Rehab Estimating for Real Estate Investors

Every rehab starts with a scope walk. You need to physically walk the property and document every repair item before you can put a number on anything.

Start outside. Look at the roof. Missing shingles, sagging ridgelines, and staining on fascia boards all point to roof work. Check the foundation for cracks wider than a quarter inch. Walk the perimeter and look for grading issues where water pools against the house.

Inside, turn on every faucet and flush every toilet. Check water pressure and look under sinks for leaks. Open the electrical panel. If you see Federal Pacific or Zinsco breakers, budget for a full panel swap. Knob and tube wiring means a rewire. These mechanical items are where most investors blow their budgets because they skip the inspection and guess.

Check the HVAC system. How old is the unit? Is it gas or electric? Does the ductwork look intact or is it falling apart in the crawlspace? A new HVAC system runs $5,000 to $12,000 depending on your market and the size of the house.

Cosmetic items are the easy part. Paint, flooring, cabinets, countertops, fixtures. Walk room by room and note what stays and what goes. Take photos of everything. FlipMantis lets you log scope items with photos directly from your phone during the walk, so nothing gets forgotten between the property and your desk.

Dollar-per-square-foot estimates kill deals. A $30/sqft number on a 1,500 square foot house gives you $45,000, but that tells you nothing about where the money actually goes. You need line items.

Break your budget into categories: demolition, structural, plumbing, electrical, HVAC, roofing, exterior, flooring, kitchen, bathrooms, paint, landscaping, and general conditions. Under each category, list every specific task. Kitchen is not one line item. Kitchen is demo, cabinets, countertops, backsplash, sink, faucet, disposal, appliances, lighting, and flooring transition.

For each line item, assign a cost. Use local contractor pricing, not national averages. A bathroom gut in Houston costs different than one in Boston. Build your own price book over time. After three or four projects, you will know exactly what a tub-to-shower conversion costs in your market.

FlipMantis has a built-in rehab scope tracker. Add your line items during the scope walk, attach photos, and assign estimated costs. The platform totals everything and feeds the number directly into your underwriting calculator. No spreadsheet. No re-typing numbers.

Always add contingency. Ten percent for cosmetic rehabs. Fifteen to twenty percent for gut jobs. You will find surprises behind walls. Termite damage, bad plumbing, improper framing. Contingency keeps those surprises from killing your profit.

Bad contractors cost more than expensive contractors. The cheapest bid usually means corners get cut, timelines get blown, and you end up paying someone else to fix the work.

Get three bids minimum for every major scope item. Give each contractor the same written scope so you are comparing apples to apples. If one bid is 40% lower than the others, that is a red flag, not a bargain. Ask them what they included and what they excluded. The low bid almost always leaves out something important.

Check references. Not the ones they give you. Drive past their last three jobs. Do the houses look finished? Are there still dumpsters in the driveway six months later? Ask other investors in your market who they use. The best contractor referrals come from people who have actually paid them and would hire them again.

Structure your payments around milestones, not time. Demo complete, rough-in complete, drywall complete, finish work complete. Never pay more than 10% upfront. Some contractors ask for 50% before they start. Walk away. A contractor who cannot fund the first phase of work is undercapitalized, and that is your problem when they disappear mid-project.

FlipMantis tracks contractor jobs, payments, and milestone completion. You can see which contractors hit their deadlines and which ones consistently run over. After a few projects, the data tells you exactly who to call first.

The budget you set on day one means nothing if you do not track it during construction. Most investors check in once a week, see a number they do not like, and scramble. Track it daily.

Every expense gets logged against the original line item. When your contractor bills $3,200 for plumbing rough-in and your budget was $2,800, you know immediately. That $400 overage is either a change order you approved or a conversation you need to have before writing the check.

Change orders are where budgets die. The contractor finds something unexpected, calls you, and says it will cost an extra $2,000. Before you approve anything, get it in writing. What is the additional work? What materials? What is the timeline impact? FlipMantis has a change order workflow that documents the original scope, the proposed change, the cost delta, and your approval. When the project is done, you have a clean paper trail.

Do weekly site visits. Compare what you see to what the contractor invoiced. If they billed for cabinet installation and the cabinets are sitting in boxes on the floor, do not pay that draw. Photos from each visit, logged in FlipMantis, give you a timestamped record of actual progress.

At project close, compare your actual costs to your original estimate. Where did you miss? Which line items came in high? This data is worth more than any estimating guide because it is your real numbers from your real projects in your market.