BRRRR, how to know if fixing up both units to a duplex is worth it?

Question

I am purchasing a duplex, with unit 1 vacant and unit 2 the tenants pay $1,200 rent.

Purchase price is 365k.  ARV 465K.

Rehab budget 40K

Total predicted rent $3,600

With these numbers, how do you find out if its worth rehabbing unit 2? Should i let the tenants stay and slightly raise the rent? Or should i completely rehab both units to get the rental income up to $3,600? We don't know exact amount of rehab yet but our budget is 40k. as of now if its over 40k for both, we will just rehab unit 1 but are worried that not renting unit 2 for $1,800 will hurt us if the total rental income isnt $3,600.

Deborah Wodell · Answer

Hey Jorge! Sounds like a solid project overall, and props to you for running the numbers already.

I get what you're aiming for with the $3,600 rent total, but I think what Stuart is trying to say is — without having a clearer estimate for the rehab of both units, it’s tough to make an informed decision. A $40K rehab budget split between two units might end up tight, especially if anything unexpected pops up (and let’s be real, that happens a lot 😅 — HVAC, plumbing, old wiring, etc).

Maybe a good middle ground: finish unit 1 first, and while that’s happening, get a more detailed scope/cost for unit 2. If the tenant is solid, paying on time, and not causing issues, it might be worth keeping them short-term while you build more cash reserves or financing options. But if you’re trying to BRRRR and squeeze the most value and rental income out of the deal, a full rehab of both might make more sense — but only if the numbers still work after a full reno and possible higher holding costs.

Either way, you’re thinking through the right stuff. I’d just make sure your rehab budget is dialed in before committing either way. You don’t want to get halfway in and be stuck.

Good luck and keep us posted on how it plays out!

Sheryl Sitman · Answer

@Jorge Morales

Your total predicted rent of $3,600 assumes $1,800 per unit. If Unit 2 remains at $1,200, you're leaving $600/month or $7,200/year on the table. Over just a few years, that becomes a significant loss.

It’s critical to determine whether the cost of rehabbing Unit 2 will allow you to get to $1,800 rent. Working with the right contractor can make all the difference. A contractor who understands the rental market—not just construction—can help design the scope efficiently and avoid unnecessary upgrades that don’t drive rent growth. It's a skill set that comes only with lots of experience.

Keeping current tenants at below-market rent may seem like the easier path, but it can limit your returns and delay your ability to refinance  if you're using BRRRR.

Bottom line: Whether it’s worth rehabbing  depends on the rehab-to-rent ratio. Make sure to work with a really good contractor - it can make all the difference. Avoid any temptation to go with the cheapest estimate. Been there, done that.

Mohamed Sylla · Answer

Hey Jorge — solid BRRRR setup and good question. I work with a lot of Philly investors and see this kind of situation often.

If your goal is to maximize your cash-out refinance and long-term cash flow, then yes — getting both units to market rent ($1,800 x 2) will make a major difference in your post-renovation appraisal, DSCR ratios, and refinance terms.

But here’s the tradeoff:

• Keeping the existing tenant at $1,200 may save you rehab money and vacancy risk short-term,
• But leaving $600/mo on the table is a $7,200/yr opportunity cost. That adds up fast if you plan to hold this long-term.

Keeping the existing tenant at $1,200 may save you rehab money and vacancy risk short-term,

But leaving $600/mo on the table is a $7,200/yr opportunity cost. That adds up fast if you plan to hold this long-term.

Since you’re already putting $40K into rehab, I’d seriously consider doing both units if you can:

• Confirm that $40K gets you close to full value in both units (maybe one just needs light updates)
• Run numbers for both rent scenarios through your BRRRR/refi calculator — you’ll likely find the higher gross rent makes a big difference in your appraisal and LTV.

Confirm that $40K gets you close to full value in both units (maybe one just needs light updates)

Run numbers for both rent scenarios through your BRRRR/refi calculator — you’ll likely find the higher gross rent makes a big difference in your appraisal and LTV.

You might also look into cash-for-keys if the tenants are cooperative, or time your renovation work around their natural lease expiration.

Happy to connect if you want to talk through comps, rehab scopes, or what I’m seeing investors do with similar duplexes across the city.

– Mohamed

Reginald Truss · Answer

Hey Jorge,

Great question – this is exactly where running a side-by-side BRRRR analysis helps you see the full picture. Here’s how I’d look at it:

1. Compare the two scenarios

• Option A (rehab Unit 1 only): Rent = $1,800 (new Unit 1) + $1,200 (current Unit 2) = $3,000/month.
• Option B (rehab both units): Rent = $1,800 x 2 = $3,600/month.

Option A (rehab Unit 1 only): Rent = $1,800 (new Unit 1) + $1,200 (current Unit 2) = $3,000/month.

Option B (rehab both units): Rent = $1,800 x 2 = $3,600/month.

That’s a $600/month difference ($7,200/year) in cash flow.

2. ARV and refinance potential

Your $465K ARV is likely based on both units being updated and at market rents. If you only rehab one side, your ARV might come in lower ($440K–$445K range), which could limit your cash-out refinance proceeds.

3. Payback period on Unit 2 rehab

If rehabbing Unit 2 costs, say, an extra $10–$15K, you’d make that back in ~18–24 months from the additional $600/month rent. Plus, the higher ARV helps on the refinance.

4. Tenant/turnover considerations

If Unit 2’s tenant is month-to-month and local laws allow, it might be worth turning the unit so you can rehab and reset the rent. If they’re on a long lease and you’d face months of vacancy, it may make sense to stagger improvements.

Rule of thumb: If the cost to rehab the second unit pays for itself in 24 months or less and increases the ARV, it’s usually worth it.

If you want, I’m happy to mock up a quick BRRRR refinance/cash flow comparison using your numbers – it really helps clarify which path leaves you in the best position after the refi.

Reggie Truss

Husnain Mushtaq · Answer

I think you should mention your zip code as well, this well help people see the surrounding area bc in many parts of philly $1,300 is the top end of rent and I wouldn't touch any thing.

Sabrina Morgan · Answer

I'm just curious how this was purchased, what the costs are to maintain etc.  In California we can't just move someone out, and honestly I wouldn't want to.  We can increase rents a total of 10% per year on current tenants.  Not knowing if there is a loan involved or what other expenses come into play, makes it hard to really give an opinion on the situation.  But if I were in a situation, with a leveraged duplex; I'd raise the rent on the current tenant to whatever the allowable amount is in your state, rehab the other unit and if possible; make the rehabbed unit a short term rental to make up the difference until you can bring up the rent in unit 1.

Reginald Truss · Answer

Glad that helped! If you want, I can run a full BRRRR worksheet for you that includes:

• Rehab scenarios (1 unit vs. both)
• Projected ARV and equity position
• Cash flow at refinance with realistic loan terms

Rehab scenarios (1 unit vs. both)

Projected ARV and equity position

Cash flow at refinance with realistic loan terms

That way you can see exactly how the numbers shake out before making a final call.

Feel free to DM me the exact rent comps or rehab cost estimates you’re working with, and I’ll plug them in.

Reggie Truss

Stuart Udis · Answer

You mentioned you don't know how much the rehab will cost but your max budget is $40K. What if it the cost to renovate the  vacant unit is $40K and then the occupied unit requires immediate cap ex....hvac system needs replacement, roof needs replacement etc. etc. What do you do? If you can't cover the repairs the tenant leaves. Then how do you renovate the unit for the replacement tenant? You have to figure out your costs, it shouldn't be a guessing game.

Jorge Morales · Answer

I’m not understanding on why it wouldn’t be right for me. To answer the questions, is it better to continue renting unit 2 at a lower rent or is it worth completely rehabbing it for maximum rent. I ran my numbers, asking for opinion after you run the numbers yourself. Thank you!!

BRRRR, how to know if fixing up both units to a duplex is worth it?

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