Rehab Money for Your Real Estate Investment

By December 3, 2019 Blog

Rehab on your real estate deal can take you from flipping for profit to just plain flipping out!  The rehab money for your real estate investment is a crucial part of the deal and there are a some things you need to know.

  1. You get what you pay for!  If you go cheap, expect it to be a cheap return.  Make sure to not to lose site of the overall profit when picking materials and contractors.  One of the best pieces of advice I ever got for one of my flips was when I was trying to haggle down the price of a contractor.  He turned the tables on me and asked a really simple question, “What do you want me to do?”  I told him I wanted it cheaper.  His response was equally simple and has stuck with me ever since.  He said, “It costs what it costs.”  
  2. A little planning up front goes a long way.  Have a budget for your rehab money from the very beginning.  Make a good plan and place specific dollar amounts on that plan.  Don’t assume anything.  Get prices up front.
  3. Get 3 bids!  If you are just getting started flipping houses or doing a BRRR rental and are just starting to build out your crew – get a minimum of 3 bids for each job!  You will quickly find that service contractor’s prices vary, and they can be all over the place.  Getting bids will give you choices and help you build out your budget.  And just an fyi – don’t always go with the cheapest bid – it’s not always the best!
  4. Have some cushion!  When you’re budgeting rehab money for your real estate investment, make sure you include a good cushion.  A good common rule of thumb is to add 10% for the unexpected.  The hopes are that you did good enough research and due diligence prior to buying your flip house or rental that you don’t need the cushion.  But in the end, if you need it – better that it’s there.  It’s best to add it to the budget up front so that you don’t get stuck later.
  5. Secure the money through a hard money loan and take advantage of one of real estate investing’s best benefits – Leverage!  Use OPM, “other people’s money”, to do your deal and try to get the rehab money included.  The idea behind leverage is to increase your ROI by reducing or completely avoiding putting money down on the deal.  No money down deals are out there!  And when it comes to hard money loans – that just means finding a deal with a great ARV margin.

These are a few important things to consider when looking at your flip house strategy and specifically the rehab money for your real estate investment.  Contact us to learn more about how we do our real estate investing and how we can help you.

Check out our deal calculator to help see how rehab money can change your deal:


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Author Kyle O'Keefe

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