Flippers – Do you rehab for profit or ego?

By | Flipping

One of our customers, Kurtis Squyres, regularly sends out emails to his investor clients. His latest email caught my attention as it reminded me of one of the more significant newbie investor mistakes – over rehabbing.

Back in the boom I would try hard not to roll my eyes when someone started telling me how their fantastic rehab skills had made them so much money on the house they flipped. The math would usually go something like this: purchased for $250k, spent $50k and every free night and weekend on rehab over 6 months, sold for $370k, netted $50k profit. The problem is that they failed to realize that most of the gain was due to the market, so instead of killing themselves on an over the top rehab they could have done: $250k purchase, $5k rehab, sell for $330k, net $60k. Bottom line — their brilliant rehab skills lost them $10k and months of weekends and evenings working their butts off.

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