Upfront repair costs canceling out cashflow for X years

[Brendan L.]

I'm trying to buy my first duplex. I have one under contract, and I'm trying to determine the initial repair costs.

I need to decide between keeping the slate roof and repairing year to year, or just replacing. I'm looking at up to 5k in other structural deferred maintenance, and I would like to dump 10-20k into improvements to raise rents. So maybe up to 30k-35k up front.

So if I invest all this money up front, I won't make it back until 3-5 years in. Keep in mind, I expect these investments to be strictly for cashflow, not for appreciation in my area.

Would that be concerning to you as a real estate investor? A concern I have is, what if it doesn't work out and I have to sell before I make that money back? I guess I just have to hold on to it for a while to reap the benefits of initial capex repairs and cosmetic improvements..

[Wayne Brooks]

Up front repairs are considered part of your acquisition/cost basis....different than ongoing repairs and capex, but of course cuts into your cash.