Cash Flow Analysis - Accounting for Rehab Costs
When figuring cash flow where does the cost of rehabbing fit into the equation? I am looking at a duplex which will have quite a bit of work to be done ($30,000 by my estimation).
Not accounting for the large sum up front, the cash flow looks nice - $4655 per year for both units which includes the cost of hiring an outside property manager (which I won't actually do). But then I have the $30,000 figure staring at me and don't know what to do with it. Should I consider it part of the mortgage principle? If I do that the cash flow drops to $2946.
Please advise.