5 Crucial Qualities of a Denver Rehab Property
When it comes to a Denver rehab property, not every home is a great investment. In fact, as a rehabber you constantly walk a thin line between major success and major disappointment. The first step to success is choosing the right Denver property, but how do you know which one is the right one? The right property will have the mix of a desirable location, layout, affordability and potential property. Check out the five most crucial considerations when buying a Denver rehab property.
Location
The importance of a great location when selecting a Denver rehab property cannot be understated; the saying “location, location, location” is really true. A steeply discounted home in the middle of nowhere may not be the great deal you initially thought it would be, because when you are rehabbing you always have to look at the big picture. Your goal with a Denver rehab property is to add value do that you can make a profit. One of the easiest ways to accomplish this is to buy in a location with great demand. Search for properties that are near highly-rated school districts, and that have convenient access to retail centers and major highways. Even if the rehab property you are planning on buying is the worst looking one on the block, it’s better to buy in an in-demand area than to buy the best house where nobody is looking to move because end buyers always gravitate towards the better location.
Specific Markets
Once you have a location, you need to focus on the specific Denver market and a lot can change within a zip code in just a couple of miles. Getting a good deal on a property in a market with rising foreclosures and high unemployment rates is a surefire way to lose money on your rehab. You also want to be sure and look into the crime rate when considering your market. Before you buy, it’s important that you conduct research and look for markets that are on the rise. Take a look at the number of new housing permits or see if there are any major employers that are coming to the area soon. Drive around the neighborhood and the street the property is on and make note of the homes that surround your rehab property. The properties that surround yours are what your buyer will use to make comparisons, and if the homes surrounding yours are rundown or in poor condition, it will have an effect on your end price. Always avoid buying in a market just based on the zip code and do your homework before you make an offer.
Consider the Demand
One of the most common mistakes that Denver rehabbers make is to think about their personal preferences when buying a property. Generally speaking, you want to look for and buy rehab properties that will create the largest demand possible. While you can change nearly everything about a property, there are some things that are out of your control. Poor backyard space, unique property structure and a bad layout are often things that are unfixable. It may seem boring to you to purchase the same cookie cutter home that everyone else on the market is buying, but if those are the homes that are selling, it’s important that you listen to the market. You can consider adding your personal flair and style to the interior of the home, but err on the side of caution to appeal to the largest pool of buyers possible.
Think About Profit
The simplest things are often the truest: when rehabbing a Denver property, you want to find properties where you can add value. Getting your property at a discount is only a part of successful rehabbing. There are three major areas in which you can maximize profit: acquisition price, improvements and end sales price. The acquisition price is important because you need to acquire the property at a price that makes sense for you. Next, the improvements you complete will determine how much value you add to your property. Making the right renovations, upgrades and improvements will make a huge difference in your profit. Lastly, the end sales price is important. You need to be able to sell your property quickly and at the price you want. If the numbers in any of these areas are weak, consider looking at a different property.
Timeframe
The time in which you are able to turn a property around is nearly as important as the price you pay for it. You are bound to come across properties that are a good deal but that will take a good amount of time to close. While there isn’t a rule against waiting a few months for a property to close, you might want to pass on the property. In the time it may take to buy, rehab and sell this property, you may have been able to close two other properties. Look at the sales in the market over the last 90 days and look at how long these properties were on the market. Time really is money when it comes to rehab properties, so you want to be sure you invest wisely on both accounts.
The amateur rehabber will look primarily at the purchase price of a Denver rehab property. However, the savvy rehabber knows that there are many things to consider when selecting a property to rehab. Before you make your next rehab purchase, be sure that you have carefully considered the five items above.