Quote from @Michael Florkowski: I really like this approach.

Cost segregation utilizes the MACRS approach.

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.

In driving past our property, we saw that a bunch of fill dirt was brought in for elevation/grading.We also did a visit to Pine Island which has a lot of areas of worse damage. 

It feels like there’s always a surprise—whether it’s skyrocketing material prices or finding something unexpected during the demo—that eats into the budget and profits.I know there’s always more to learn, so I’m curious—how do you approach rehab budgeting?

@Chris Mahoo many new investors don't take the time to properly understand RE investing.1) Many are using approaches from 2010-2018 when Class A property prices were so low from the Great RE Crash that an investor could cashflow and get pretty easy Class A tenants to manage.2) If you look at what investors were doing before 2008-2010, most were buying Class B & C rentals.To make it worth while, an investor either needs to Fix & Flip or invest & hold rentals for 10+ years.- Over a 10 year period cashflow will increase as rents increase (rents typically rise faster than property taxes, insurance, etc.)- The property should be appreciating, if purchased in a good location, increasing the owner's equity/wealth.- Rents will be paying the mortgage off, increasing the owner's equity/wealth.- If you hold a rental until death, you can pass it on with a stepped-up cost basis, limiting captial gains if then sold (limited by inheritance tax limitations).Too many newbies on this site trying to replace their day job income via "passive" real estate investing w/o digging deep enough to understand how it really works.

Hey Jason - if it's a 1-4 unit, you would need to value it based off the sales comp approach (assuming the buyer is using debt financing).

High-end properties might require a white-glove approach with customized services, while more modest properties may prioritize affordability and efficient communication.

Totally agree with your approach!

I did approach them about a year ago about getting $25k credit line per property, and the response I got was basically no.