How to Estimate a Rehab Budget

To estimate a rehab budget, build a detailed scope of work, price each line from real quotes or known costs, and add a contingency for surprises. Lenders fund the rehab against this budget, so a realistic number protects both your deal and your draws.

1. Build a scope of work

Walk the property and list every item, by area and system: roof, HVAC, electrical, plumbing, kitchen, baths, flooring, paint, exterior, landscaping. The scope is the backbone of both your budget and your draw schedule.

2. Price each line

• Get contractor quotes for big-ticket and specialty work.
• Use known per-unit costs for repeatable items (flooring per square foot, paint per room).
• Separate materials from labor where it helps accuracy.

3. Add contingency and carrying costs

Add a contingency (commonly 10-20%) for the things you cannot see until walls open up. Then account for carrying costs during the hold, interest, insurance, taxes, utilities, so your numbers reflect the true cost to the finish line.

4. Sanity-check against ARV

Your purchase plus rehab needs to leave room under the after-repair value for profit and the lender's ARV cap. If the budget pushes you past that, re-scope or renegotiate the buy.