Room-by-Room Rehab Cost Estimates and a Contingency That Holds

Start with the scope, not the sticker price

Before you estimate anything, write down what the listing photos and description actually show, then mark everything you cannot see. Most fixer budgets fail not because the investor misjudged finishes, but because they priced the visible work and assumed the hidden systems were fine.

Walk the house on paper one room at a time. For each room, sort the work into three buckets: cosmetic (paint, fixtures, flooring), functional (cabinets, counters, tubs, plumbing fixtures), and systems (roof, HVAC, electrical, water heater, supply and drain lines). Price cosmetic items with unit costs you trust, such as a per-square-foot material cost plus labor from local contractors or your own past projects.

A worked example on a 1,200 square foot house

Say a three-bedroom, two-bath house lists at $180,000. The kitchen is dated, both baths need refreshing, the roof is listed as original, and the electrical panel looks old. Here is a room-by-room estimate:

• Kitchen (cabinets, counters, sink, faucet, appliances): $14,000
• Main bath (tub surround, vanity, toilet, fixtures): $7,500
• Second bath (refresh): $5,500
• Flooring, luxury vinyl plank throughout, installed: $5,400
• Interior paint, two coats, ceilings included: $2,400
• Asphalt shingle roof replacement: $9,000
• Mechanicals: HVAC replacement $6,500, water heater $1,200, electrical panel upgrade $2,800, subtotal $10,500

Adding the lines: $14,000 + $7,500 + $5,500 = $27,000. Add $5,400 flooring to reach $32,400. Add $2,400 paint to reach $34,800. Add $9,000 roof to reach $43,800. Add $10,500 mechanicals to reach $54,300 for the base scope.

That base number is not your budget. It is the work you can see and price. The budget adds a contingency on top.

Set the contingency before you make an offer

An unknown-condition house deserves a larger buffer than a known one. Before a full inspection, a 20% contingency on the base scope is a reasonable starting point for a house of this age. Once an inspector has documented the systems and you have contractor bids, you can usually tighten that to 10% to 15%.

Using 20% in the example: $54,300 x 0.20 = $10,860. Total planned rehab budget: $54,300 + $10,860 = $65,160. Closing costs, holding costs, and financing are separate and belong in your deal model.

Keep the contingency in its own line, and do not treat it as slack for finishes you wanted to upgrade. If you spend it on granite you were not budgeting for, you have no buffer left for the plumbing.

What surprises actually look like

Suppose you close, open the kitchen wall, and find soft subfloor from a slow leak under the sink. Replacing the subfloor and sistering joists costs $1,800. Then the plumber finds galvanized supply lines that are corroding behind the bathroom walls, and repiping the house costs $3,200. Your surprises total $1,800 + $3,200 = $5,000.

Your remaining contingency is $10,860 - $5,000 = $5,860. The deal survives. Had your contingency been 10% ($5,430), the same surprises would have left only $430, and a single permit delay or appliance backorder would have pushed you into your own cash.

Practical rules for the buffer

1. Write the contingency as a dollar figure, not a vague feeling, and hold it in a separate line in your model.
2. Track every draw against the base scope and the contingency so you know which bucket is shrinking.
3. Add permit and inspection fees to the base scope when you know the work requires them, since they are not surprises.
4. Re-run the numbers after the inspection, then compare the revised all-in cost against the after-repair value with the ARV calculator. If the margin disappears at a 20% buffer, the offer is too high.

Run your own numbers

The method is the same on every house: list the rooms, price the systems honestly, add a buffer you would be comfortable absorbing alone, then decide whether the remaining spread still works. Take one listing you are considering this week and build the worksheet before you tour it. You will learn more from that exercise than from any rule of thumb.