The maximum rehab loan that can be obtained is 35k, so the contractor's total estimate needed to be within that budget.

Account ClosedThe closer you are to a $50,000 price point, the more likely, you want to be closer to the 2% rule than the 1% rule.Items like Maintenance, Capex, Vacancy don't take money out of your pocket every month.You budget for them though becuase you know eventuallyYour tenant will leaveYou will need to replace the water heaterYou will need to replace the roofAnother issue with Turn-key is that you are paying a premium.

One selling point they like to make is that you dont need to budget for rehab/capex because the property should be good as new from reno.

But 50% of a watermelon is better than 100% of a grape as Mark Cuban would like to say.Here's the financial snapshot:~$650,000 worth of property~$520,000 worth of debt service~$130,000 worth of equity ($43,300 each)~$1,300 cash flow (after PITI)$0 out of pocketInfinity ROIInfinity knowledge$5,000 set aside for future repairs (money from bank refinance)Lessons Learned:-Plumbing is one of our largest expenses-Check all the electric, worth the peace of mind-Granite is worth the extra cost even on <$100k homes (better ARV, tenant proof and better tenant)-Section 8 isn't so scary if you've got a good tenant-Having a truck is a game-changer!

You also budget for utilities that the land lord pays, and you will want to know how the building is metered (who pays for utilities). 

I also believe I won't have to budget much for vacancy with the current tenant, at least for a few years (albeit stuff does happen).

This is your rehab budget. 3) I can't comment on California.

Bought this one with three partners @Elan Radbil, @Ben Hutto and @Jake Guhy using a commercial line of credit.Purchase price: $95,000 4bd/3baRehab budget: $40,000Scope: Paint in/out, foundation work, new plumbing, new flooring, new decks, counter tops and converting a master bedroom into a 1/1 in-law suite. 

, which is within my cash budget, and out within 6-12 months per deal. 

In fact, we had some extra expenses come up this year and could have done way better about budgeting and this strategy still worked really well.