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Investment Property Makeover: A Budget-Friendly Rehab Blueprint: One of the pricier projects a real estate investor can undertake is rehabbing investment properties. This undertaking can be overwhelming and tricky, especially for beginner investors. It consists of purchasing a property, renovating it, and selling it for full market value or renting it out. Rehabbing requires attention to detail and time to master. It remains one of the more lucrative investment options in real estate. That’s why investors flock to this type of investment.

Investment Property Makeover: A Budget-Friendly Rehab Blueprint

☛ Step One: Make an Offer:

The first step is to make an offer. This stage requires you to run the numbers on a deal to evaluate exactly what type of offer you can introduce to the seller.  It is the foundation of a good deal.  It is the secret sauce.  Here are 3 tips on making a good property choice once you have done the research on your target market:

☛ 3 Tips on Making a Good Win Win Offer

Remember, a win-win offer is about creating a deal that benefits both you and the seller. By understanding the seller’s needs, offering flexible terms, and showing that you are a serious buyer, you can increase your chances of making a successful offer.

💎Pro Tip: When doing your walkthrough of the property the seller or realtor may try to chat during your inspection.

  • At times they may try to talk to distract you from noticing obvious property defects.
  • Remember you are there to carry out a job, so make sure you are laser-focused.
  • Later that distraction can cost you $5000-$10,000! Excuse yourself and walk away from them and make sure to revisit the area that triggered the interruption.
  • Also, take lots of pictures, notes and even videos to avoid a second trip.

Remember time is not your friend so make good use of it.

☛ Rehab Cost

Rehab can cost anywhere from $20,000 to $75,000 or more. It’s your task to find a rehab project within your budget and skill set.

  • As a rule of thumb, it is a good idea to start by assessing how much capital you have available.
  • Especially, if you are borrowing funds for the purchase and rehab.
  • Lenders expect that you have a bit of skin in the game.  So expect to put in a deposit or have cash to play.
  • Once you know what your cash situation looks like, you can narrow down the size of the property and rehab project you can handle.

Here’s what the cost breakdown may look like on a few rehab examples.  (Note: These are national averages and may vary depending on where your market is located.)

If you are new to rehabbing, we suggest you start with level 1-2 rehabs. Build up to the other levels when you get some experience under your belt.

  • Remember the more hands-on you are the better prepared you will be moving up the line for your next few projects.
  • It’s crucial to add up all the costs of potential renovations before you put a down payment on a property.
  • Don’t let the dreamy idea of owning a rental property suck you in.
  • Instead, be brutally honest before you commit. Doing so may actually pay off in the long run and save you from making a mistake.

“If people are unforgiving upfront about assessing the costs of renovation, the value of the property and the neighborhood, and how much money they have, they can come out ahead and buy more house than they otherwise could ever afford,” Bradley Inman, CEO of, told This Old House.

☛ Common Fixer Upper Project Considerations:

  • Project Materials: Estimate potential repairs during the property walkthrough. 
  • It helps you get familiar with the materials needed so look up potential material costs.
  • These include new countertops, windows, doors, appliances, paint or flooring, and any other supplies necessary to complete the project.
  • Project Labor: The most essential part of a rehab project is a good team.
  • Not only will you need a contractor, but you made need an electrician, plumber, carpenter, cleaning team, etc.
  • This all depends on the level of rehab your property needs.
  • Project Team: You may need an attorney, real estate agent, title company, inspectors, appraisers, and lenders.
  • Each of whom will be associated with various jobs and costs.
  • Choose wisely, your success depends on your due diligence.
  • Purchase Price: The initial purchase price of a property is the base of a rehabbing budget. 
  • It impacts everything from the loan required to the future return on investment. 
  • So, getting the right price for your property at inception is critical to your success.
  • Lender Fees: Depending on how the property is financed, different lender fees could be required.
  • These will cover paperwork, title searches, and other costs associated with property purchase and financing.
  • You should expect to pay approximately 3-6%.
  • Note the level of speed-related to how quickly you want to close may sometimes drive the lending fees, rate and term.
  • Ownership Costs: Do not forget to account for holding costs when estimating the budget.
  • This includes the costs of utilities, property taxes, and overall upkeep during the rehab and selling or rental process.
  • So, if you set on a 3-month rehab, consider 3 months of ownership cost.
  • As a rule of thumb, we always include 6 months of carrying cost. This allows for a safe buffer as you work toward curing your project for sale or rent.
  • Property Staging: Now for a first-time rehabber you may skip this expense if you are on a tight budget, hot buyer market, hot renter market or if you are going to rent it out.
  • Once you have some decent funds in the bank and are insulated financially, you can incur the staging cost.
  • After the rehab is complete it will need to be staged and photographed to sell.
  • Staging helps to dress the property up so you can get more for the property.
  • It helps potential buyers picture themselves living in the space.
  • Just so you know, in some hot markets, investors can’t wait to get their hands on completed projects to add to their portfolio.
  • So, use your own judgment on this expense.
  • Permits: For newbies, this is the Achilles heel.
  • The permit process can influence the cost and project timeline of a property rehab.
  • A permit will typically be required when adding to the square footage of a property. 
  • Also, parking a dumpster for old debris and, and changing utilities to the property.
  • In some states like California, it’s not unheard of to wait almost 6 months to 2 years for permits.
  • Yet in Texas, you can get a permit in as little as two weeks.
  • Keep in mind that you may skip the permits to save a few bucks, but if an inspector comes by and doesn’t find a permit, he can shut the project down. 
  • Plus, you will be facing a lot of fines to boot.
  • So make sure you have all your permits and keep out of trouble.

☛ Most Common Rehab Projects

💎Pro Tip: try surplus and liquidation clearance building supply warehouses.

  • At times, you may find used cabinets sets for under $1500.
  • If you are planning to do a few rehabs in the next 12 months, it’s wise to visit these surplus warehouses.  So, you can stock up on cabinets and other used building materials.
  • It is a good way to save moving forward.

☛ How Long Does It Take to Rehab an Investment Property?

It can take anywhere from six weeks to six months to rehab an investment property.

  • There are several factors you can use to determine how long a project will take. 
  • That includes the size of the property, the extent of work, and how many team laborers.
  • To get a more concrete understanding of a rehab project, look at each of these factors before purchasing a given property.
  • Additionally, make sure you are on the same page with the contractor.
    • Make sure he can give you a good time estimate.
    • Using a “Scope of Work” report itemizes all the tasks to complete the rehab, but it also provides a complete time schedule.
    • Download the report below so you can use it on your next project.

Click Here for Your Our Property Rehab Checklist and “Scope of Work” Report

☛ Contractor Report Card:

Here are a few items to consider when looking for a contractor:

Once you’ve found several contractors, the next step is to have each one submit a formal project bid. This will enable you to handpick the contractor that best fits your needs and budget.

💎Pro Tip: Never…ever…ever give all your rehab funds to the contractor.

  • We had an investor that gave $75,000 cash to an unvetted unlicensed contractor.
  • They dropped off some materials at the site and were never seen again.
  • Even if you are paying with your own cash, you should always use the draw method of dispersing cash.
  • Every time the contractor completes one phase, you need to sign off on it, so they can move to the next phase.
  • Always use a bank check, check or pay by card.  NEVER CASH!!
  • Most professional contractors follow this system.

☛ 10 Rehab Steps to Follow

Follow these steps on how to rehab an investment property:

Property Evaluation: The initial walk-through of a property is a crucial component to succeeding in the rehab.

  • Make sure you are looking at all the major high-ticket items (AC units, heating units, plumbing, electrical boxes, electric connections, kitchens, bathrooms, structural, roof, leaks, old water damage etc.).
  • Take pictures and good notes during the initial inspection.
  • These site notes and pictures will play a significant role in developing a budget using a rehab checklist.
  • Investors should hire a professional inspector.
  • The deal should always be contingent on a good inspections report.
  • These individuals will identify items that need repair and recognize items you would have otherwise missed.
  • A home inspection will include examining the home’s heating and AC system, electrical system, plumbing, foundation, roof, flooring, walls, ceilings, windows, doors, foundation, and insulation.
  • For foreclosure investments the bank may be selling the property as-is and having a property inspector may not be an option.
  • Property Rehab Checklist: When you conduct the initial walk-through of the property it is important that you capture as many details about the property plant as possible.
  • Having a good property rehab checklist that covers all areas of the property is critical.
  • Without the checklist, you may forget crucial details that may cost you down the line.
  • Budget-conscious investors should summarize all necessary repairs and the costs associated with each.
  • Use the inspection report as a guide.
  • Keep the most important items on the top of the list to ensure you complete them first. 
  • Unforeseen expenses pop up all the time so running a tight budget is critical to a successful rehab.
  • Investors on a constrained budget will need to examine the thin line between cost-effectiveness and high returns.
  • So be vigilant of every detail.
  • Also, keep with the plan, contractors love revisions, but they cost time and money.
  • Interview local contractors:
  • The importance of finding a quality contractor cannot be understated.
  • These individuals will play a crucial role in transforming your property into a successful investment.
  • However, not all contractors are the right fit.
  • As an investor, you will need to spend a decent amount of time investigating general contractors.
  • Using Yelp, and Google are extremely helpful. 
  • Most investors, don’t do the homework and hire the first head that pops out.
  • Try to hire slowly and fire quickly.
  • Consider the Trojan Horse story. Once you invite the contractor to start the project it’s too late and can be devastating to your bottom line if it doesn’t work.
  • This vetting process ultimately saves you time, patience, and big bucks.
  • For newbies, the first few rehabs should be local projects.
  • Schedule a contractor walkthrough: Once you have hired a contractor, schedule a property walkthrough.
    • Conduct it together.
    • This is when you can discuss the rehab plan.
    • An experienced contractor should be able to help you set your timeline, set your budget, and rehab repair checklist. 
    • They can also offer suggestions to help with the project.
  • Building permits:
  • Do you have the required permits to perform the rehab?
  • Avoid violating local building codes and pull the permits needed early.
  • In most cases, the contractor will determine what permits are needed based on the type of work.
  • You can contact the local building department to confirm.
  • Make sure to apply for any building permits as necessary in a timely manner.
  • Verify what permits you may need by checking with your contractor and following up with contacting your local government.
  • Start Advertising: Use Craigslist and social media to introduce your project to the community.
  • Build preliminary interest before you finish so that when the project is done you can get a few names.
    • “Coming Soon totally renovated apartments for rent @ $1,500 a month.”
  • Budget & Finances: Once you understand the scope of work that needs to be done, the next step is to assemble a rehab budget.
  • All rehab plans are different but getting a complete profile of all the tasks that need to be completed is super important.
  • Doing so will enable you to prioritize your rehab checklist or make changes if necessary.
  • Remember, prioritizing is the key.
  • Important items first and secondary items afterwards.
  • Make an itemized list and work your way down by levels of importance.
  • Keep your exit strategy at the forefront of your budgeting.
  • If you are selling the property, the materials used might be a bit upscale to maximize return.
  • With that said, if you are not moving in…don’t overspend. So don’t fall in love with the property because it will cost you.


Demolition: this is the beginning of the physical part of rehabbing your investment.

  • This phase includes trash removal and removing damaged items like doors, windows, and fixtures.  
  • The cleanup is essential to prep the property for renovations and safety.
  • A clean and safe site insulates you against accidents and liability.
  • Keep in mind, if you do the cleanup yourself using a little sweat equity you can save a few bucks and minimize additional costs.
  • In the past, I tried to find properties near each other so I can hire a crew to clean up all the properties in one day.  I centralized the dumpster between all the properties and carted debris to the dumpster.   I used Craigslist for local hires.  It was a good move.

Property Exterior: One of the most inexpensive expenditures when rehabbing is the exterior.

  • Improvement to the property exterior can generally be accomplished without a contractor.
  • These enhancements can be performed at an inexpensive cost.
  • Consider using a power washer to clean the deck or exterior property instead of painting. Sometimes a little bit of elbow grease and a power washer is what’s needed to take 20 years of gunk off of a house.
  • You will be surprised what a good power washer can do and in the long run, it can save you a bunch of cash.
  • You can use a good power washer to clean cement, outside walls, roofs, decks, etc.
  • While the cost of rehabbing the exterior of the property will differ from property to property, these costs are generally lower than other project improvements.

Property Interior: The main costs of rehabbing a property will involve the interior of the property.

  • Depending on the repairs needed, the scope of work inside the property will almost always demand the biggest chunk of the budget.
  • Projects like repairs to the HVAC system, plumbing, and electrical systems tie up most of the cash in a rehab.

However, there are a few things investors can do to avoid overspending.

  • For starters, there are endless ways for investors to enhance interior appearance through do-it-yourself improvements.
  • Changing the doors or painting the cabinets instead of replacing the cabinets.
  • Repairing existing systems rather than replacing them.
  • Resurfacing countertops, repairing AC units, and heating systems, and patching up defective items.
  • Switching out cosmetic elements is shown to have a high impact on buyers. Things like light fixtures, door handles, hinges, medicine cabinet, etc. 
  • Note: a little paint goes a long way. Whitewashing the hallways, common areas and basement goes a long way. 

Pro Tip: As mentioned earlier, as an investor you must choose repairs that offer the highest return on investment. These upgrades will help produce the best return for your dollar. Sample projects include the addition of energy-efficient appliances, bathroom upgrades, and insulated windows and doors.

Wrap Up: The last piece to rehabbing a property is finalizing the improvements.

  • Do a walkthrough with your contractor by your side.
  • Examine all of the work done, including double-checking any adjustments made during the renovation.
  • Make a final punch list if necessary.
  • A final inspection by a professional service is also recommended, as they can confirm the work completed by the contractor.
  • The confirmation that the work is finalized correctly lets you sleep better at night.
  • Avoid having a combative attitude with the contractor.  You want to cultivate that relationship if you want to keep investing in that area.

Exit Strategy: Once your rehab project is complete, it’s time to achieve your exit strategy!

  • Note: To ensure success, make sure you think about your exit strategy before you start the project, in the middle of the project and at the end….this is a must!
  • If you follow our guide and started advertising early on, you should already have some nibbles on your rental ads.
    • Contact anyone who expressed an interest in your property rental ad.
    • Whether it be potential buyers or renters. If you get lucky, you may secure a terrific offer or place excellent tenants without even having to take the house to market.
    • Otherwise, list the property on an online listing platform for renters or buyers and get the ball rolling.
    • After this final step, your project is now complete.
    • Rinse and repeat the process!!

💎Pro Tip: Green and energy-efficient systems are in favor and will impact your investment returns.

  • Buyers will sometimes pay extra for a property with a low carbon footprint and energy-efficient systems.
  • Items like solar power, water reclamation system for watering the grass and other creative ways to conserve and reuse resources is a clever way to make an old house into a progressive one.

☛ 7 Property Rehab Tips for Newbies:

Rehabbing your first investment is no easy feat. You will feel like your are drowning sometimes, but that is normal.  Just keep moving towards the finishing line.   The following helpful tips are for your very first project:

Don’t bite off more than you can chew: Especially with your very first project.

  • Don’t hesitate to start at a level 1 or 2 rehabs.
  • Focus on a few renovation projects that offer a high return on investment.
  • At first, try to do one project at a time.
  • This allows you to focus on completing the rehab without too many distractions.
  • Take on bigger projects as you gain more experience.

☛ Rehabbing an Investment Property: 5 Mistakes to Avoid

As you gain understanding, you will become more secure with the methods of rehabbing investment property.  However, that may not make your first rehab any less terrifying. Read through these closing mistakes to avoid before embarking on your first investment property rehab:

☛ Final Thoughts

In conclusion, rehabbing investment properties on a budget is not only possible, but it can also be highly profitable with the right approach. The key is to prioritize, plan meticulously, and make smart, cost-effective decisions that add real value to the property. Remember, it’s not about how much money you pour into the project, but rather how wisely you use your resources to create a desirable property that attracts buyers or renters. With the strategies outlined in this guide, you’re well on your way to mastering the art of budget-friendly rehab. So, roll up your sleeves and let the transformation begin!

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