How much would you all calculate into the renovation of a rental that wouldn't go for anymore than $700/month and wouldn't sale for anything more than $40,000. I have a property that needs some repairs and want to make sure I go about this the right way. Any suggestions?
Generally, you wouldn’t want to spend more on repairs than the house is worth. But in regard to rent, I would suggest doing a quick search on the ‘2% rule’. There is a ton of info here covering ever conceivable question on it. Personally, I find it is more like the 1% rule and it basically means that you’d want rent at 1% of your acquisition cost plus repairs. Hopefully, this was less than the $40k you said the house was worth. Assuming for the sake of answering your question, if you paid $40k, you would want to invest no more than $30k to arrive at the market rental rate of $700/month. If you can do repairs for a cost that keeps your total investment below $40k and hit the $700/month, then you are in a sweet spot! But I want to emphasize not investing more than the house is worth.
thank you very much. I am researching 2% rule now