The Right Mix for a Headache-Free House Fixing

Posted on: January 27, 2011

Categories: How To

Author: lbuen

4700299866 3a0cffc8f6 m The Right Mix for a Headache Free House FixingHouse Fixing – Riskier But Richer

The higher the risk, the higher the yield. This is one of the general rules in investing, and it applies very well even in real estate investing.
Retailing in the housing industry presents to the real estate investors substantial profits that are far heftier than wholesaling. This is because you can increase the value of the property by rehabbing. However, conforming to the investing precept just mentioned, rehabbing also brings greater risk because it requires more capital to fund the house fixing. It is thus, vital that the project be carried out properly. You need to buy the right property with the right repairs, hire the right contractors and fix the right contract for a headache-free house fixing project.

Buying The Right Property for House Fixing

While a property selling below 60 percent of market value may be enticing, make sure that they are not Frankenhouses or houses that have been done horribly. Yes, you may enjoy horror movies but who wants to do a rehab that can make hair curl? As early as the acquisition stage, you would already have noted the repairs needed and asked from contractors for quotations.

Identifying the Right Repairs in House Fixing

Zoom in on repairs that could vitally increase the value of the property, hence, also fetching greater return when you sell it. Investing in kitchen and bathroom repairs would usually make a house more marketable. Value could sometimes be a matter of perception. A newly-painted house could be perceived as having more worth than dreary structures. Working on the so-called “curb appeal” is also said to add value to the property.
You must also attend to repairing problems that could potentially cause legal concerns that can take you to court. Other than these, do not get carried away and overdo the renovation and forgetting your profit.

Hiring the Right Contractors and Harnessing the Right Contract

Developing business relationships with competent contractors is a must for real estate investors who specialize in retailing. Hire contractors who have track records to deliver well at a reasonable price and time frame. The faster the better, but the least expensive is not necessarily the best. Have them bid for the house fixing project to create competition.
When hiring contractors, set expectations right by ensuring that you agree on things like the price, the time frame, the specific tasks and quality of work they are required to deliver. Writing this agreement down is your seal of guarantee that you will get what you would promise to pay for. Be specific as much as possible and do not make any assumptions that they would perform a job that is not listed in the contract.

Pay For the Right House Fixing Job

Follow the style of a brilliant real estate investor in setting the payment conditions. His system ensures that his contractors finish their job. He pays 33 percent of the house fixing cost once the contractors finish half of the job; 50 percent when 75 percent of the work is done; 67 percent when they have accomplished 90 percent; and 90 percent when they have delivered 100 percent of the project. The remaining 10 percent is his insurance for the things that the contractors may have overlooked, such as installing the outlet covers, and other finishing touches. When it passes his inspection, only then does he pay the remaining amount.
Penalizing contractors for delayed work is a way to prod contractors to get things done on the agreed due date. You can set a penalty clause stipulating the penalty fee per day. If you have the extra resources already, you may also offer the contractors the carrot instead of the stick by rewarding great work completed before the agreed date.

House fixing is a crucial part in a rehabber’s business where the bottom line of a deal largely depends on its execution and outcome, thus, properly dealing with the right contractors is a must.

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LEAVE A COMMENT:  2 Comments

2 Responses to “The Right Mix for a Headache-Free House Fixing”

  1. rich says:

    Great, but how do I actually find contractors to rehab my property without looking in the yellow pages and getting ripped off?

  2. buyfixandprofit says:

    Hey Rich

    Great question. The best way for finding a good and reliable rehab contractor is through networking with other investors. It’s really easy to get burned and ripped off if you choose the wrong contractor. Check out my article on to find a rehab contractor to see what’s worked well for me. /how-to-find-a-contractor-to-flip-that-house/

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