You can buy properties that need total rehab, properties that just need a little sprucing up or properties that are turnkey. In my model I rehab my properties to the point where I could sell them for a profit (flip) if I needed to and from there I rent them for the cash flow. I am riding the home equity up in my target areas, while I generate a monthly cash flow for my retirement. This requires strategy. When a bargain property hits, there is not much time to closely inspect everything before you make an offer. It can honestly take some nerve to make offers. Before you do, you need to at least have a basic understanding of what type of rehab a property will need to make it ready and how to create your budget. Managing your money is critical in the rehab phase.
I don’t always get my rehab budgeting right. I have run into surprises with every property I have purchased, even the properties I thought were turnkey. In the beginning I got this wrong a few times, grossly underestimating my expenses. As I acquired more properties I got better at estimating my rehab expenses and understanding how to use the cash flow from my rents to pay for my upgrades and improvements. I budget all of my rehab costs from the cash flow from my rents. I would advise you to do the same as you build your portfolio, if you decide to go this route. I also use my Home Depot and Lowe’s credit cards and take advantage of their zero percent financing offers every chance I get. I like using their money, even if I have the available cash on hand.
I still do some of my own maintenance but not much. I have found great people, who I trust, who can do just about anything that needs to be done, usually twice as fast as I can. They are better at understanding the materials needed and save me time and money there as well. My handymen are independents and most have full time jobs, doing property maintenance, rehab and remodeling on the side. This can slow my rehabs down but it saves me a bundle. I have a few, Heating and HVAC guys, a few Electricians, Roofers and even Plumbers plugged in if I need them. I found everyone I work with through referrals and I am always on the lookout for new people in case my team decides to take a break or drop out, which happens.
Being networked and treating people well by not losing my cool over every little thing has helped me build a great team. You can do the same.