Even if you use up all 65k in equity to make the rehab, and if we are conservative and use the 50% rule, you are still at 10% ROI. 

As far as reducing expenses, it appears that 50% net income is a conservative estimate, and 25% is an aggressive estimate. 

Be ethical and conservative!  

I'm no paint expert (and to remain conservative in my estimates) I'm going to assume the worst for now and say the paint that is peeling off the walls is lead based.Does anyone have any idea what the process is and the costs associated with lead paint removal? 

Jaysen: Colin here - My CPA is just conservative but he's against a HELOC and has pointed out a few things to me after closing on these two properties in 2018.

Hi Kristin, when I run my numbers I personally start from the ARV and work my way back, in this part of the year I try to go conservative on my ARV and then even take 5-10% off that just to ensure the deal still works, then I run my rehab numbers, add an additional 5-10% on that just to ensure a buffer in the event something unexpected pops up (it will) and THEN I will find my acquisition price, ultimately I want to be ALL IN at about 75-80% of the ARV.

Run it by an experienced local investor or two.Determine repair costs and be conservative.

I'm more inclined to think that this is a very new law and folks are flouting it, and I'm being pretty conservative by trying to obey it. 

Maybe I am being too conservative with expenses that are turning actual good deals into bad deals?

That's a pretty conservative number and doesn't always work around here where purchase prices are much higher than other parts of the country.The 1% rule is for rentals and is a way of ballparking a deal.