Discounting for Immediate Renovations and Repairs

[Seth C.]

When looking at an investment with value-add rehab, obviously we need to take market cap rate and discount for the actual costs of repairs. But there is no reason to take on the risk, time, lost rent, and work for the same return as a turnkey.

My question then is how much do you discount and how do you phrase that discount? That is, do you discount x dollars, or require a better cap rate, etc., and how much? It obviously depends on the work required, but some typical scenarios would help!