The Three Levels of Renovation
Rehab projects generally fall into three categories: cosmetic, moderate, and full gut renovation. Understanding which level your property needs is the first step in estimating costs accurately.
- Cosmetic rehab ($10-25 per sq ft): Paint, flooring, fixtures, landscaping, minor repairs. The structure, mechanicals, and layout stay the same.
- Moderate rehab ($25-60 per sq ft): Kitchen and bathroom remodels, some mechanical updates, possible layout changes, new windows or roof.
- Full gut renovation ($60-150+ per sq ft): Down to the studs. New everything: electrical, plumbing, HVAC, drywall, kitchen, bathrooms, roof, foundation repairs.
Room-by-Room Cost Breakdown
Breaking the rehab into individual rooms and systems makes estimation more accurate than using a single cost-per-square-foot number. Here are typical cost ranges based on data from HomeAdvisor and the National Association of Home Builders (NAHB):
- Kitchen (budget): $10,000-20,000 - New cabinets, countertops, appliances, flooring, paint
- Kitchen (mid-grade): $20,000-40,000 - Custom cabinets, granite/quartz, tile backsplash, new layout
- Bathroom (budget): $5,000-10,000 - New vanity, toilet, tub/shower surround, flooring, paint
- Bathroom (mid-grade): $10,000-20,000 - Tile shower, double vanity, new fixtures, heated floors
- Roof replacement: $5,000-15,000 depending on size and material
- HVAC system (new): $4,000-10,000 depending on system type and home size
- Electrical panel upgrade: $1,500-4,000
- Full re-plumbing: $4,000-15,000
- Flooring (entire home): $3-12 per sq ft installed (LVP, hardwood, or tile)
- Interior paint (entire home): $1.50-3.50 per sq ft
- Exterior paint or siding: $3,000-15,000
- Foundation repair: $5,000-30,000+ depending on severity
How to Create a Rehab Budget
Start with a property walkthrough (or detailed photos) and create a line-item scope of work. List every repair and improvement needed, room by room and system by system. Assign a cost estimate to each line item based on local contractor quotes or cost databases.
After totaling your line items, add a contingency buffer. For cosmetic rehabs, add 10%. For moderate rehabs, add 15%. For gut renovations, add 20% or more. This contingency covers hidden issues like water damage behind walls, termite damage, or code violations discovered during construction.
The National Association of Home Builders reports that the most common budget overruns in renovation projects come from unforeseen structural issues (42%), change orders (28%), and material price increases (18%).
Getting Accurate Contractor Bids
Get at least three contractor bids for every major trade (general contractor, electrician, plumber, HVAC). Provide each contractor with the same scope of work so you can compare apples to apples.
Red flags in contractor bids include: prices significantly below all other bids (they may cut corners or change-order you later), no line-item breakdown (just a lump sum), and verbal-only estimates without written documentation. Always get bids in writing with a clear scope and timeline.
Rehab Estimation Shortcuts for Experienced Investors
Many experienced investors use the cost-per-square-foot method as a quick estimation tool. After renovating several properties in a market, they develop a reliable cost per square foot for each rehab level that they can apply to new properties for a fast initial estimate.
Another shortcut is the 10% rule: quick estimate rehab costs at 10% of the ARV for a light cosmetic rehab, 15-20% for a moderate rehab, and 25-35% for a full gut renovation. This is a rough starting point that should always be validated with a detailed scope of work before making an offer.
Key Takeaways
- Classify the rehab level first: cosmetic, moderate, or full gut renovation
- Use room-by-room and system-by-system line items for accurate estimates
- Always add a contingency buffer: 10-20% depending on rehab scope
- Get at least three written contractor bids for every major trade
- Cost per square foot is a useful shortcut but always validate with detailed scope
Frequently Asked Questions
How much does it cost to rehab a house for flipping?
The cost to rehab a house varies widely. A cosmetic rehab typically costs $10-25 per square foot ($15,000-37,500 for a 1,500 sq ft home). A moderate rehab costs $25-60 per square foot ($37,500-90,000). A full gut renovation can exceed $60-150 per square foot. According to HomeAdvisor, the national average for a full home renovation is $48,000, though investor-grade renovations in expensive markets can exceed $100,000.
What is the biggest rehab cost overrun?
Structural and foundation issues are the most common source of unexpected costs in rehab projects. The National Association of Home Builders reports that unforeseen structural issues account for 42% of renovation budget overruns. This is why a thorough inspection before purchasing and a 15-20% contingency budget are essential.
Should I estimate rehab costs before or after seeing the property?
Ideally, you do a rough estimate first using photos and property data to decide if the deal is worth pursuing, then refine your estimate after a physical walkthrough. Tools like PropLab can generate an initial rehab estimate from property data and photos, which you can then validate on-site before making a final offer.