Rehabbing Houses For Profit – How To Get Started



One of the best ways to make money as a real estate investor is rehabbing houses. If a property is distressed, you will be able to buy it at a lower price and add value back into the house by fixing it up. This new equity creates a huge opportunity for profit. You can sell the house if you are planning to flip it. Or if you rent the house to a tenant the lower purchase price will ensure you make a profit each month.

When people first start investing they usually imagine buying a run-down house and making it beautiful again. The problem is that this is also where newest investors get stalled. Once you start looking at houses that need major work fear and uncertainty will likely follow. Everyone at some time or another has said:

  • This seems like a lot of work…
  • Can I do this…?
  • What if I lose money…?

That last one is the real kicker. What happens if you lose money on the first house you rehab? This can stop your real estate dreams before they even start. If you don’t lose all of the money you have your confidence will almost always be ruined. Unfortunately, too many people decide this just isn’t worth the risk and walk away.

This is the most disappointing to me because it doesn’t have to be risky.

An investment should be calculated to minimize risk. And you can do this by using a few proven guidelines for rehabbing houses. As long as you follow these there will be no reason to worry and you can buy your first fixer-upper without fear.

Stick With What You Know

When you are walking through houses for sale, especially if they have been vacant, you will see a wide variety of repairs that need to be made. From loose switch plates to full renovations. The first rule is to stick with what you know. Make a list of the type of work that you are comfortable with and then follow that list. Don’t be tempted to try something new in the beginning.

You may not think you are comfortable with anything but don’t worry. Imagine you are living in your own house and think about the kind of upgrades you would make. Painting walls or getting a new carpet is pretty common. And people often change out light fixtures or even remodel a bathroom, etc. I call these cosmetic repairs. You are not changing any of the house structure, you are just changing how the walls and floors appear. Even if you don’t think you are comfortable with these most people are at least familiar with them.

The next level of repair is related to the structure of the house. These include the foundation, plumbing, electricity, heating, and cooling, etc. When you hear someone tell you a house has “good bones” these are the bones they are referring to.

If you are a new real estate investor I recommend you stick with cosmetic repairs only until you are comfortable with the rehab process. After you have some experience you can take on some of the more difficult repairs that involve structure.

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