Rehab cost depends on the scope of work. Use these benchmarks to estimate your project:
| Rehab Type | Cost/sqft | Typical Scope |
|---|---|---|
| Cosmetic | $15-25 | Paint, flooring, fixtures, light finishes |
| Moderate | $25-45 | Kitchen/bath updates, some mechanical, drywall |
| Full Gut | $45-80 | Down to studs, all systems replaced, layout changes |
| Addition | $100-200+ | Square footage additions, second story, accessory dwellings |
| Commercial | $50-150 | Commercial buildouts, restaurants, mixed-use |
A complete rehab budget includes more than just labor and materials. Don't forget:
Experienced investors budget 15-20% contingency for unexpected issues. On a $50K rehab, that's $7,500-$10,000 in buffer. Common surprises:
If you don't use the contingency, it becomes additional profit. If you do, you're prepared. Either way, you're not over-leveraged.
Once you have your rehab estimate, plug it into the standard fix-and-flip offer formula:
Max Offer = (ARV × 0.70) − Estimated Rehab Cost
For example: If a property has an After Repair Value (ARV) of $400,000 and rehab is estimated at $60,000, max offer = ($400,000 × 0.70) − $60,000 = $280,000 − $60,000 = $220,000.
The 70% covers your purchase + closing + holding + sale costs + flip profit. Adjust to 75% in lower-margin markets or 65% if you need a larger profit cushion.
Estimates from walkthroughs alone are typically ±20-30%. To tighten accuracy, get a contractor walkthrough during inspection contingency, pull permits on past work, and inspect mechanical systems. A 15-20% contingency buffer covers normal estimation variance.
Depends on the property and market. Cosmetic flips have lower risk and faster turn (60-90 days). Full guts have higher upside but longer timelines (4-6 months) and more risk. Match the scope to comps — if all sold comps are renovated, you need to renovate. If many sold "as-is" lately, lighter rehab may work.
A general rule: if your all-in cost (purchase + rehab + closing + holding) exceeds 80% of ARV, the deal is too thin. Above 85% of ARV all-in is usually a no-go. Run the numbers before getting attached.
Yes — fix and flip loans through our marketplace typically cover 90-100% of rehab plus 80-90% of purchase. Funds release in draws as work is completed. Contact us for current LTC and LTV limits across our 30+ capital sources.
Most fix and flip loans have provisions for budget overruns — but at the borrower's expense, not from the loan. Keep contingency in cash reserves separate from the loan. Going over budget without reserves can stall a project and trigger default.
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