Expensive Things That Will Kill Your Rehab Profits!

by | Apr 18, 2014 | New Investor, Rehabbing Tips, Uncategorized |

house-money

Nobody likes surprises when rehabbing. They are usually expensive. There are a few gotchas in particular that will hurt your backend profits. Be aware of these when doing your inspections and rehab budgets, and your project will not resemble an overly dramatic rehab show on TV! The following are some things to pay particular attention to when inspecting your projects:

Septic Systems

Its imperative to find out if your potential project is on public or private water. An outdated septic or a well that does not “perc” (produce sufficient water pressure or flow per minute) will derail your project quickly. Redrilling a well or replacing a septic system could cost $10,000-$20,000 or more. Its a good idea to have the septic system inspected before you even purchase the house. These inspections still might not be sufficient to satisfy the local municipality though (ask me how I know). They might require you to bring the system up to current code in order to issue you a building permit for your project, whether or not you are adding an addition into the house, Its best to check with the local environmental protection agency to see what records they have on the system. If it was recently repaired or upgraded, you will probably be fine. If you are investing in Maryland, be aware that if you are installing a new septic, they will require you to put in a BAT (Best Available Technologies) system consisting of a double tank and a pump. These systems can be twice the cost of the older versions. The purpose of the BAT system is to reduce the nitrogen contamination that septic systems contribute to the groundwater.

Roofs

Its a good idea to take a par of binoculars on your inspection of our potential rehab. That way you can see the condition of the roof without having to climb up there. Curled edges on your asphalt shingles indicate a roof past its prime. Also take note of the number of layers on your roof. There should be no more than 2 layers of shingles on the roof. Any more than that and you might run into issues on your home inspection during the sale.