People nowadays are not keen on selling their houses without any improvement or rehab. This leaves us with two choices. You can either rehab your house and sell it to a buyer or sell your rehabilitated house to an investor. Let us compare the two to see which one is the best option for you.
Selling rehab house to a buyer
The main purpose behind selling a rehab house is to attract the buyer and get the maximum value of your property. Especially, as many people are selling flipped or rehab house, improvising your house ensures that you don’t get left behind in the market.
Selling a house in as-is condition is not very beneficial, especially when your house is old and requires maintenance. Homebuyers prefer moving to a house that requires little to no improvement. Plus, rehabilitating your house can increase the value up to five times or even more in some cases.
Pros
Make a quick profit
The main reason people rehabilitate their house is in the hope of making quick money. If you correctly rehab your house, you can earn huge profits. Selling a rehab house will give you an upper hand on setting a favorable price. With a well-furbished house, the buyers have the least grounds for negotiating the price.
Unanticipated cost
Selling a rehab house to the buyer will help you learn to budget on unexpected costs like construction delays, building permits, etc. In case you are unable to sell as sooner as you expected, it would help you to hold the cost.
Cons
Losing money instead of gaining
Rehabilitating a house is not an easy task. You have to be very careful about how much you invest and sell the house. You have to pay 70% of ARV minus the cost of the repairs. Without experience and proper guidance, you may get a loss on your rehab property instead of gain.
Selling rehab house to an investor
We talked about how rehabilitating your house can help you get the upper-hand in the neighborhood. Unfortunately, the situations are not always ideal. Other sellers around you can have a higher property value and better house improvisations, which you cannot afford to match.
In such a case where you are can’t find a suitable buyer, it is good to sell your rehab house to an investor. An investor will quickly buy a rehab house as they can easily sell it to a buyer.
Pros
The minimum investment on rehabilitating the house
When selling the house to a buyer, you have to make all the necessary improvements, which cost a lot. Homebuyers these days are very particular about the maintenance and appeal of the house. But when you have to sell the house to an investor, you can do that with minimal changes and repair.
Fast closing
As you don’t need to get into any home inspections and approved financing, you can sell the house to an investor pretty quickly. Investors can close in as little as seven days when they find your property suitable enough to buy.
Cons
Selling below market value
Remember that there is less profit in selling your house to an investor. Investors have an advantage behind cash offers. They are entitled to buy the house lower than the market value as they have to sell it later as well.
Bottom Line
The trend of rehabilitating houses in Houston is growing very popularly in real estate. Improvising a house and selling it is a great investment. Selling a rehab house to a buyer or seller has its own benefits and downsides. See the market value of your house and how much you can invest in rehabilitation. This will determine which option is best for you.