Rule of thumb for repairs? -Santa Monica, CA

Santa Monica, CA · Member since 2017 · 14 posts · 2 votes

Hey all,

I'm a newbie and have a question regarding repair costs. Is there a rule of thumb that puts a limit on the maximum repair costs for a deal.

In other words, is there a % of ARV that repair work should not exceed?

In advance, thank you!

Rodrigo

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Jo-Ann LapinPro Member
Loan Officer · Tustin, CA · Member since 2015 · 3k+ posts · 713 votes
9y
65arv should be a good bench mark
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Rodrigo Donoso
OP
Santa Monica, CA · Member since 2017 · 14 posts · 2 votes
9y
Jo-Ann, Thank you for responding. I'm a little bit confused on your response. 65% of ARV? I was thinking repairs would be somewhere closer to 20% of ARV. Am I missing something?
Rodrigo
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Sam Shueh
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
9y
No rule of thumb. You provide better than average repair to save you headaches. For example replace the entire faucet not just washer.
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Marian Smith
Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
9y
What matters is ARV minus repairs and holding costs while making repairs relative to purchase price plus cost to buy and cost to sell. There should be a big gap between the two commonly called profit. Too small a gap might end up being a loss....nobody likes a loss.
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