Find a diamond in the rough

Image courtesy of Boykung from freedigitalphotos.net

Image courtesy of Boykung from freedigitalphotos.net

Do you like to turn the old and ugly into the new and improved?  Then rehabbing homes may be for you.  Here, you are looking at houses and get to figure out how to make them better .  You can make a house into someone’s dream home.  It’s a lot of fun!  However with this strategy, you must make sure you have someone you trust go through the home to see what it needs to bring it up to full retail condition.  Then you have to carefully estimate your rehab costs, making sure that you have considered your error factor (at minimum 10% of total rehab costs), holding costs (interest, electric, heat, water, taxes etc. while rehabbing) and your minimum profit (of course) to see if the deal is doable.  It may or may not be.  Don’t be so anxious to make a deal you get emotional and buy it anyway thinking it will all work out.  Carefully run the numbers and do your due diligence.  You are looking for a blue diamond in the rough and it can take a long time to find one.  Be patient, my friends.  Good things come to those who wait.

Do you have a favorite “Diamond in the rough” story?  If so, please share.

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