Worst Case Scenarios?

[Amy Fulbright]

I realized recently that what's really holding me back from diving into REI with both feet is that I don't have a solid set of exit strategies for if/when things go wrong. Not only that, I'm not sure that I'm AWARE of what can go wrong. Can you help me create a list of general categories of things that can go wrong?

Here's what I've got so far  

- I hire a bad General Contractor/handyman/contractor to do the repairs
- Rehab goes over budget (and I don't catch it until after the budgeted funds have been spent, house isn't finished)
- Rehab goes over budget (and I catch that it's going to happen, before the budget is totally busted)
- Rehab goes over budget (and I don't catch it until after the budgeted funds have been spent, house IS market-ready though)
- Reappraisal comes in low after rehab/Can't refinance
- Can't sell for enough to break even
- Can't rent for enough to cover monthly loan payment

My eventual goal is to get a list of the top 5-10 things that commonly go wrong, and then find ways to PREVENT the them. 

[Bjorn Ahlblad]

@Amy Fulbright by the time you have read the list and checked it twice the property will have been sold to someone else. It is good to be thoughtful and conservative; but it is like a lot of things follow the rules until you learn which ones you don't need to worry about. When you are new don't get into a big rehab, don't buy w/o a realtor, get a pro inspection, get liability insurance, learn to underwrite, learn LL tenant laws, screen your tenants, including inherited tenants etc. etc. I would not get into a rehab at all if I had no experience; lots of places are rent ready. All the best!