It Costs More and Takes Longer Than You Think

One of the most consistent problems that new investors have is that they think they can get away with rehabs on the cheap. For one thing, you pay what you get for. Don't hire some subpar contractor who pays a bunch of sketchy semi-employable people under the table to do your rehabs with a mix of cheap materials, used materials and possibly stolen materials.

Secondly, projects usually take longer and cost more than you expect. This is especially true for new investors, but even experiences one's can get burned. The Sydney Opera House was supposed to cost $7 million dollars and take four years to build. Instead it cost $102 million dollars and took 14 years to build. Oops!

If such a project can go south, so can yours. First, a contractor's bid often doesn't include many vendors (HVAC, carpet, appliances, etc.). Furthermore, there will be add-ons and change orders, I guarantee it. And in addition to that, you have holding costs.

So make sure to add in at least an extra 25% on top of the what you think it will cost, and at least a week, probably more depending on the size of the project. And of course, the big key is to get really good deals. This will leave you with the margin you need if there are problems with the rehab. And trust me, there are always problems with the rehabs.