Flip Tip Summary
Cutting corners on your rehabs can cost you dearly. It sometimes feels like you are being frugal, but in fact, it may often lower the price you can sell for. If you’re using a lender that’s funding your rehab, shifting gears on your rehab plans may also result in losing funding for those repairs. Mike Hanna has been involved in over 1000 transactions, and joins us today to share this great Expert Tip…only on FlipNerd.com
Flip Tip Transcript:
Hambright: Hey, it’s Mike Hambright from FlipNerd.com, and we have a quick expert tip to share with you from Mike Hanna, who’s going to share a tip on how to not cut corners on your rehab.
Hanna: Yes, when you get your initial repair estimate for your rehab that you’re going to be doing, the biggest thing you can do, the biggest mistake you can make is cutting corners in the deal. Inevitably when you get into a deal, something happens. It’s real estate, so things are going to happen, things are going to pop up.
What you don’t want to do is go back and say, “Well, I’m going to just cut some corners here and I’m not going to put in granite countertops, we’re going to go with Formica instead,” or, “I’m not going to do hardwood flooring. I’m just going to put in carpet.”
Those are mistakes that you’ll make that will cost you money in the end because inevitably the value of the property will not appraise or you will not be able to get your money back out of the deal. That property may sit on the market a lot longer because of the things that you did do cut corners on the deal and try to save money.
Hambright: Right, and if you used a lender, as you said, a hard money lender, and if you change gears mid-process, then the lender may not even fund those repairs because you’re not doing what you said you were going to do.
Hanna: That’s exactly right. You have to stick with the program when you get in. We’re going to ensure that you’re not going to do those things if you’re using us as a lender. But if you’re not, if you’re buying the property on your own, paying cash, just be sure not to do those things. Do not cut any corners in your rehab. It’s only going to be a disaster for you in the end.
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