Investors
How do I estimate rehab costs when flipping?
By Steve Lockhart
The short answer
Rehab estimating starts with the property itself. Walk every room with a checklist and a budget in mind: kitchen, bathrooms, flooring, paint, windows, doors, roof, HVAC, electrical, plumbing, and anything structural.
Full answer
Rehab estimating starts with the property itself. Walk every room with a checklist and a budget in mind: kitchen, bathrooms, flooring, paint, windows, doors, roof, HVAC, electrical, plumbing, and anything structural. Note the condition honestly, because a dated kitchen that needs new cabinets and counters prices very differently than one that only needs paint and hardware.
Then price the actual work with current local numbers. The fastest way to get accurate is to bring a contractor or a detail-oriented contractor yourself... or rather, to bring a contractor or an experienced investor through the property with you, so the scope matches reality. Trade labor and material prices in Las Vegas change, and they vary by neighborhood and house size, so yesterday's per-square-foot number from the internet is a starting point at best. Get two or three bids for the major work and check them against each other.
Finally, add the margin everyone forgets: a contingency, commonly 10 percent or more, for the surprises behind the walls, plus a buffer for permit fees, dumpsters, and the small purchases that never make the big list. If the deal only works without the contingency, the deal does not work. The last step is comparative: what does the finished home actually sell for on that street, because the rehab budget is only as good as the after-repair value it supports.
A note from Steve: nothing on this page is investment, legal, or tax advice. Markets move, and every property is different. Run your own numbers on the specific deal, and talk to your CPA and attorney before you commit.
Go a little deeper
Frequently asked
Questions investors often follow up on
Can I use a per-square-foot cost to estimate rehabs?
Only as a rough screen. Per-square-foot figures vary wildly with house size, condition, and the scope of finishes, and they cannot see the specific property. They are useful for a first filter, never for the final budget.
Do I need permits for flip renovations in Las Vegas?
Yes, for most significant work like structural changes, electrical, plumbing, and mechanical systems, permits are required, and skipping them creates title and disclosure problems when you sell. Budget permit fees and inspection time into the plan.
How much contingency should a flip carry?
A common planning figure is 10 to 15 percent of the rehab budget for surprises. If adding that cushion breaks the deal, the deal was already too thin, because rehabs find things, and the honest budget plans for them.
The Lockhart Method
The Lockhart Method
Your Home | My Strategy | Proven Results
My strategy: real bids from local trades on a walk-through scope, a written line-item budget, and a contingency that keeps the deal honest. We compare the finished budget against the street's after-repair value before you commit a dollar to demo.
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