There are three aspects to doing rehabs.
The first is buying right. The second is figuring out what adds the most value for the buck in your area. The third is knowing all about what taxes you’ll be liable for as a Real Estate Dealer/Developer, which is what the IRS will consider you. You will want to look into precisely which business entity will fit your situation. C-corps, S-corps, LLCs, and Limited Partnerships all have benefits and drawbacks.
Also, a thorough knowlege of construction is necessary. Don’t even consider rehabbing if you do not have a background in construction. There is a helluva lot more to rehabbing than you see on HGTV, and just throwing a coat of paint on the house will not add $50,000 in value. If you don’t have the knowlege, you’ll have to sub out every single aspect of the rehab, which will cut severely into your profit margin.
I personally worked 8 years in construction, from rough framing to roofing to siding. However, in the past two years of self-employment in the Real Estate industry I have also become proficient in drywalling, trim work, landscaping, plumbing, electrical, masonry, windows, flooring (carpet, hardwood refinishing, vinyl, and ceramic tile), and above all… vision!
Not only do you have to know all of this, but you have to have the VISION necessary to see what a rehab property will look like upon completion. I have spent countless hours looking through “idea” books for kitchens, baths, bedrooms, and landscaping… and use it all daily. As your experience grows, obviously this will become easier.
There. That’s the long version of it.