When you are rehabbing houses for profit it is important to have a plan. You need to know how much it will cost to do the work and you need to know how long it will take. You will also have carrying costs while the house is being worked on. More time is going to mean more money that needs to be planned for.

As always, your plan is only as good as the information you put into it. And that is why you need to have good accurate forecasts for how much time and money is involved. If you are working with contractors make sure that you stress this upfront. One of the criteria I have for working with contractors is how accurate their estimates are. Even if they are a little more expensive at least I can plan for it upfront and I know my plan will be correct.

If it can go wrong it will go wrong. This saying is true for many things in life but especially rehabbing houses. One project can often reveal problems that you were not aware of. And this leads to more projects with more time and money. So how can you plan for this (other than buying a crystal ball)?

The only way is to set aside a portion of your budget for overrun costs. This way no matter what happens you will have a buffer in place to protect you. I can’t stress this point enough, one of the top reasons people lose money on fixing up houses is because they went over budget and lost all of their profit.

When you create your budget increase it by a certain percent right from the start. Then if you can still make a profit you will be safe from almost anything that might happen. I have heard to use anywhere from 25% to 50% as a buffer. I know this sounds like a lot but this is the safest way to invest, especially if you are a beginner.

Of course, this article can’t cover every little thing you will need to know to successfully rehab houses. But these guidelines are a great start and following them will let you confidently build experience. If I have one last thing to say it is — be patient. Once you start looking at houses you will find many that come close to meeting all of the requirements, but they don’t meet all of them. Stay away from these.

It may take a while to find the house you are looking for and I know that can be frustrating. But don’t bend your own rules just to get started faster. If you follow all of these guidelines you may not find a ton of properties to work with. But the few properties you do find will be good smart investments that will make a profit. And that is the key. As a real estate investor, you are looking for quality properties.

So remember to stay patient, stick with what you know, get accurate forecasts and plan for unexpected costs. Good luck!

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