Rehabs take too much time...

The Lazy Investor Yes, rehabs, for me, take just too much time.

And, oddly, here I find myself in the midst of one - again...

Well, this one is for a house that we really like for ourselves, and since we picked it up so cheap (at 70% LTV), it is 'worth' it...

However, don't get me wrong - I'm not doing all that work!

Oh, I have 'dabbled' here and there - taking a couple days and stripping off 50-year old wallpaper last week, and checking in on the painters I hired to put up wallboard in a few spots (to cover the old panelling) and paint the place with 'modern' color (it was GREEN in some rooms, with GOLD and BLACK in others and a variety of wallpaper coverings from BROWN/GREEN to PINK!)

Yes, this house was something to look at before - - -

Now, it will be much more modern.

The whole place is being textured in a MEDIUM pattern (oh, there is a name for it, but I forget...) and we are using SWISS COFFEE paint (a slightly off-white that has just a hint of tan in it - a common color, perhaps - you see it in office buildings and most homes nowadays, but it will be a quick resell...)

There is so much more to do...

The pool - well, it is GONE. The liner was taken completely out and there is no pump. The financial decision is close to simply bringing in a dump truck full of sand....

The fountain - yes, this place is big (1/2 acre) and has plenty of room for a 2888 sq. ft. house, a pool, several mature trees and rose bushes (and other flowers we have yet to identify...) as well as a 'figure-8' fountain.

The fountain leaks, badly. We filled it with water and the next day, it was over half dry, so we obviously have a serious leak. Looking at it, there are a few crack marks, but nothing looks too serious. However, the waterline tells the truth - we have some work to do...

The roof - after getting into this, we found that the roof had a 20 x 20 tarp on it... The lady I got it from told me that all the leaks were 'fixed', but it looks like we have more to do than we thought.

Of course, I'm brining in a roofer - I won't be doing that myself, either...

The roofer is a really interesting fellow - he takes his dog with him everywhere - INCLUDING THE ROOFTOPS!

Yes, he has a 'roofing dog' (I think his name is 'Roofer' - I forget - I had met him a couple years ago on the "last" rehab I did...).

Then, there's the floors...

90% of this big house is HARDWOOD FLOORS.

Wow, did I learn a big lesson yesterday!

Talking with the refinisher, I found that this is an EXPENSIVE thing to get done!

I know it isn't something that I want to do myself, but it is PRICEY!

He quoted me $10,000 just to sand and put some gunk on the floor - WOW!

That wasn't the worst part - he told me it would take UP TO 3 WEEKS to complete the job (perhaps he could finish in 2)!

So much for us moving in next week!

That puts us into paying for both houses for another month - not a fun item on my list!

Overall, we will certainly make out well on this property - after all, I only put down $10 of my own money to lock in the property and we have been in control of it for right at two months now.

We are taking out an 80% loan to pay off the existing 1st (it is too high an interest rate to keep - the old owner had refinanced with poor credit) plus some 'hard money' we borrowed to pay her some equity and move on (which brought us up to the 70% mark), and with the additional 10%, we'll do all the repairs and still have cash in our pocket (at 'worst', we will break even) - plus 20% equity in this $425,000 property.

Not bad for $10 down.... ;)

Plus, we will have a beautiful place to live in for a couple years (bypassing the capital gains taxes) and then resell it for upwards of $500,000 (1/2 acre properties are really hard to find in Las Vegas - the demand is high and people will pay the price).

Is this the greatest deal ever? No. Yet, it is a good one - and with no less than $80,000 in equity (that can be leveraged into another property) in my wealth bank, it is a deal that is certainly worth taking.

However, I would NEVER recommend you take on such a project unless you want to live there!

Rehabs - certainly for beginners, are NOT something you want to do!

They are too much physical work, and quite often, simply too much time. They take away from your thinking process - after all, we only have a certain portion of our brains that we use anyway, and only 100% of what we use is available for thinking/doing.

If you spend your time thinking about the missing screws on the wallplates and the cost of that $.15 item busting your budget, you don't have time to contemplate another deal that could bring you several thousand dollars!

So, watch out for 'time-waster' things like rehabs. Unless you are experienced and/or going to live there (and I would still recommend you stay away from the rehab unless you have a good reserve!) - simply don't do them!

Utilize your time for other things - make deals happen where you get PAID, not where you spend a lot of time.

Once you have a bankroll, then consider a rehab job (we all love to get our hands dirty once in awhile...), but be sure to balance out the costs of materials and workers - as well as the cost of your time!

In my new book, The Lazy Investor's Guide to REAL ESTATE, I've gone through several calculations on how to guarantee you'll never loose money on a deal. One of the CDs I've included even has "The Break Even Calculator" - an Excel spreadsheet that does all this calculation for you.

You can get your copy of the Guide and all 6 CDs at
http://TheLazyInvestor.com/TLIGTRESL.html