understanding of what the profit from the deal will be.
Real Estate Investors undergo a list to understand what aspects of a Rehab deal is perfect for them.
Real Estate Investor Go Through The Following Aspects:
- Full Price
- Contractor/No Contractor
- Materials – Supplies – Logistics
- Different Permits
Real Estate Investors Decide On Financing
Private Or Hard money?
In some cases, a Rehab project is probably not be the ideal exit strategy for the beginning Real Estate Investors.
A main drawback of working on a Rehab project is that while renovating the property, you’re linking up working capital for an extend amount of time, and based on your financial situation, this fluctuates.
For newcomer Real Estate Investors, it would be beneficial to speak with Real Estate professionals that have finished Prehab and Rehab projects.
Most seasoned Real Estate Professionals are more than happy to assist a newcomer along.
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