Many if not all businesses, projects, and initiatives evolve from an idea, need, or dream. But soon after, if that idea is to be realized, there must be a plan—a written road map. Taking this step allows you to clearly identify what your objective is and how to achieve it with less unforeseen pitfalls and roadblocks. Additionally, it helps you stay on track and motivated when the road gets rocky. Skipping this step will increase the chances of you losing money and time you can’t afford to lose. That is even if you can afford to lose them, why? 

Below is a six steps plan to residential rehab: 

  • Determine the Budget 
  • Find Your Property 
  • Fund the Project
  • Secure Key Players (contractors, industry consultant, project manager, lender, investors) 
  • Plan for Setbacks and Conflicts 

∙  Exit Strategy (sell it, rent it, or live in it). This is where I like to start. In my experience, if you do not have a back-up plan to your original plan. You will get stuck holding on to a property. This will later cost you time and money. 

Carefully following these steps increases the possibility that your project will be successful. So, let’s explore what each step entails. Finding your property is one of the first two steps of your plan. Just like any high-cost purchase item, before you even leave the house to shop, you most likely would do research. Thanks to technology, specifically, the world-wide web, research is efficiently possible with a few taps of the fingers. Research includes identifying where and what type of properties you want to buy. 

FINDING YOUR PROPERTY – Finding your property is one of the first two steps of your plan. Just like any high-cost purchase item, before you even leave the house to shop, you most likely would do research.  Determine the neighborhood, size and cost of a property.  Determine your target audience or buyer.  Determine if other properties have been sold in the neighborhood within the last 6-8 months.

DETERMINE THE BUDGET – Once you find the property of interest, using the same research suggestions mentioned in the “Finding Your Property” section, you should have also found its associated cost or value. Other budget elements include purchase related costs (i.e., closing and realtor fees), renovation costs (i.e., architecture, general contractor, realtor, and marketing fees), and finance cost (if you are borrowing money), as well as unforeseen costs due to schedule setbacks (backorders on material, bad weather, etc.). 

FUNDING THE PROJECT – Securing the money to fund the rehab is probably the most important part of the process. As mentioned, the money is the life (blood) of the project and without it, there is no project. You’d be surprised by how many people start projects without fully securing the funds to only find themselves at a deficit and unable to complete the project.

KEY PLAYERS – The quality of a rehab property is equal to the quality and competency of its rehab team. Identifying the key players is essential before any money is spent. Depending on the property, key players may include realtors, lenders, contractors, industry consultants, project managers, attorneys, and investors. 

SETBACK RECOVERY – I would be remiss if I didn’t tell you to have a recovery plan for setbacks, because chances are you will have them. So, when dealing in the risky business of real estate, you want to be proactive to minimize a financial loss or exposure. This means that there needs to be recovery plans for potential funding, labor, legal, schedule setbacks, and market related impediments.