It looks as though I will be getting an early retirement. I’ve been seriously looking in to rehabbing as a way to fill my time and supplement my income. Would any of you be willing to share your real life experience on realistic expectations for net profit. Ave home price in our area is $128k - was thinking on targeting the $50-75k range.

I realize there are a million variables… but on a typical rehab project - what’s the bottom line?

Thanks in advance

Hello. I have had experience rehabbing 2 homes in the last few years in my spare time. The first I did not make any money. I barely broke even. That was a terrible experience that was preventable if I would have done more research into the area of the home and a few other variables. The second one was much more successful. I bought a bank owned repo for 70. I put in approximately 10, and then sold it the first day it was listed on the market for 92k. I did most of the work myself, including texturing walls and ceilings, rewiring a couple of rooms, painting the entire inside, and re doing the whole kitchen. I also replaced the furnace and AC, plus new flooring. It took me about 4 months to do this project. I am now strictly doing flips and wholesaling as this frees up a ton more of my time. I hope this helps.

You notice that rehabbing and landlording is under the same heading. Maybe it is because many buy and hold are landlords and it is one way to get income property cheap enough to have good cash flow. You want to have at least 20% equity built in after all fix up and holding costs no matter whether you sell or keep.

I don’t suggest you do the work yourself unless you have uncommon skills. It takes too long and it keeps you from finding other deals.

If you can’ make 20% or at least 15K net then it is not the right deal.

I usually look for a minimum profit of 20k, but it depends on how much work it needs. If I’m spending 50k on the rehab, I’d like my profit to be close to 50, but if it’s a quick and easy carpet and paint, I’d probably be OK with 15.

Hope that helps- :slight_smile:

I’d like to get a dollar-for-dollar return on the money I spend to rehab a house, but it doesn’t always work that way. Last house I spent 53K on repairs (and holding costs, etc.) and netted 38K. The house I’m working on now I’m looking to spend about 100K on repairs and holding costs (I’m nearly doubling the square footage) and I hope to make somewhere near a 100K profit. We’ll see how it works out.