How to Estimate Rehab Costs for a Flip Room by Room (Without Underestimating)

There are two ways to estimate a rehab. The first is to walk the house, take in the scope, and say “call it forty grand.” The second is to write down thirty-seven lines and total them.

Both take about the same time. Only one of them tells you when forty grand was wrong.

On the deal below, the line-item version came to $37,700 before contingency. “About forty” would have been close — and that’s the trap, because you’d never have known whether it was close or $12,000 light. A number you can’t check is a feeling wearing a dollar sign.

The Structure That Catches Things

Three rules make an estimate reliable:

1. Estimate by category, not by house. Seven sections: kitchen, bathrooms, flooring, paint and walls, roof and exterior, HVAC/electrical/plumbing, and general. Each gets its own subtotal so you can see where the money actually is.

2. Split materials and labor on every line. This is the rule that earns its keep. It lets you zero out labor on the lines you’ll do yourself without pretending the materials are free, and when a contractor bid comes back high it shows you whether the gap is in the spec or the rate.

3. Contingency on the total, not on individual lines. Padding each line breeds a budget nobody trusts. One honest number plus one clearly-labeled contingency is easier to defend to a lender and easier to track against.

The 37-Line Checklist

Copy this. Every line gets a materials figure, a labor figure, and later an actual.

Kitchen 1. Cabinets 2. Countertops 3. Appliances 4. Backsplash 5. Sink & faucet 6. Lighting

Bathrooms 7. Vanity & sink 8. Toilet 9. Tub / shower 10. Tile 11. Fixtures & hardware 12. Mirror & medicine cabinet

Flooring 13. Living areas (LVP / hardwood) 14. Bedrooms (carpet) 15. Tile (kitchen / bath) 16. Trim & transitions

Paint & walls 17. Interior paint, all rooms 18. Exterior paint 19. Drywall repair 20. Trim & baseboards

Roof & exterior 21. Roof repair / replace 22. Siding repair 23. Windows 24. Exterior doors 25. Gutters 26. Landscaping

HVAC / electrical / plumbing 27. HVAC repair / replace 28. Electrical panel upgrade 29. Rewiring 30. Plumbing repair 31. Water heater

General 32. Dumpster rental 33. Permits 34. Final construction clean 35. Staging furniture rental 36. Pest control 37. Miscellaneous

That last section is the one people skip because it doesn’t belong to a room. On the worked deal it’s $3,000 — nearly 8% of the budget, spent entirely on things you can’t photograph.

The Worked Estimate

A 1,540 sq ft 3/2, built 1994, systems sound, needing a full cosmetic renovation:

Two things this view tells you that a lump sum can’t.

The kitchen is 37% of the budget. If the deal is tight, that’s the only line with enough money in it to matter — and the difference between a $14,000 kitchen and an $8,500 kitchen (paint the existing boxes, new doors and hardware, laminate that looks like stone) is $5,500 of profit. You can only see that trade when the kitchen is its own subtotal.

Labor is 45% of the spend. If you’re doing the paint yourself, that’s $4,300 of the $6,100 paint line — not the whole line. Knowing the split stops the “I’ll DIY it and save six grand” arithmetic that never quite works out.

Sizing the Contingency Honestly

Ten percent is a floor, not a default.

What the contingency is actually buying, in the order it usually gets spent: the subfloor under the vinyl, the wiring you find when the drywall comes down, the panel the electrician won’t sign off on, the permit inspector’s re-check list, and the water damage behind the shower surround.

At 10% on this deal you’ve got $3,770. One unexpected panel upgrade and a subfloor replacement consumes it. That’s the contingency doing its job — a deal that only works at zero contingency doesn’t work.

Track Actual Against Estimate While the Job Runs

Put an Actual column beside every line and fill it in as invoices land. Two payoffs:

During the project, you can see a category running over while there’s still time to pull scope from a different category. A $2,000 kitchen overrun caught in week three is a decision. Found at the end, it’s a fact.

After the project, the variance is your training data. Flippers who consistently estimate well aren’t better guessers — they’ve built a file of what their last six kitchens actually cost with their actual contractor at their actual finish level. Nothing else calibrates an estimate that fast.

Variance per category, at the end:

Estimate − Actual = Variance, and Variance ÷ Estimate = % off

If your kitchens run 18% over three deals in a row, your kitchen line has a known correction factor. That’s worth more than any national cost-per-square-foot average, because it’s measured on your crew in your market.

Where This Fits in the Deal

The rehab number isn’t just a cost — it’s the input that drives your maximum offer. In the 70% rule, it’s subtracted straight from your offer price, so a $10,000 estimating miss is a $10,000 overpayment. And a bigger scope means a longer hold, which means more holding costs, which is why the rehab estimate and the hold time have to move together. The complete deal analysis, with all five cost buckets, is here.

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