Staging the work across the occupancy year is what made conversion three hold
Converted my third one in February. 1978 split level, 1,640 square feet, bought at 268,000 with 5 percent down owner occupant, rate 6.5. It needed a roof, the panel was a mess, and the bathrooms were original.
I've done this twice before and the mistake I made both times was doing the work in the first three months because I was excited to live somewhere nice. This time I sequenced it against what the rental actually needed and what my cash could absorb.
Roof in month two, 11,400, because that was the item that would have killed an insurance binder for a landlord policy later. Panel and a subpanel in month four, 3,900, my own labor on the rough plus a licensed electrician for the tie-in and permit. Then I sat on my hands for six months. Bathrooms in months ten and eleven, 9,200 for both, and I stayed with mid grade fixtures because I already knew from the last two houses that the rent comps in this band don't pay for tile work.
Total in was 24,500 against the 13,400 down and about 7,000 closing. Rented at 2,340 against PITI of 2,061 including PMI.
The part that nearly broke it was DTI on the fourth pre-approval. Two prior rentals with full year lease history got counted at 75 percent of gross by the lender I used, and this one had no history at all, so at the time I applied it was pure debt on my ratios. I came in at 44.8 and the overlay was 45. One credit card with a 240 balance was the difference. Lenders differ on all of this and mine gave me their overlay sheet in writing when I pushed for it, which I'd do again.
What I'd keep: doing the expensive structural item early and the cosmetic item late. The roof protects the insurance and the appraisal. The bathrooms are still fresh when the first tenant walks in instead of having a year of my own showers on them.