How to estimate rehab costs

Why the per-square-foot rule fails

Every flipping guide hands you the same shortcut: multiply the square footage by a dollar figure. Light cosmetic work, $20 a foot. A gut, $50. BiggerPockets quotes a range of $20 to $80 a square foot and moves on. The shortcut is fast, it feels precise, and on the houses flippers actually buy it is wrong in the direction that loses money.

Here is the arithmetic that breaks it. Take a 1,200-square-foot house and price a "medium rehab" at $30 a foot. That is $36,000, and it sounds reasonable until you list what a distressed house needs. A roof replacement averages $9,608, per Angi's 2026 data. A furnace-and-AC swap averages $7,500, per Angi's HVAC guide. A minor kitchen remodel runs $10,000 to $20,000. Add a bathroom near $12,000 and you are at roughly $39,000 to $49,000 on four items, before a single gallon of paint or foot of flooring. The per-square-foot number told you $36,000. The house needs more than that on the big systems alone.

The wide official ranges tell the same story. Angi's own whole-house remodel data puts the figure anywhere from $15 to $150 a square foot, with an average near $52,000 and a top end past $225,000. When the "rule" spans a 10x range, it is not a rule. It is a placeholder standing in for the real work of pricing the parts.

The reason the rule fails is that it was calibrated on cosmetic flips, where paint and floors dominate and there is no new roof. The distressed house is the opposite: the cheap cosmetic work is a rounding error and the expensive systems are the whole budget. Multiply by a dollar figure and you flatten that difference into a single number that fits neither. Estimate the big systems first, then use per-square-foot only to sanity-check the total.

Estimate the big six systems first

Six line items decide most rehab budgets, because they are expensive and because a distressed house often needs several at once. Price these before anything else. If the numbers already blow past your budget, you can walk before you have wasted an hour itemizing doorknobs. Walk early. It is free.

The roof, the HVAC, the kitchen, the bathrooms, the flooring and a full interior repaint are the ones that move the total. A new roof at $9,608 average and a full HVAC replacement at $7,500 average are the two that people forget to check from the driveway and then eat as a surprise. A water heater, small by comparison at about $1,347, is almost always due on a house that has been neglected. Get rough numbers on these six, add them up, and you have 70% of your true rehab cost from six quick line items instead of forty.

Run the sample house all the way through. That 1,200-square-foot flip needs a roof at $9,608, an HVAC swap at $7,500, a water heater at $1,347, a minor kitchen at $15,000, one bathroom at $12,147 and luxury vinyl through the main floor at roughly $6,000 installed. That is about $51,600 before paint, before permits, before the contingency, and before anything the walls are hiding. The $36,000 per-square-foot guess was off by more than $15,000, which on most deals is the entire margin. This is why the order matters: the six systems, priced first, tell you the truth while you are still standing in the driveway.

The room-by-room numbers

These are current national averages, drawn from Angi's 2026 project data unless noted. Treat them as retail anchors, not your final number; the next section explains why an investor comes in under them.

A cross-check keeps you honest on the biggest item. Angi puts a roof at $9,608 on average; Fixr's February 2026 figures put it near $10,000, or about $4.75 a square foot for asphalt shingle. Two sources within a few hundred dollars is a number you can lean on. When two sources disagree by 3x, you have a scope problem, not a price problem, and you go get a bid.

Notice the kitchen. At a $26,940 national average across 13,100-plus projects in Angi's data, the kitchen alone can outweigh every other room combined. On a flip you are almost never doing the $65,000 major remodel; you are doing the minor $10,000-to-$20,000 refresh that makes a buyer say yes. Knowing which version the deal needs is the difference between a real estimate and a guess.

Flooring and paint round out the cosmetic budget, and both scale cleanly with square footage once you know it. Angi puts luxury vinyl plank at $2 to $22 a square foot installed, with a national average job of $2,562 and labor alone running $1 to $10 a foot; budget another $150 to $700 for subfloor prep and tear-out on a neglected house. Interior paint on a 2,000-square-foot house lands between $4,000 and $12,000, or $2 to $6 a foot. These are the two line items where an investor with a crew saves the most, because both are labor over cheap materials.

Investor-grade runs under retail

The averages above are homeowner-retail: mid-grade materials, a licensed contractor, one house at a time. A flipper doing rental-grade finishes with a repeat crew comes in under them on the cosmetic items, sometimes 20% to 40% under on paint, flooring and a light kitchen, because you buy builder-grade luxury vinyl at the bottom of its $1.50-to-$12 material range and pay a crew a volume rate rather than a retail bid.

What does not discount is the mechanical and the permitted. A roof is a roof, a furnace is a furnace, and the county charges the same permit fee whether you flip for a living or not. So the split matters: pad your cosmetic estimates down toward the low end of each range if you have a crew, but hold the roof, the HVAC, the water heater and anything requiring a permit at the full average. Investors who blow a budget almost always did it by assuming their crew discount applied to the roof. It does not.

The driveway walkthrough, in order

You will not always get inside before you make an offer, so build the estimate in the order that the expensive surprises hide. Start high and work down, because a bad roof or a cracked foundation can end the deal before the kitchen matters.

• Roof first. Age, sagging, missing shingles, a fresh patch that hides a leak. A roof at the top of Angi's range, past $40,000 on a large or multi-layer tear-off, can sink a thin margin by itself.
• Then the mechanicals. Find the furnace date plate and the water heater date plate. A unit past 15 years is a replacement you should budget now, not a repair you hope holds.
• Then water. Stains on ceilings, a musty smell, corrosion at the water heater base. Water damage is the cost that multiplies, because it feeds mold, subfloor rot and drywall all at once.
• Then the kitchen and baths. These are the rooms that sell the house, and the rooms where you decide between a $12,000 refresh and a $40,000 gut.
• Then cosmetics. Paint at $2 to $6 a foot and flooring last, because they are the cheapest to fix and the easiest to estimate once you know the square footage.

Photograph every one of these. A phone full of dated furnace plates and roof shots is the raw material for the bids you will get later, and it stops you from arguing scope from memory.

Contingency and the stuff behind the walls

No estimate survives contact with an open wall. Knob-and-tube wiring, a cracked cast-iron drain, a rotted sill you could not see: these appear after demo, not before. Add a contingency of at least 10% to 15% of your rehab total, and more on anything built before 1960 where the systems are original. Old houses lie. Budget for it.

The doubling shortcut is a fair starting point on labor: for a rough all-in figure, many investors take the materials cost and double it to cover labor, then check that against real bids. It is crude, and it breaks on labor-heavy work like tile or a full rewire, but for a first-pass number on a driveway it beats guessing. The moment the deal looks real, you replace the doubling with three actual bids, because a $30,000 estimate that turns into a $45,000 project is the difference between a profit and a lesson.

Feed the number into your offer

A rehab estimate is not the goal. It is one input to the only number that matters, your maximum offer. Whether you use the 70% rule or a full maximum allowable offer calculation, the shape is the same: after-repair value times your factor, minus rehab, minus your fee. Get the rehab wrong and the whole offer is wrong, in the exact amount you missed.

So the estimate and the after-repair value do opposite jobs and both have to be right. ARV sets the ceiling of what the finished house sells for; rehab sets how much of that ceiling the work eats. A $40,000 rehab on a house you thought needed $25,000 does not just cost you $15,000. It moves your maximum offer down by $15,000, which may have been your entire spread. Estimate conservatively, because on the buy side, the pessimist keeps more deals from going bad than the optimist wins.

Build your own cost sheet

Skip the per-square-foot habit and build a one-page sheet with the seven line items above and your local numbers filled in. Price the roof, the HVAC and the water heater from current averages, decide whether each kitchen and bath is a refresh or a gut, add paint and flooring by the foot, then tack on 10% to 15% contingency. Do that on the driveway and you will kill bad deals in ten minutes instead of ten days. The rehab number then sets your maximum offer, and the last piece is a steady flow of houses cheap enough to make the math work. That deal flow is the part Farmrix handles, scoring the owners in your market most likely to sell and mailing the top of that list, so the offers you have priced so carefully land in front of people who might actually take them.