Rehabbing Homes for Fun and Profit in the Cincinnati Area

Buying residential properties, fixing them up , and reselling for a short term profit is commonly known as “rehabbing”.  Rehabbing is an excellent investment strategy, particularly in the Cincinnati area, though there are some things to be aware of if you are considering this lucrative real estate venture.

One of the main considerations is the tax issues associated with the profits.  Because the timeline for rehabbing is usually just a few months from identifying the property to the closing of the sale, this technically generates short-term gains, which are taxed at a higher rate than long-term gains. The other consideration is that if you rehab and resell too many properties, the IRS could potentially consider you a “builder” and that has major tax implications as well.

One way to solve both problems is to hold the properties for one year and one day, by fixing them up and renting them, then listing them for sale approximately one month before the one year anniversary of the purchase.  This converts the profit into a long-term gain, and you can use a 1031 exchange to shield the profits from taxes.

Equity Team helps investors locate properties that are suitable for rehabbing, but when it comes to actually fixing up the properties, there are some things you should be aware of.  First is that you make your money when you buy, by buying at rock-bottom prices, so only work with motivated sellers.  Second, make sure you estimate the repair costs accurately, and get bids from multiple subcontractors so that you don’t overpay for repairs.  Use only licensed subcontractors except for general labor.

Also, repair and renovate only to the standards of the neighborhood and the expectations of the buyers for the price range.  Don’t “over-renovate” because you won’t get a return on the extra money spent.  Shop around for the best prices on fixtures, carpet, etc. and don’t be afraid to put in “used” fixtures.

Always get full home inspections while you have the property under contract, and if anything significant, like structural / foundation issues arise, walk away from the deal.  By houses that are in good condition but that just need carpet, paint, and some landscaping, and a few fixtures, and when you resell it, you’ll get a great return on your investment.

There are numerous other considerations as well, but the experts of are experienced guiding investors to the properties that are suitable given your investment requirements, goals, and aptitude for undertaking a renovation project. Let experienced pros help you make an informed decision so your project has the maximum chance of turning into a nice payday for you in the end. Contact the today to start locating suitable properties in the Cincinnati area that are just right for you!