Take a clean cosmetic job in Akron as the reference case: bought at 118, paint, carpet, fixtures, lighting and new vanities in both baths, total reno of 19,400, sold at 172 after 97 days with hard money at 12.5 percent. That nets just under 14.8 percent on purchase after both sides of closing and the carry, and it is about as good as a true cosmetic job gets when the operator has not manufactured equity by buying wildly distressed or off market through a relationship built over years. The 20 percent figure usually comes from people who are leaving their own labor out of the count or borrowing at 0 percent from a family member. The other common source is a purchase with hidden structural problems bought at a structural discount and then labeled cosmetic. The one model that never survives contact with a closing is buying at 80 percent of ARV and expecting 20 percent net on a cosmetic. Everyone models it that way. What actually happens is that the ARV comp you anchored to was a peak sale from eight months ago and your buyer's agent talks you into pricing under it, or the house sits 30 days longer than the spreadsheet said and that alone eats 1.5 to 2 points depending on your rate. A 13 to 15 percent net is an honest number in a real market once carrying costs are counted, and it is better to underwrite to that and be right than to underwrite to 20 and be wrong at closing.
