Rehabbing & House Flipping
Market News & Data
General Info
Real Estate Strategies
Short-Term & Vacation Rental Discussions
presented by

Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Tax, SDIRAs & Cost Segregation
presented by

1031 Exchanges
presented by

Real Estate Classifieds
Reviews & Feedback
Updated about 7 years ago on . Most recent reply

Rehab Costs on a 10k house
I see more and more investors buying 10k SFR's in low-income areas. They put 5k-7k into rehabbing the house, and renting it to Section 8 for a nice, consistent ROI. I personally know 3 people who do this. They actually never even step foot on the properties they are purchasing, and they are all doing very, very well. A friend of mine let me see the numbers on one of his deals. Here it is. $5000 purchase. $7500 getting the home Sec 8 ready. Gross rent is $800. Property taxes are $100/Mo. Insurance is $60/Mo. Water+Sewer is $80/Mo. Vacancy/Repairs/CapEx $200. Rental Registration $3/Mo. Lawn, trash, snow, are not paid for. Taxes include Trash removal. PM is $75/Mo. Expenses- $518/mo. Cash Flow- $282/Mo. No mortgage, really not losing anything during turnover periods, and I think that CapEx is more than conservative. 3br 1 bath. 1200 sqft. Also I would like to add that he does NOT rehab the houses himself. He has bought and rented 2 houses per month, for the past year. Curious on what your opinions are, and why you do or don't like this strategy.
Most Popular Reply

This is exactly what my mentor does, and he makes insane amounts of money! I think that model works A+++ if you have A LOT of units, because there will be some bad apples, so I think he had 100 houses, 1 eviction isn't a big deal, but if you are starting with say 5 houses, 1 could hurt, so I think scale is the most important factor with that business model.
We do a modified version, normally buy $15K, and instead of $7K in rehab costs, we will do $15K, and make the houses look nice and updated. Our houses look gorgeous, and we never have a problem renting them out. You just have to define your business plan, and make it work for you!