Why Rehab Estimates Matter
In a fix-and-flip deal, your profit is the gap between what you sell the property for and what you spent acquiring and renovating it. Underestimate rehab costs by $15,000 and that's $15,000 straight off your bottom line.
The most common reason flippers lose money isn't a bad market — it's bad estimates. Getting rehab costs right is the single most important skill in the flipping business.
The Three Levels of Rehab
Before you start estimating line items, categorize the scope of work:
Cosmetic Rehab ($15–$30/sq ft)
- Paint, flooring, fixtures
- Minor kitchen and bath updates (refinish cabinets, new countertops, hardware)
- Landscaping and curb appeal
- Cleaning and staging
Moderate Rehab ($30–$60/sq ft)
- Full kitchen remodel
- Full bathroom remodel(s)
- Window replacement
- Some structural or layout changes
- Partial electrical or plumbing updates
Full Gut Rehab ($60–$120+/sq ft)
- Down to the studs
- New electrical, plumbing, HVAC
- Structural work (foundation, framing, roof)
- Complete layout redesign
- Permits and engineering required
These ranges vary significantly by market. A moderate rehab in San Francisco costs far more than a gut rehab in Memphis. Always calibrate to local labor and material costs.
The Line-Item Approach
The most accurate way to estimate rehab costs is to build a detailed scope of work with line items for every task. Here's a framework:
Exterior
| Item | Budget Range |
|---|---|
| Roof (full replacement) | $5,000 – $15,000 |
| Siding repair/replacement | $3,000 – $12,000 |
| Exterior paint | $2,000 – $5,000 |
| Landscaping | $1,000 – $5,000 |
| Driveway/walkway | $1,500 – $5,000 |
| Windows (per window) | $300 – $800 |
| Gutters | $800 – $2,500 |
Kitchen
| Item | Budget Range |
|---|---|
| Cabinets (mid-grade) | $3,000 – $8,000 |
| Countertops (granite/quartz) | $2,000 – $5,000 |
| Appliance package | $2,000 – $5,000 |
| Backsplash | $500 – $1,500 |
| Sink and faucet | $300 – $800 |
| Flooring | $500 – $2,000 |
| Lighting | $200 – $800 |
Bathroom (per bathroom)
| Item | Budget Range |
|---|---|
| Vanity and mirror | $300 – $1,500 |
| Tub/shower (refinish or replace) | $500 – $3,000 |
| Toilet | $150 – $400 |
| Tile work | $1,000 – $3,000 |
| Fixtures and accessories | $200 – $600 |
Systems
| Item | Budget Range |
|---|---|
| Electrical panel upgrade | $1,500 – $4,000 |
| Rewiring (full house) | $8,000 – $15,000 |
| Plumbing (repipe) | $4,000 – $10,000 |
| HVAC replacement | $4,000 – $10,000 |
| Water heater | $800 – $2,000 |
Interior
| Item | Budget Range |
|---|---|
| Interior paint (whole house) | $2,000 – $6,000 |
| Flooring – LVP (per sq ft) | $2 – $5 |
| Flooring – hardwood (per sq ft) | $5 – $12 |
| Interior doors (per door) | $100 – $300 |
| Trim and baseboards | $1,000 – $3,000 |
| Light fixtures | $500 – $2,000 |
The Contingency Rule
Always add a contingency buffer. No matter how thorough your estimate, surprises will happen — especially on older properties.
- Cosmetic rehab: add 10% contingency
- Moderate rehab: add 15% contingency
- Gut rehab: add 20% contingency
If your line items total $45,000 on a moderate rehab, budget $51,750. This isn't padding — it's reality.
Getting Accurate Bids
Get three bids for every major trade. Don't just go with the cheapest — evaluate reliability, timeline, and quality of past work.
Walk the property with your contractor. A phone estimate based on photos will always be less accurate than an in-person walkthrough.
Define the scope in writing. "Remodel bathroom" means different things to different contractors. Specify: remove existing tile, install new subway tile to ceiling, replace vanity with 36" single, install new toilet, replace fixtures with brushed nickel.
Ask about lead times. Material delays can add weeks to your timeline. Budget for holding costs during the rehab period.
Holding Costs: The Hidden Budget Killer
While you're rehabbing, the clock is ticking on carrying costs:
- Hard money loan interest (often 10–14% annually)
- Property taxes (prorated)
- Insurance
- Utilities
- Loan origination points (amortized)
On a $200,000 property with hard money financing, holding costs can run $3,000–$5,000 per month. A rehab that runs two months over schedule costs you $6,000–$10,000 in holding costs alone.
The 70% Rule
As a quick screening tool, most flippers use the 70% rule:
Maximum Purchase Price = (ARV × 0.70) − Rehab Costs
If a property's ARV is $250,000 and it needs $40,000 in rehab:
Max Purchase = ($250,000 × 0.70) − $40,000 = $135,000
This leaves room for closing costs, holding costs, selling costs, and profit. It's a rough filter — always run a full analysis before making an offer.
Building Your Estimation System
Experienced flippers build a personal database of costs over time. After each project:
- Compare estimated vs. actual costs for every line item
- Note which contractors delivered on budget and timeline
- Track material costs by supplier
- Record holding costs and timeline
After 3–5 flips, your estimates will be significantly more accurate because they're based on your own data, not national averages.
Try It Yourself
Use our Fix & Flip Calculator to model your next deal. Input purchase price, rehab budget, ARV, and financing terms to calculate total profit, ROI, and maximum allowable offer.