Equity from Rehab

[Daniel Fierros]

Hello BP nation! I haven't posted in a while so I want to ask this out of curiosity. How much should you (as an investor) aim to raise the value of a home vs the amount spent on rehab? Ex. If an investor buys a distressed house for $70k and spends $30k on rehab, how much of a raise in value should that investor expect to be considered a good investment? Should he/she expect for the new value (ARV) to go up by double (+$60k making the ARV $130k)? Or 1.5 times the amount spent (+$45k making the ARV $115k)? Or maybe even higher than what's been mentioned. If I'm not clear about something, let me know. I just want to be more active on the forums and I thought this would be interesting to get some opinions on. Thank you

[Larry Turowski]

Originally posted by @Troy Gravett:

It should really driven by your target ROI. What return do you want to make on your money? 10%, 20%, 30%? If you're all-in capital is 110k (including holding & selling costs), and you want to make 20% return (22k profit in this case), your ARV should be at least 132k. If you're not hitting your goal, then you need to adjust your offer price until it makes sense financially.

That considered in the context of opportunity. i can want 30% ROI but I'll almost never get a deal here. At 20% I'll find some deals. At 15% I I'll get more and it is still worth it.