The Dos and Don'ts of Renovating Foreclosed Homes

Foreclosure investing has become quite popular with the large selection of cheap homes for sale in the market. Of course, renovating these foreclosed homes is part of the deal.
| Wednesday, September 14, 2011

The real estate market is considered as one of the most reliable markets when it comes to earning a profit from your investment. With the huge inventory of cheap foreclosures for sale, it is understandable why many investors are trying their hand at foreclosure investing. These repossessed properties can be bought for an amount below their present market value, sometimes as much as 60 percent less.

Of course, the main consideration is the repair work which should be done whether you are planning on selling or renting out the property. If you are not sure about how to go about the rehabilitation, consider these dos and don'ts.

Dos

  • Consider the age of the foreclosed property. Older homes might require extensive repair and they might even be constructed according to old specifications. Also, look for signs of previous work done to unearth hidden problems. Hire an inspector to check the property thoroughly.
  • Hire a professional contractor who is experienced in renovation and rehabilitation. Be sure to shop and compare prices as well as quality of work to maximize the budget you set aside.
  • Work with your budget. Avoid making decisions based on impulse or emotions. Remind yourself that the reason you bought the home is because of its profit potential.
  • Prioritize function over style. Your objective is to make the house comfortable to attract buyers and renters. Of course, it would certainly add to the home's appeal if it looks good on the inside and outside, but try to keep the cost at minimum. Things like painting the home and even cleaning the surrounding lawn will already go a long way to improving the home's physical condition.

Don'ts

  • Leave all decision to the contractor. Make sure you communicate on a daily basis to avoid costly mistakes in the renovation.
  • Be ignorant when it comes to regulations and permits. You should at least familiarize yourself with the required documents and make sure your contractor has complied with each one of them. You would not want to experience delays in the schedule just because you failed to meet a particular construction requirement.
  • Make unnecessary additions to the home or expensive upgrades. It will prolong the renovation and increase cost. Since you are on a budget, it would be smart to stick to repair works which improve or add functionality to the foreclosed home. They will certainly attract more practical buyers.
  • Forget to make a final inspection. Refer to the contract you made with your contractor and see if everything has been completed according to what was agreed on. It would be more convenient if you routinely check the progress of the renovation to ensure nothing is missed or skipped.

These are just some of the things you need to think about when you finally purchase a foreclosed home and are itching to have it rehabilitated. You will find these tips quite helpful, especially if this is the first time you will be engaging in such activity.

   
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