Reiwired: 5 Things You Can Do To Lower Your Risks When Rehabbing A Home
Many are convinced to get into the rehabbing business. Rehabbing a home can be very lucrative. However, before you make any final decision, it is very important that you know some tips, which will help you, lower your risks when doing the business.
1. First of all, make sure that all your contractors are licensed. More than just that, they should also be insured and bonded. When looking for people to work in your project, do not treat them as employees but as subcontractors. The best way to do this is to ask them to sign subcontractor agreements. The contractors that you hire should have their own workers compensation insurance. They should also be able to set their own working hours; work for others aside from you and; have their own means of transportation and tools.
2. Identify repairs at the outset. Deal only with contractors after you have performed a background investigation. Call references or check with previous employers. After you have made your pick, make a written bid. As a rule, every repair should be put into writing. For instance, all materials needed should be listed down accordingly. More than anything makes sure that all contractors understand that you will be holding them to the written bid.
3. Set a timeline. When rehabbing a home, it is very important that you break the project into a timeline. Ideally, completion dates should be written in the contract to giving yourself and your contractor a clear picture as to how you want the entire project to go. Schedule jobs for cleaning up, landscaping and the like. Make sure that everything is done on schedule. Set penalties in case the contractor fails to comply by your designated timeline. This should be mentioned in the contract at the start.
4. Deal only with approved buyers. Do not sign a contract with buyers if they have not yet been approved for a loan. Lending requirements are very strict in todays market so when a potential buyer informs you that she has been pre-approved, confirm this with their lender.
5. Get the right insurance. What exactly are you doing? Make this clear with your insurance professional. Be sure that you have the proper type of insurance needed to cover your rehabbing needs. As mentioned above, put everything into writing and keep it as future protection just in case you realize later on that you do not have enough insurance.
Rehabbing houses can be very profitable. Just make sure that you know how to get about through every step. For more tips on rehabbing a home and real estate in general, go to www.REIWired.com.
by: Daniel Mc GreyAbout the Author:REI Wired is the pinnacle of real estate education by serving high-quality content through high-quality videos. Sign up only takes a minute and you can start right away! Learn More