Rehab-Real-Estate: Rehabbing Houses And The Thing They Call Recession

Rehab-Real-Estate: Rehabbing Houses And The Thing They Call Recession

Some say that the recession is the ultimate enemy of investing. Smart ones, however, beg to differ. They consider the economic slump as an opportunity to make it big in real estate investing, especially through rehabbing or fixing and flipping houses.

Rehabbing is buying a distressed property, repairing it, and selling it at a much higher price. Investors are taking advantage of the number of undervalued properties across the country and are turning these old houses into new homes.

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Fixing and flipping houses is indeed inviting, especially to those who love maintaining homes. Handymen, or those who like to do odd jobs on their own, will love this business. You get to repair a house and beautify it, which is something you like doing, and get paid for it handsomely. While others simply love rehabbing houses, it is the huge rate of return that really attracts people into this form of real estate investing. Those who are good at it earn a $10,000 paycheck with just one project.

Another good thing about rehabbing is that it does not require a huge capital. Matter of fact, you can start fixing and flipping houses with little or no capital at all. This is possible through hard money financing, which unlike traditional loans, will be able to fund the whole project. Traditional lenders like banks only lend money to buy the property you want to rehab. If that property is worth $90,000 then you'll get $90,000 from the bank. You must then shoulder the repair costs needed to raise the property's value.

Hard money financing, meanwhile, is based on a special formula. Lenders usually give out 70% of the after repair value (ARV) of the property. The ARV is the value of the property after you complete all the repairs and renovations on it. The 70% ARV is usually enough to buy the undervalued property and may even partially or fully cover the repairs.

What is important is that you learn the basics of this business first. Ask seasoned realtors and investors, read books and magazines about real estate, and find informative websites that can help you in your real estate investing. Try visiting rehab-real-estate.com, contains videos and articles on real estate investing. The web site is ideal for beginners who know nothing about the business but would like to take advantage of the current market condition and make a fortune from rehabbing.