How to Estimate Rehab Costs Before You Have a Contractor Bid

By Josh Cote · Rehab · 7 minute read

On your first flip, the repair budget can feel like the part you know the least about. That is normal. You are not trying to write the contractor's final bid from a quick walk-through. You need a rough number that tells you whether the house is worth spending more time on and getting properly inspected.

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Check the expensive stuff first

Before you get focused on cabinets or paint, look at the roof, heating and air, electrical panel, windows, plumbing, and any sign of water or structural trouble. Those items can change the budget by thousands. If something is original or looks close to the end of its life, do not pretend it will be fine just because replacing it makes the deal harder. Flag it, put a rough price on it, and get a qualified inspection before you commit.

Then sort the job into a rough category. A light rehab is mostly paint, floors, fixtures, and other surface work. A medium rehab usually means updating the kitchen, bathrooms, floors, paint, and trim. A heavy rehab includes major systems or a gut job. This helps you compare houses, but it is not a substitute for a real scope of work.

Use square-foot numbers to screen the deal

My First Flip Field Guide uses rough starting ranges of $15–$40 per square foot for light work, $40–$80 for a medium cosmetic rehab, and $80 and up for heavy work. Harder projects in expensive markets can run higher. These are starting points to help you screen a deal, not a contractor's quote. Labor, permits, materials, access, and what is hiding behind the walls are different in every house and every market.

If your deal only works when the repairs land at the very bottom of a wide range, the budget is not dependable yet. I would rather find that out before making an offer than after I own the house.

Turn the rough number into a real scope

1. Walk the house, take pictures, and list every room and major system.
2. Separate things the house has to have from upgrades that would be nice. Look at remodeled houses nearby to see what buyers actually expect.
3. Ask two or three local contractors who understand investor work for a rough range, then get written bids after a full walk-through.
4. Write the work out by task and material. “Update the bathrooms” means something different to everybody.
5. Add a cushion. The guide uses 10% as a starting point. On a $60,000 estimate, that makes the working budget $66,000. A house with more unknowns may need more.

Keep the work and cash moving together

Hard-money lenders often release repair money in draws after somebody checks the work. That means the lender can approve the rehab budget and you can still need cash for the first materials, deposits, and labor while you wait to get paid back. Before closing, ask exactly how draws work, what paperwork they want, and how long reimbursement usually takes. Line up contractor payments with finished work and, when you can, with the lender's draw schedule.

Once work starts, walk the house often, compare the job to the written scope, and make sure a phase is done before paying for it. A budget only protects your profit if you compare it with what is really happening at the house.