It is probably a high C in a comparable neighborhood. the cap rate would need to be over 10 for that right?

Hi,I have a not-completely-hypothetical example for advice.Would you rather purchase a single family at $50k which will need $20k of repair to rent at 900/month, or a converted house that is currently in ok shape, wit...

Comparable rents in the area are $450-650. 

@Jessica Chow Congrats on the rental, pulling the trigger on the first one is challenging.Do you have an estoppel agreement from the tenant and have you compared that to the lease provided by the current owner along with whatever background info they collected from the application?

The latter has more risk and {potentially} more reward, but as my uncle would say: unless you grew up farming, you probably shouldn't consider share-cropping  [The same would apply to renting pasture for live-stock on a per-head share].  

In other words, a lot of calculations must be performed and compared. 

There are no comparable homes in the neighborhood and it sits as one of the most expensive homes in the neighborhood  (although price per sq ft is slightly lower than the smaller homes) which scares me a bit if there is to be a market correction in the next few years.

Just find a comparable home after reno.

When I was heavy into the BRRRR strategy, before it had a cool name, I was rehabbing close to flip condition using less expensive materials where I could to achieve a comparable property to the flip houses in order to get the best value on the refi.

The market is not rewarding rehabs with high profits.