What rehab cost would yield a $200 rent increase?

[Victor Oben]

I found a property that's $200-300 below market rent and needs some work. How do I estimate what rehab cost would make the rent worth raising $200-300? Is there a formula to calculate this?

[Mitch Messer]

Hi @Victor Oben. There's no magic formula, but there is a simple solution!

If market rents are $200-300 higher than what your target property is receiving, then you just need to examine what amenities and features these other rentals have that yours doesn't.

Go visit a few neighborhood properties that currently command a higher rent and make careful note of the interior and exterior. Notice the flooring choices (carpet, vinyl, ceramic tile, hardwoods, etc.), the paint schemes, the plumbing and electrical fixtures, the appliances, landscaping, etc.

Once you know exactly what is missing, then you can determine what it will cost to bring your property up to this higher standard.