Calculating Turn Costs Question in Indiana

[Jason A.]

Hello everyone,

I just started investing out of state and was wondering if this calculation sounds about right. I had a PM company do a cost analysis on a turn for a duplex that I just bought. Estimated cost is $4,000 for a single 650 sq. ft. unit. Here is a breakdown of the items they saw that needs attention.

Needs minor trash removal; needs mown

Support post trim needs replaced; badly deteriorated; upper trim needs scraped and painted

Broken panes on side back needs replaced

Replace fixture on front porch; flood lights on back

Needs some minor trash removed and minor work done

220 wiring needs secured;not up to code, needs to be placed inside conduit.

Install new furnace filter

Clean and paint register vents

Install apprx. 4 door stops

Full interior rent ready cleaning required after all work complete

Replace as needed to match all light bulbs

Steam clean all carpet; sweep and mop vinyl

Replace missing storm door, paint interior door

Paint all walls

Paint door; interior shows signs of previous leak, but doesn’t appear to be a current problem; paint interior

Seal gaps in side window; paint all; seals appear damaged on double pane windows; may not be an issue

Replace screens

Install two smoke detectors

Install two blinds

Touch up, as needed

Paint all window seals

Seals appear bad; paint

Install screen

Very old and drawers fall out; should be replaced with new; secure handles, if kept

Has several large chips; functional sink otherwise

Install two strainers

Install fire extinguisher

Paint side exit door

Estimated cost is $4,000. 

Rents bring about $550/month for the area.

What do you guys think? Is this about what you spend on a turn? Any feedback is appreciated.

Kindest Regards,

[Andrew S.]

@Jason A.  you definitely (and urgently) have to find ways to lower those turn costs.  You can’t pay anywhere close to 4K to turn a unit that brings in $550 a month, unless your place doesn’t turn over but once every 10 or 20 years.  I shoot for no more than 1 month rent as a reasonable goal for a standard turn unless I also do a major update like all new floors or new windows, etc.  sometimes it’s more and sometimes it’s less, but 1x is the goal.  Yours looks like about 7x and that will be unsustainable in the long run.

Remember, your PM will ask for 0.5x-1x for finding a new tenant and then you will also have maybe 1-3 weeks ( or more) of vacancy on top of everything.