America needs more real estate investors that are looking to rehab homes. Of course, some might think the market is saturated with all of the reality TV shows currently airing. I assure you, however, there is plenty of room. In reality, there is a big demand for more properties to be renovated. Are you ready to answer the call?
There are several factors driving the demand for more rehabs. There are also far more opportunities than many may realize. So where are the deals? How can more individuals participate and profit from rehabbing homes.
Big Opportunity
Some media outlets suggest that home inventory is tight, and hard to find. That may be true for some small pockets in the country – at least when it comes to properties that have already been remodeled and are being flipped. That isn’t a direct reflection of all that is available to real estate investors off-market, and behind the scenes. Some recent figures put the current pool of defaulted mortgages and REOs that are in ‘shadow inventory’ at well over $150 billion dollars. This doesn’t even begin to touch on all of the other properties that are out there that need to be sold for other reasons, or that can be bid on. Now that the big hedge funds have switched gears to financing rehabbers instead of competing with them, there is even more opportunity for new entrants and existing individual investors.
This goes beyond residential single-family homes too. There are multifamily properties, office buildings, retail outlets, mixed use projects, and even properties stalled in the construction process. They are all up for grabs.
The Current Sweet Spot
New building construction is really trending right now, and the reason many investors are getting so excited. New home, condo buildings, and commercial properties are being built, even before all of those distressed properties, and others that could use a makeover have been cycled through the market. If you’ve taken a look at some of these new properties, they are normally going for premium prices.
There can be a significant price gap between existing properties and new properties. Many new properties are selling while older ones sit on the market for a long, long time. This is even true of some of the hottest markets in the country. Homebuyers and renters want new, it is as simple as that. They want that new home smell. They want up-to-date interiors. They don’t want to buy a bottomless money pit. That’s how they often perceive properties that need a makeover: one big expense. By coming in and doing the makeover work, real estate investors can serve up beautiful, like new homes, and sell them at great prices. They are adding real value, and get paid well for it.
Good Rehabbers Wanted
Some may wonder why all the slack isn’t being picked up by existing investors. For one, there is just so much of it. It was even too much for the multi-billion dollar private equity funds to take down by themselves. Then there is the fact that buying, rehabbing, and then flipping properties can take time and ties up money. Even the largest home builders take on a set number of properties in a community, finish them and sell before moving on to the next. So this is a great window of opportunity for aspiring investors to dig in.
Sadly, the truth is that not everyone is on top of their game. Not everyone is doing a great job at fixing and flipping houses. Some are just rushing in with little care for building real estate investing education first. Others are doing it with little care for the quality of the work or how it impacts the next owner and their family. Others just aren’t getting the math right. So yes, the nation needs more rehabbers, and good ones.
Finding Your “Why”
Those rehabbing houses can find the process extremely rewarding, as well as highly profitable. Whether fixing up single-family homes or remodeling properties to rent out, real estate investing has several benefits. It doesn’t always have to be that intensive either. Some properties don’t need a gut rehab. It might just be a cosmetic makeover. There are also many ways to participate and profit from this industry without having to roll up your sleeves and sweat. There are opportunities to fund. How will you do it?
