Updated about 3 years ago on . Most recent reply
Rehab -or- Sell
Hello,
This is my first ever post, I am a newbie to BiggerPockets.
My family has recently taken back a property that was forfeited through a land contract forfeiture. The whole process was an ordeal in itself. Anyways, I am looking for advice and asking those who have more experience and knowledge than myself.
The property in question (located in SW Michigan) is quite distressed, missing walls, probable termite damage, damp/soft flooring, and probably many other issues.
However, I am located in Florida, and do not know of any investors and contractors in the SW Michigan area. My question is this, should I look for a partner (and hope to learn ), or should I just sell the property as-is?
Most Popular Reply
If you know how to get reliable contractors and are an experienced investor, I would say you 'could' try to rehab the property. However, rehabbing is especially difficult if you're a long-distance investor. First and foremost, your contractors might screw your chances of making money on the property. They could not stick to the plan and be seriously behind schedule. Worse, if you're not there to check on them, things can go downhill very quickly. They might now show up at all.
Partnering up with somebody can also be an excellent chance to learn. If you do decide to partner up, they will have local knowledge, and navigate through the process of looking for a contractor. You will also be able to minimize your risk since you're partnering up. However, partnering up could be a dangerous move as well. They can have disagreements with you, and want to do things their own way. Even so, they're taking their share of the profit. If you're partnering up, be sure to pick your partner carefully!
If you decide to sell it as is, you might not get as good of a price, but you won't have the headache of dealing with partners, contractors, etc. If you're a beginner investor, I wouldn't recommend partnering up to do long-distance investing, especially if you don't have a large cash reserve. However, if you're an experienced investor, and feel relatively confident, partnering up sounds like a good choice as well.
Finally, do some research on "What could go wrong?"(What if the contractors are behind schedule? What if I find hidden costs? What if the rehabbing cost is much more than I anticipated?) Think of all the possibilities of your deal going bad, ask other people, and reinforce your plan. This will allow you to minimize your stress and risks.
Keep us updated on your progress, and good luck on your journey!