Real Estate Rehabbing

Have you ever asked yourself, what is rehabbing? Or been to a meeting, and wondered what real estate rehabbing was? Some people talking about remodeling, and other ways of fixing up a house, but they are using the terms incorrectly. Simply put, real estate rehabbing is the act of restoring a house to its previous condition. Remodeling, on the other hand, is the act of upgrading or improving the property in some way as has not been done to it in the past. Some examples of remodeling are:

  • Adding a new room to the house.
  • Adding a garage or storage shed.
  • Tearing out a standard bath tub and replacing it with a large, jacuzzi or garden tub.
  • Adding an island to a standard kitchen.
  • Replacing carpet with hardwood floors.
  • Replacing A/C window units with central heat and air.
  • Significant landscaping upgrades.

On the flip side, when you are talking about rehabbing a property, generally you are talking about things that are really necessary to fix, things that are obvious eye sores or code violations, such as:

  • Replacing worn out carpet with new carpet.
  • Re-painting the interior/exterior.
  • Replacing a dysfunctional dishwasher with a new dishwasher of similar size and capabilities.
  • Fixing or replacing a leaky roof.
  • Fixing worn out plumbing and electrical.
  • Replacing non-working light fixtures and faucets, etc.
  • Mowing the grass and removing weeds.

So you see, in the first group, when we are talking about remodeling, we are talking about significant upgrades and improvements to a house. Improvements like adding rooms, central heat and air conditioning can actually increase the value of the house. But when you are strictly talking about rehabbing, all you are doing in that scenario is fixing only the things that really need to be fixed, you aren’t adding any value to the house, you are simply preparing the house to sell at market value. Often, when you remodel, you end up spending more than you stand to make by when you sell the house (unless of course you wait for years and let the property appreciate). So I normally go for properties to rehab, because you can get them cheap, spend a minimal amount of money in repairs, and then get market value for the sale of the property.

So to recap, just remember that rehabbing is just fixing the things that are broken or old in the house, and remodeling is making significant upgrades to the house. If you found this article interesting, sign up for my RSS feed to get free, automatic updates as they become available in your favorite RSS reader. Don’t know what a RSS feed is? Learn more about property rehabbing

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