How much cash should I have for repairs when buying foreclosures?

4 Replies

The best answer is "it depends"

Each property is different depending on whats wrong with it. The best way is to view each property with a tally sheet with each room what need to be done and the current estimated price to do it.

Also repairs for a flip can be different for a rental

. Flips you put the best repair value in - expecting to get the highest value when you sell.
. Rentals you put low to medium value repairs - expecting renters to do some damage during each rental value.

For each flip or rental purchase once i have my numbers , I estimate an additional 8% for any hidden surprises.

If you live up north and the house is claiming to be "winterized" I would advise be prepared to have some plumbing issues even if you don't see any immediately noticeable water damage or piping concerns. Other than this I would say similar to what others have suggested get in there do an assessment and come up with an estimate of what you think needs done. 

I have seen extremes on both sides so there is no magic number. The last foreclosure I bought I had $1k in repairs and it was off and renting.

if it is long term hold I would not want to spend more than 15%.  Three places I look to upgrade flooring, kitchen, and bath.  Also I try to do some type of upgrade between tenants.  If you want good tenants don’t be a slum lord.  Keep your property looking good inside and out   One thing I have found out with single family homes is to provide lawn service, don’t allow your tenant the option of taking care of the lawn   Curb appeal and good neighboring requires the outside of the home be kept up.   

Echoing Brian Van Pelt - "it depends". I just finished rehabbing a house that I THOUGHT would be a train wreck , but after we removed 100 cubic yards of garbage we found out that the house was basically sound (see "diary of foreclosing on a note".

Plan for disaster, hope to be wrong.