First full gut renovation - tell us you experience
Jaron WallingPro Member
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votesUp until this point our REI experience has been cosmetic+ BRRRR deals. In 2025 we started actively looking at listings, wholesaler deals, and driving for dollars. Given this market there's no low hanging fruit. The sold prices for distressed stuff (what we look for) compared rents don't make sense in most cases. Profitable as a flip? Maybe for the right guy, but the margins are tight. My wife is not going to support time away from our kid to make $12k gross profit. I don't blame her.
Long story short we need get out of our comfort zone and aim higher (forced appreciation play/ nicer neighborhood, no cash-flow) or buy cheaper more distressed properties (cash). Aiming for full gut interior, electrical, maybe plumbing, drywall, windows, flooring, HVAC, and probably exterior paint and landscape. Our rehab budget would be about $60-70k for 1200sqft, 2/3 bed, 1bath. We have some contractor support. I want to GC on our next project, and think differently. I'll complete some easier projects to save on labor.
Is this realistic? Is BRRRR dead in 2025? We need some inspiration.
@Scott E. Appreciate the thoughtful response. We have created equity in all our deals and want to keep doing it. Seeing the before and after gets me excited. It's one of my favorite parts especially if you can swing a hammer and complete a small part of the renovation. We're in the messy middle so it's hard to justify the jump to a challenging rehab. I'm fearful we don't have enough contractor support to get the rehab done in a timely fashion.
What prompted your transition into more full gut renovations? Good history with the same contractor(s)? How many cosmetic renovations did you complete before going big?
Pretty early on I had a mentor explain to me this:
You can buy a $300,000 house, do $50,000 worth of work, sell it, and walk away with a $50,000 profit in about a year's time.
Or you can follow the exact same formula but buy a $1,000,000 house, do $500,000 worth of work, sell it, and walk away with a $500,000 profit in about a year's time.
The latter of course generally takes a little bit more time (and of course more capital) but it was a very eye opening realization for me. From that moment forward I did everything I could to scale up just a little bit on every project.
Much like you I really enjoy improving neighborhoods and seeing the before and afters. Very fulfilling work. But it became too hard of work and too much risk to be making just $30,000-$50,000 per flip (before tax).
I still see homerun BRRRRs with simple cosmetic upgrades from my clients time to time but definitely rarer than couple years back. Buying deep in the price is really key and it's more important than ever to run numbers conservatively.
Personally, I'm not obsessed over getting 100%+ of my money back if I'm putting less than what I would've put in as a rental & go for appreciation, but everyone has different expectations.
@Ko Kashiwagi Agreed. We have taken 60-65% LTV on refinances to make the numbers work, but we can't grow our portfolio doing that. We could comfortably do it again but why? It's just draining our capital. The distressed properties I get access to keep leaning towards a full gut flip, but we're not flippers. We have 9-5 jobs.
We need the courage to take on bigger projects. That seems like the best path forward due to lack of supply.
I'm in the exact same boat - any time away from family has to be wisely invested. I'm going to see something on-market that is fairly distressed later this week and will probably make an offer at a price that works for me. I don't think I'll get it, but if I get it, I'll need help overseeing the rehab. I have some investor friends and I'll try to see if I can pay one of them to be my PM.
I made a few seller finance offers on some on-market properties earlier this year as well. Figured they wouldn't be accepted and they weren't, but had some good interactions with the agents.
I don't think BRRRR is dead, it's just as difficult as ever. Good luck!
@Nicholas L. Exactly. I'd rather BRRRR than flip. I was so close to buying a distressed off market property about a month ago, but the seller already had an agent working for them. I couldn't convince them to consider my offer. It went pending a month later. At least my analysis was spot on. I think if I was better at sales I could have changed there minds.
You're following the same path that I followed Jaron. I started with very light cosmetic remodels, transitioned into larger more gut renovations, then got into adding square footage, and lately I've been tearing the whole house down and down ground up spec homes.
The path you are considering is totally realistic, but also risky. The biggest challenges as you get into more complex builds are if you are dealing with anything structural (rearranging the floor plan, removing load bearing walls), if you are adding square footage (it sometimes is tricky to tie the old building into the new building), or if you are relocating a lot of plumbing (moving sewer lines is messy).
My recommendation would be to hire a qualified general contractor and you have way less to worry about. But if you're wanting to GC the project yourself, then you instead need to hire a really good architect/draftsmen. If they give you detailed blueprints, you should be able to sub out the job and give your crews clear direction.
@Scott E. Appreciate the thoughtful response. We have created equity in all our deals and want to keep doing it. Seeing the before and after gets me excited. It's one of my favorite parts especially if you can swing a hammer and complete a small part of the renovation. We're in the messy middle so it's hard to justify the jump to a challenging rehab. I'm fearful we don't have enough contractor support to get the rehab done in a timely fashion.
What prompted your transition into more full gut renovations? Good history with the same contractor(s)? How many cosmetic renovations did you complete before going big?
@Scott E. Appreciate the thoughtful response. We have created equity in all our deals and want to keep doing it. Seeing the before and after gets me excited. It's one of my favorite parts especially if you can swing a hammer and complete a small part of the renovation. We're in the messy middle so it's hard to justify the jump to a challenging rehab. I'm fearful we don't have enough contractor support to get the rehab done in a timely fashion.
What prompted your transition into more full gut renovations? Good history with the same contractor(s)? How many cosmetic renovations did you complete before going big?
Pretty early on I had a mentor explain to me this:
You can buy a $300,000 house, do $50,000 worth of work, sell it, and walk away with a $50,000 profit in about a year's time.
Or you can follow the exact same formula but buy a $1,000,000 house, do $500,000 worth of work, sell it, and walk away with a $500,000 profit in about a year's time.
The latter of course generally takes a little bit more time (and of course more capital) but it was a very eye opening realization for me. From that moment forward I did everything I could to scale up just a little bit on every project.
Much like you I really enjoy improving neighborhoods and seeing the before and afters. Very fulfilling work. But it became too hard of work and too much risk to be making just $30,000-$50,000 per flip (before tax).
Sounds like you are thinking and working in the right direction! I’ve done two cosmetic rehabs while doing most of the work myself, and man I was surprised how cheap I was able to keep it when the work is mostly cosmetic. Currently, I’m doing a full gut rehab in a house (my first one) and man I’m surprised how expensive it is. The bones are solid, but pretty much everything else needed gutting. I’ve done all the labor other than plumbing, electrical, and drywall, and we are 90k deep in a 4bed 2bath 1900 sq ft. Now, this is the house my family will live in for many years, so we are putting quality stuff in.
Secondly, if you GC a project yourself and work 9-5, anticipate coming home randomly, taking phone calls throughout the day, and constantly trying to keep the guys in line who are working on your house. It’s doable, but very time consuming and takes some real personal skills to let sub contractors know what you expect of them and the quality of job they do. When I GC’d the drywall guys on this house, I was constantly stopping by because they weren’t showing up, or they had a question about something, or the process was going way too slow. Overall, they did great, it just took some time and effort on my part to ensure that.
@Scott E. You're like my hero! I really like the explanation to scale quickly. I'm realizing we need to think bigger and stop playing around with cheap BRRRR deals. Lunch money cash-flow is not getting us very far.
@Nate Williams 100% agree with you. I have the 9-5 flexibly to GC an entire renovation. I work in the field most days and can travel to the property with my work vehicle. I've managed subs before but not on big scale. It's time to step it up.
Besides the bottom line of your cash-on-cash return (or whatever metrics you care about), think about the time value of money. If you can make $50K on a cosmetic flip in 4 months, great. That's a step in the right direction, because if you extrapolate that out, that would be $120K in a year.
Upon selling, you might position yourself to take advantage of some other deals that come up within that 1 year time frame, so you can have two projects running simultaneously, and so forth and so on.
Yeah, you COULD make $500K in a year by taking on a massive remodel and adding sq ft, or doing a new build. But cashflow can be just as important to a small business (and your mental health). It's important to grow in a way that is secure, where one project isn't going to make or break you.
Another option to help you scale would be buying a house to renovate (not just cosmetics), and live in it as a primary, temporarily. Then sell after a couple years so you can protect your capital and reinvest into future projects (or primaries if you want to keep repeating the process). I'm doing that with my husband right now.
@Marcela Hoag Appreciate the response. The smaller profitable flip is what I need to focus on. If we can't sell for what we want I'll just rent it.
"Another option to help you scale would be buying a house to renovate (not just cosmetics), and live in it as a primary" - That's how I got started but we have 2 year old now. That strategy is really inconvenient when you have a family.
This is one of the most honest and grounded posts I've seen in a while. You're definitely not alone. A lot of investors are feeling the same pressure right now with tight margins, rising costs, and a market that no longer rewards cosmetic-only BRRRR deals.
But BRRRR is not dead. It just looks different now. The easy deals are gone. What's left are the ones where you force value with full renovations, layout improvements, mechanical updates, and smart design. That is where the upside is.
Your budget of 60 to 70K for a full gut on 1200 square feet is tight but possible if you GC it and take on some of the labor. The key will be managing the timeline and keeping the crew on track. If you can control that, the deal can work.
Also think about mid-term rentals like traveling nurses. It can give you better cash flow without relying on long-term rents in tough neighborhoods.