Financial Modeling of Renovation/Rehab Costs

[Michael K.]

You acquire a property that as a renovation/rehab play, not necessarily just for the units themselves, but also improvements to be made to building systems and exterior . . . Let's say you already know the approximate $ figures of the costs of the renovations you plan to make to the property. I usually just add this amount to the cash invested equity portion. But I am curious to see how others might be incorporating renovation/rehab costs in their financial model, especially if these changes are done over time, a period of a few years perhaps. Also, where you are adding these costs to - to the equity portion? taking additional debt? seller concession? How do you typically account for these renovations costs in your financial model?