Real Estate Agent · Cleveland, OH · Member since 2024 · 51 posts · 31 votes
Picture two houses on the same street in Northeast Ohio. One is listed at $75K. The other is $100K.
The $75K house looks like the obvious win. Then you walk through it. It needs a roof, the furnace is on its last legs, and there’s a decent amount of work to do before a tenant could even step inside.
The $100K house down the street is in good shape and ready to rent.
Now the math gets interesting. Add the repairs, the months the house sits empty while the work gets done, and the holding costs that keep running that whole time. That $25K gap closes a lot faster than most people expect.
Does that make the cheaper house the wrong buy? Not necessarily. If you're after a BRRRR or a flip, taking on a rehab is the whole point. If you want a rental that earns from the first month with no work upfront, paying more can make sense. Neither approach is wrong.
What I see is investors getting so locked in on the purchase price, especially in a market where low price points are still out there, that they forget to ask what it’ll take to get the property where they want it.
What you pay for a property is only part of the equation. What you have into it when it’s all said and done is what matters.
You are asking the right question, Aiden. The purchase price is only the start — the real cost is the months the house sits empty while work gets done, plus the holding costs that keep running. In Memphis we run 236 doors, mostly single-family, and we price every deal on rent-ready time, not just repair cost. Turnover and vacancy cost more than repairs, so a house that needs a roof and a furnace can eat that $25,000 gap fast if it sits empty for two or three months. We run rent-ready turnovers on a 21-day scheduling system for that reason. If you want rent from month one, pay for the house that is ready. If you take the rehab, be honest about how long it will really sit empty. What rent are you underwriting on the $100K house?