Level of Rehab for a BRRRR

[Mike Rios]

Sup Folks,

About to close on a 3/1 REO as an owner-occupant for 190k(cash), current county assessment is 220k, ARV is about 325k and I plan on BRRRing. House is from the 60's and has a 15 year old roof. House has an illegal bathroom and illegal room extension. Ive done a sewer scope and normal house inspection and the estimated costs seems to be 20k from the inspection reports( will probably need to do a gut job). The floor plan is pretty bad but I have some good ideas on the rehab, but Its my first one and I'm at a crossroads. Its clear for rentals you don't want to spend too much on the rehab as long as you cashflow, but I don't know what the appropriate threshold is for a BRRRR because you want a higher appraisal and for the cash out refi and still cash flow at the end of month. I also don't know what To do about the code violations and how that'll effect the appraisal. Any advice?