You estimate rehab costs by walking the property room by room, listing every needed repair, applying local price ranges (or contractor bids) to each, totaling it, and adding a contingency buffer of 10–20% for surprises. Repairs are the number beginners blow — and a wrong repair estimate wrecks every downstream calculation. Here's how to get it close.
This is education, not construction or investment advice. Confirm big items with licensed contractors.
Why this number is make-or-break
Your maximum offer is (ARV × 0.70) − repairs. If you guess repairs at $30k and they come in at $55k, that $25k comes straight out of your profit — or turns the deal into a loss. Repairs deserve as much care as ARV.
The room-by-room method
Walk the property with a checklist and estimate each system/area:
- Roof — age, leaks, full replacement vs. patch
- Exterior — siding, paint, windows, gutters, landscaping, foundation
- HVAC — furnace/AC age and function
- Plumbing + Electrical — updates, panel, code issues (expensive if bad)
- Kitchen — cabinets, counters, appliances
- Bathrooms — fixtures, tile, vanities
- Interior — flooring, drywall, paint, doors, trim
- Big-ticket surprises — foundation, mold, termites, sewer line
Assign a dollar figure to each from local price ranges, then total.
Two ways to price it
- Rules of thumb (early screening). Many investors use a rough $ per square foot by rehab level — light cosmetic, medium, or full gut — to quickly ballpark a deal before investing time. Useful for filtering, not for committing.
- Contractor bids (before you commit). Once a deal looks real, get written bids from licensed contractors with a detailed scope of work. This is your accurate number.
Start with the rule of thumb to screen; confirm with bids before you sign.
Always add a contingency
Even pros miss things behind walls. Add a contingency of ~10–20% on top of your estimate for the surprises you can't see — this is exactly the conservatism guides like Rocket Mortgage's 70%-rule breakdown preach. A deal that only works with a perfect rehab isn't a deal.
The estimating mistakes that burn beginners
- Estimating from the doorway. Walk every room; look up (roof/ceilings) and down (foundation/floors).
- Forgetting the invisible systems. Plumbing, electrical, and HVAC don't show in photos and cost the most to fix.
- No contingency. Guarantees you'll be short.
- Trusting one verbal quote. Get written, itemized bids from more than one contractor.
- Ignoring permits + timeline. Permit delays are holding-cost dollars.
The come-up move
Repairs are where optimism goes to die. Walk it room by room, price each item, get written bids before you commit, and pad for surprises. Conservative repair math protects every deal above it on the ladder.
Start free on Squatters to practice ARV + repair + max-offer math on real properties. Squat it. Fund it. Own it. 🦝