"Top 3 Profit Eating problems when Rehabbing Homes" by Scott MacDonald

It is always amusing and somewhat hysterical when I see T.V shows about flipping houses or turning houses for big profits. I especially cringe when I see newbie investors jumping into major rehab projects that involve thousands of dollars in acquisition costs and rehab money. Not surprising the show frequently ends with the investor going WAY OVER budget, WAY OVER the time schedule, and plenty of headaches. Unfortunately, this not only happens on T.V. but in every city across America. I believe most of this can be avoided with a couple simple steps to follow if you decide to jump into the rehab game. No body deserves to have their flip labeled with the tag "DEATH BY RENOVATION". If you decide to not plan your next rehab project that is exactly what will happen.
Throughout my years of investing in real estate I have been on the top of my game and just as quickly fallen on my butt as well. The times when I have succeeded is when I created a plan and stuck with it, the other times however, well that is for another article. Looking back on my failures with regards to flipping real estate by renovating homes I began to see common patterns for failure. I would like to take the time and share with you my "TOP 3 Profit eating problems when Rehabbing Homes". Number one is simply "not buying at the right price". It is commonly said in the industry 'you make money when you buy not when you sell', there is a whole lot of truth to that. More importantly though, I believe you need to have a system and formula in place for buying your properties (if you would like to know what I personally use and teach my contact info is on the bottom of this article), I have a certain formula that I stick with no matter what piece of property I buy, and I would use this whether I was buying in Jacksonville, FL (my hometown) or San Diego, CA. The second point to this is always have a bailout price, also referred as HPP (Highest Price Paid) or strike price. If you decided on a strike price and then decide to break your own rule you most likely will regret the decision later, listen to me very carefully "Always have a price limit, and stick with it". The second profit eating point involves holding costs. It amazes me that even seasoned investors do not factor this into there potential profit equation. Personally I like to know what my potential profit of a deal is before I jump into it, I think it is very careless to invest your money or someone elses for that matter without factoring in the potential holding costs of the project. What are some holding costs that will affect your profit? I am so glad you asked. The ones I ALWAYS factor in are taxes, insurance (builders' risk or vacant policy), utilities, and hard money fee's (points and interest). I like to add these potential cost up before I do the deal, even as far as knowing the monthly and daily costs associated with the project. The last but certainly not least is "choosing the wrong professional". If there is one thing I dislike with real estate in general is the "everyone has there hand in the cookie jar" aspect of the business. Just think of all the people involved in one rehab project (realtors, brokers, contractors, closing agents/attorneys, hard money lenders/private money lenders, mortgage brokers, banks, the dog, cat and the neighbor next door, OK I know I am getting carried away here, I'm sure you get the point. The major point I want to convey to you is make sure you have the best team of professionals around you and working for you and your best interests. I believe now is the absolutely best time to buy and sell real estate in the history of our country, knowledge is power in any business you have, my goal is give you some helpful tips to increase your knowledge of Rehabbing and flipping houses. If you would like to contact me regarding my programs and proven systems for successful real estate investing, contact me at premierchoiceceo@gmail.com. Good luck and happy investing.