FHA 203k LOAN, HOMESTYLE CONVENTIONAL LOAN, HARD MONEY LOAN

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 Top 5 Reasons Rehab Project Fail 

If rehabing a home was easy, everyone would do it! Anytime you’ve got the possibility to use the bank's money to turn a damaged house into a dream home, rental property and fixer-upper and flip to earn tens of thousands of dollars in profit, people will flock by the thousands to try to get their piece.

Unfortunately, most have never attempted to rehab damaged real estate let along flip a fixer-upper. Such a competitive market weeds out the lazy, unskilled, less-determined people, leaving only the experienced investors with the best tools, skills, and desire to reap the rewards. 

So let’s get back to basics for here.

What are the real reasons that rehab projects fail?

Let’s explore:

This industry is filled with unexpected – and usually unfortunate – surprises. Things like:

• The rehab project takes longer than projected
• You find unexpected issues with the house (mold, structural issues, etc.).
• The final numbers come in slightly over budgeted (cost over runs) and you need a bit more cash to complete project.

And plenty of others!

If the rehab project is a fixer-upper flip? You adopt the attitude: This is it… the one property that’s going to make you rich! You’ll finally be able to leave your job with a nest egg to do your next deal…

But then you crunch ALL the numbers… and reality sets in. It’s not a profitable deal.

You’re crushed. You’re not sure if you want to keep doing this. You quit altogether.

This happens more often than you think. Potential borrowers come to lender with a “unrealistic” deal, but then the 203k consultant  calculate the estimated cost based on borrower wish list  and the numbers come back unfavorable. The 203k consultant give them the bad news. Instead of pulling back on some of the wish list the borrower finds a "switch and bate" contractor to low ball the job cost, promising they can do the work below market cost.  

A experienced investor realizes that’s just how the industry works. Some job are just to costly and moves on until they find a property with fthe right budget.

Similar to above, don’t stick it out with a single property in mind if the purchase and rehab cost BREAKS the budget, have two or three that you’re working on simultaneously !

“But I’m brand new… I can’t handle the negotiating give-and-take of making offers on several properties at the same time!”

First off, you’re fretting over an extremely prudent scenario. 

Second off, there are solutions to this! You can always turn down a deal if you find that multiple offers are driving the purchase price too high or you are fortunate and all offers to buy going through at your offer price at once. Also, you can wholesale the “extra” properties to get them off your hands with a tidy profit. Then focus on a full rehab on the one with the most profit potential or your DREAM HOME.

Honestly, your money is made during the evaluation process. If you understand how to properly value properties, you’ll be able to walk away from the bad ones, and go all in on ones with massive potential.

Those without evaluation skills are throwing darts in the dark. Who knows what the outcome will be.

That’s one skill you can’t fake your way through.

What strategies actually work for finding new deals?

How do I negotiate a better price?

Should I wholesale this property, should i turn it into my Dream Home or do a full fix & flip?

What parts of the home should I rehab?

What materials should I use in the rehab?

How do I find a good General Contractor?

What type of funding should I use for this deal? (self finance,  fha 203k or fannie mae conventional)

How do I create a legally-binding contract that benefits me?

Flipping a home requires many steps to complete, and each one contains many pitfalls. That’s why we offer extensive short and long term coaching packages to help you through some or all of the steps of rehabing a damaged property, as well as being your dedicated coach  to answer questions and address you concerns every step of the way.

Want to flip your first home or turn that damaged house into your DREAM HOME? We’ve got the Coach for you, your very own cheerleader and hard nose drill sargent all rolled into one.  We just need dedicated people who aren’t afraid to roll their sleeves up: