How to estimate rehab costs before you make an offer
Walk the property room by room and list every repair, price each one as a low to high range using local labor and material costs, add a contingency for what you cannot see, and keep problems you cannot price yet as separate risks instead of guessing. Use a per-square-foot figure only to screen deals; make offers from the line-item number.
Two numbers, two jobs
A screening number tells you whether a property deserves a closer look. A rough per-square-foot figure, or a quick walk-through total, is fine for that. An offer number is what goes into your maximum allowable offer, and it has to come from a line-item estimate, because every dollar it is wrong is a dollar you overpay or a deal you lose.
This page does not give per-square-foot figures. The published ranges disagree with one another by two times or more, because each describes a different scope, finish level and market. A number without a source attached is not an estimate; it is a guess with decimals.
Step 1: Walk the property in a fixed order
Walk every house the same way, so nothing gets skipped because the kitchen was distracting.
- Exterior: roof from the ground, gutters, siding, windows, grading and drainage, driveway and walks, fencing.
- Each room, in sequence: floors, walls and ceilings, doors and trim, windows, lighting, outlets and switches.
- Kitchen: cabinets, counters, appliances, plumbing under the sink, ventilation.
- Bathrooms: tub or shower surround, vanity, toilet, tile, exhaust fan, signs of leaks around the base of fixtures.
- Systems: furnace or air handler, water heater, electrical panel, visible plumbing, attic access, basement or crawl space.
Photograph as you go: every room, the exterior from each side, and each system you can reach. The photos are your scope sheet later, and anything you did not photograph is something you cannot price with confidence.
Step 2: Turn what you saw into line items
Each repair gets its own line with a quantity and a unit. Keep the item and the price separate until the next step, because a list of what needs doing is useful on its own: it is what you hand a contractor for a bid, and what you compare the bid against.
| Room | Item | Quantity |
|---|---|---|
| Living room | Replace carpet with LVP flooring | about 350 sq ft |
| Kitchen | Replace laminate counters | about 30 linear ft |
| Hall bath | Replace vanity, faucet and mirror | 1 set |
| Utility | Replace 40 gallon gas water heater | 1 |
| Exterior | Replace architectural shingle roof | about 18 squares |
| Whole house | Interior paint, walls and ceilings | all rooms |
Quantities can be rough at this stage, but write them down. "Paint" is not a line item; "interior paint, walls and ceilings, all rooms" is.
Step 3: Price labor for your market, not the national average
Labor is roughly half of a rehab budget. The share moves between about 40% and 60% with the scope, since a paint-and-flooring refresh is mostly labor and a kitchen is mostly cabinets, but half is a fair planning figure. Materials cost close to the same everywhere, so labor is the part of the budget that changes with location, and a national figure will be wrong in most markets.
The Estimara rehab labor cost index measures how far residential trade wages in each U.S. metro sit from the national level, scaled to labor's share of a budget, from Bureau of Labor Statistics wage data. Three examples from the same table:
- El Paso, Texas (−13): trade wages run about 26% under the national level, so the same scope of work prices about 13% under national rates.
- Columbus, Ohio (+3): trade wages run about 6% over the national level, so the same scope of work prices about 3% over national rates.
- Detroit, Michigan (+9): trade wages run about 18% over the national level, so the same scope of work prices about 9% over national rates.
Look up your metro in the index, apply the figure to the whole budget, then check it against a local bid. The index measures wages, not permit costs or how busy local contractors are, so it is a starting point rather than the last word.
Who does the work changes the price as much as where. A general contractor's price covers coordination, insurance and margin on top of the trades; a handyman is cheaper and takes on less; your own labor costs time instead of money. Decide this before you price anything, because the same line items can produce very different totals. Estimara asks the same question before it prices, for the same reason; see how it works.
Step 4: Add a contingency, and keep the unknowns out of the total
A contingency covers the things a walkthrough cannot see: what is behind the tub surround, under the carpet, inside the panel. Size it to how much you could not see. A recently occupied house where you reached every system needs less than a vacant older house with a locked basement.
Some problems cannot be priced at all yet: a stain on the ceiling with no visible source, a crack in the foundation, a furnace of unknown age. Do not put a guessed dollar figure on these. List them separately with the next step that would resolve them (have a roofer look, get a structural opinion, pull the furnace serial number), and decide whether your offer can carry that risk or whether the inspection has to happen first. A guessed number makes the total look more certain than it is, and a certain-looking total is how people overpay.
Step 5: Check the number against a bid, or two
Hand your line-item sheet to a contractor and ask for a bid on that scope. If you ask two, give both the same sheet, so the bids are comparable. When a bid comes back, compare it line by line rather than total to total: a bid that is 20% over on everything is a different conversation from a bid that matches you everywhere except a roof line that is twice your figure. Items the bid includes that your sheet does not are things you missed; items your sheet has that the bid does not are things the contractor missed, or scope you need to ask about.
Step 6: Put the repair number into your offer
For a wholesale or fix and flip deal, the maximum allowable offer under the 70% rule is ARV × 70% − repairs − assignment fee. On a house with a $200,000 ARV, $35,000 of repairs and a $10,000 assignment fee, that is $140,000 − $35,000 − $10,000 = $95,000. Repairs move the offer dollar for dollar: if the real number is $45,000, the offer is $85,000.
Run your own numbers in the free MAO calculator, which also covers when 70% is the wrong percentage.
For wholesalers: estimating without a contractor on site
Wholesalers usually price a property before any contractor walks it, often from a single visit or from photos a seller sent. Steps 1 to 4 still apply; the difference is that your buyer will re-estimate everything. If your repair number is too low, the buyer's own number will not fit under the contract price and they will walk. If it is too high, your offer is too low and you lose the deal to someone who priced it right. Price conservatively, write down what you could not see, and say so when you present the deal. A buyer who can see your line items trusts the contract more than one who gets a total.
Where Estimara fits
Estimara does steps 1 to 4 from your photos: it lists the repairs it can see room by room, gives each a low to high range priced for the property's market, and lists the things it cannot price as hidden risks outside the total. It is a first-pass planning number, not a contractor quote or an inspection, and every estimate says so. The method on this page is the method the app follows; see how Estimara works for what it does with each step.
Common questions
How do you estimate rehab costs without a contractor?
Walk the property in a fixed order and photograph every room and the systems you can reach. List each repair as a line item with a quantity. Price each line as a low to high range using labor and material costs for that market rather than a national figure. Add a contingency sized to how much of the house you could not see, and keep anything you cannot price yet, such as a leak of unknown origin, as a separate risk instead of a guessed number. Get at least one contractor bid on the same scope before you close.
What is a good contingency for a rehab budget?
It depends on what you could not see. A recently occupied house where you reached the furnace, water heater, panel and roof needs less than a vacant older house with closed-off rooms. Size the contingency to the unknowns in front of you rather than to a fixed percentage, and list the things you could not price at all separately, with the inspection that would resolve them.
Should I use cost per square foot to estimate a rehab?
Only to decide whether a property is worth a closer look. Published per-square-foot ranges disagree with one another by two times or more, because they describe different scopes, finishes and markets. Make the offer from a line-item estimate priced for the local market.
How much does rehab labor cost vary by location?
By a lot. Across the 643 U.S. metro areas in the Estimara rehab labor cost index, built from Bureau of Labor Statistics wage data, the effect of local trade wages on a whole rehab budget runs from roughly 25% under the national level in the cheapest markets to roughly 20% over in the most expensive. Within one state the spread between metros can be larger than the gap between states.
How does the repair estimate affect my maximum allowable offer?
Dollar for dollar. Under the 70% rule, MAO equals ARV times 70%, minus repairs, minus any assignment fee. On a $200,000 ARV with $35,000 of repairs and a $10,000 fee, MAO is $95,000. If the repairs are really $45,000, MAO is $85,000.
Related
- How Estimara estimates rehab costs from photos: what goes in, what comes out, and what is left out of the total.
- Estimara pricing and plans: free to start, then monthly plans by number of analyses.
- Estimara FAQ: how estimates vary, hidden risks, renovation goals, ARV and MAO.
- Free MAO calculator (70% rule): turn ARV and a repair budget into a maximum allowable offer.
- Rehab labor cost index: how renovation labor costs vary across 643 U.S. metros, from BLS wage data.
- About Estimara: who builds it, how estimates are made, and how to contact us.
Try it on a property you already know. Estimara is free to download and includes a limited number of free analyses.