Calculating Turn Costs Question in Indiana

10 Replies

Hello everyone,

I just started investing out of state and was wondering if this calculation sounds about right. I had a PM company do a cost analysis on a turn for a duplex that I just bought. Estimated cost is $4,000 for a single 650 sq. ft. unit. Here is a breakdown of the items they saw that needs attention.

Needs minor trash removal; needs mown
Support post trim needs replaced; badly deteriorated; upper trim needs scraped and painted
Broken panes on side back needs replaced
Replace fixture on front porch; flood lights on back
Needs some minor trash removed and minor work done
220 wiring needs secured;not up to code, needs to be placed inside conduit.
Install new furnace filter
Clean and paint register vents
Install apprx. 4 door stops
Full interior rent ready cleaning required after all work complete
Replace as needed to match all light bulbs
Steam clean all carpet; sweep and mop vinyl
Replace missing storm door, paint interior door
Paint all walls
Paint door; interior shows signs of previous leak, but doesn’t appear to be a current problem; paint interior
Seal gaps in side window; paint all; seals appear damaged on double pane windows; may not be an issue
Replace screens
Install two smoke detectors
Install two blinds
Touch up, as needed
Paint all window seals
Seals appear bad; paint
Install screen
Very old and drawers fall out; should be replaced with new; secure handles, if kept
Has several large chips; functional sink otherwise
Install two strainers
Install fire extinguisher
Paint side exit door

Estimated cost is $4,000. 

Rents bring about $550/month for the area.

What do you guys think? Is this about what you spend on a turn? Any feedback is appreciated.

Kindest Regards,

Assuming everything goes according to what you mentioned, it doesn't sound too off, if any, to me personally. Also, I'm not saying it was a good or bad decision, but if you bought a house that needs work, by definition you did not buy a turn-key. When you say "turn", I'm guessing you mean "turn-key property."

Originally posted by @Jason A. :

Hello everyone,

I just started investing out of state and was wondering if this calculation sounds about right. I had a PM company do a cost analysis on a turn for a duplex that I just bought. Estimated cost is $4,000 for a single 650 sq. ft. unit. Here is a breakdown of the items they saw that needs attention.

Needs minor trash removal; needs mown
Support post trim needs replaced; badly deteriorated; upper trim needs scraped and painted
Broken panes on side back needs replaced
Replace fixture on front porch; flood lights on back
Needs some minor trash removed and minor work done
220 wiring needs secured;not up to code, needs to be placed inside conduit.
Install new furnace filter
Clean and paint register vents
Install apprx. 4 door stops
Full interior rent ready cleaning required after all work complete
Replace as needed to match all light bulbs
Steam clean all carpet; sweep and mop vinyl
Replace missing storm door, paint interior door
Paint all walls
Paint door; interior shows signs of previous leak, but doesn’t appear to be a current problem; paint interior
Seal gaps in side window; paint all; seals appear damaged on double pane windows; may not be an issue
Replace screens
Install two smoke detectors
Install two blinds
Touch up, as needed
Paint all window seals
Seals appear bad; paint
Install screen
Very old and drawers fall out; should be replaced with new; secure handles, if kept
Has several large chips; functional sink otherwise
Install two strainers
Install fire extinguisher
Paint side exit door

Estimated cost is $4,000. 

Rents bring about $550/month for the area.

What do you guys think? Is this about what you spend on a turn? Any feedback is appreciated.

Kindest Regards,

Does this include all the material also, or its just the labor.  Based on the estimate, I think this will include all the material also, otherwise its very high. Seems a little low when you consider material cost as well, to be honest.  How about the flooring? Are you replacing that as well, or that's in good condition.  How many coats of paint? One or two? 

By “turn” I mean “the turn”. A phrase that people use when going from one tenant to another, and getting the property rent ready from the previous tenant. This isn’t a rehab/remodel. The property is more or less in good condition. I believe it’s material cost as well. Nothing is being replaced however, just getting it ready for the next tenant. It seems expensive to me and here’s why. If there was a new tenant every year and the associated turn cost, then $4000 would eat up about 6 months of rent every year. 

Thanks guys for your input. 

@Jason A. Well the paint and everything it likely what adds the most cost. You shouldn’t have to be repainting every turnover unless the tenants are wrecking stuff. Average turnover for me is 1500 or so, with anything over 2000 being a lot of damage. I also never want carpet at it’s always being replaced. It seems a bit high but probably not by a lot.
Originally posted by @Jason A. :

By “turn” I mean “the turn”. A phrase that people use when going from one tenant to another, and getting the property rent ready from the previous tenant. This isn’t a rehab/remodel. The property is more or less in good condition. I believe it’s material cost as well. Nothing is being replaced however, just getting it ready for the next tenant. It seems expensive to me and here’s why. If there was a new tenant every year and the associated turn cost, then $4000 would eat up about 6 months of rent every year. 

Thanks guys for your input. 

 Do your tenants plan to have WWE style fights at the duplex? What makes you think you'd be spending that kind of money every yr. 

@Jason A. Just saw the rent is 550. That’s gonna be a low class tenant so they will be tougher on your properties, hence this will happen a lot more often then in higher class properties instead of what is likely a low C class duplex at best probably worse

True, I'm not sure If I would be spending that kind of money every year. Looking at the items that need attention, it seems pretty standard for a turn. Clean this, paint that, fix that etc. Thinking positively, I'd be spending maybe $2000 a year on a turn. I was just curious what people are spending on a turn for this kind of unit. 

Originally posted by @Jason A. :

True, I'm not sure If I would be spending that kind of money every year. Looking at the items that need attention, it seems pretty standard for a turn. Clean this, paint that, fix that etc. Thinking positively, I'd be spending maybe $2000 a year on a turn. I was just curious what people are spending on a turn for this kind of unit. 

 Also, remember.. They break it.. They pay to fix it.  A good PM will make sure that the tenants sign a walk through sheet when the tenant moves in, and if they have caused damage (other than wear and tear) they are going to fix it.  As long as they have income other than Social Security Benefits, you can garnish their wages.  

PM will make you or break your OOS venture.   

@Jason A.  you definitely (and urgently) have to find ways to lower those turn costs.  You can’t pay anywhere close to 4K to turn a unit that brings in $550 a month, unless your place doesn’t turn over but once every 10 or 20 years.  I shoot for no more than 1 month rent as a reasonable goal for a standard turn unless I also do a major update like all new floors or new windows, etc.  sometimes it’s more and sometimes it’s less, but 1x is the goal.  Yours looks like about 7x and that will be unsustainable in the long run.

Remember, your PM will ask for 0.5x-1x for finding a new tenant and then you will also have maybe 1-3 weeks ( or more) of vacancy on top of everything.

I'm looking at a 3 month vacancy already because we had to do an eviction which I just got the bill for at $400. Just this one unit already is costing well over five thousand dollars, but the majority of that is the turn cost. 

Thanks everyone for your input.