Ask a new investor what a house needs and you’ll hear something like: “Kitchen, flooring, paint. Maybe a bathroom.”
Ask what it’ll cost and they’ll name a number they heard on a podcast.
That’s not an estimate. That’s a wish. And it’s the reason more flips go sideways than any other single cause. The house didn’t change. The buyer didn’t lie. The investor just didn’t look closely enough before signing.
I’m Ben Lovro. I buy and renovate houses across the South Carolina Midlands, and I don’t let anyone on my team estimate rehab costs from a driveway. Here’s the method.
Why repair estimates go wrong
Three reasons, almost every time:
- Lump-sum thinking. “It needs about this much” with no line items behind it.
- Borrowed prices. National averages, TV numbers, or what someone paid in a different city years ago.
- Invisible problems. Water damage, old wiring, failing drain lines, termite damage — the stuff behind walls and under floors.
Fix those three and your estimates get dramatically better. You won’t be perfect. You’ll be close enough that your contingency can catch the rest.
Step one: walk the house with a sheet, system by system
Print a repair sheet with a section for each major system and finish. Mine has eleven:
- Roof — age, layers, soft spots, flashing, gutters, signs of leaks on the ceiling below
- HVAC — age of the unit and air handler, ductwork condition, whether it actually cools and heats
- Electrical — panel type and capacity, any aluminum branch wiring, ungrounded outlets, DIY work
- Plumbing — supply line material, drain lines, water heater age, water pressure, leaks under sinks
- Foundation — cracks, sloping floors, doors that won’t latch, crawlspace moisture, piers
- Windows — single pane, broken seals, rot in the sills, operability
- Kitchen — cabinets, counters, appliances, layout, sink and plumbing
- Baths — tub or shower, tile, vanity, toilet, ventilation, subfloor around the toilet
- Flooring — what’s there, what’s under it, whether subfloor repair is needed
- Paint — interior walls, ceilings, trim, and any drywall repair before paint
- Exterior — siding, trim rot, porch and steps, drainage, landscaping, driveway
Go in that order every time. Consistency is how you stop forgetting things.
Under each system, write two columns: what I see and what I suspect. A water stain on the ceiling is “what I see.” A roof leak or a failed bathroom drain above it is “what I suspect.” The suspect column is where your inspection and contractor questions come from.
Step two: decide the finish level before you price it
You can’t price a kitchen until you know what kitchen you’re building.
Pull the renovated comps nearby — the houses that sold after a rehab — and study the listing photos. That tells you the finish level the neighborhood’s buyers expect: counters, flooring, fixtures, cabinet style, paint palette.
Write your finish spec on the sheet. Now “kitchen” turns into specific, priceable line items instead of a vibe. If you skip this step, you’ll either over-improve (and never get it back) or under-improve (and sit on the market).
The comp rules I use are on the comps page, and the finish-to-comps principle runs through everything on the selling a flip page.
Step three: build your own local price ranges
Here’s the part nobody can hand you: real prices for your market.
Labor and materials vary a lot by region, by season, and by how busy contractors are. So build your own price book:
- Walk two or three houses with a contractor you trust — even houses you aren’t buying.
- Have them talk through what each line item would cost to fix, at your finish level.
- Write those down as ranges — low, typical, high — per unit where it makes sense (per square foot of flooring, per window, per fixture, per room of paint).
- After every real project, update the ranges with what you actually paid.
Within a few projects you’ll have a price book that’s more accurate than any calculator. That’s an asset. Guard it, update it, and use it on every deal.
Step four: add a contingency
Every house hides something. Plan for it.
I add roughly 15% on top of the line-item total as a default. I go higher when:
- The house is older and I expect original wiring or plumbing.
- I couldn’t access the attic, the crawlspace or part of the house.
- There’s any sign of water intrusion.
- The scope includes anything structural.
- I’m working with a contractor I haven’t used before.
Contingency isn’t padding. It’s the money that keeps a surprise from becoming a crisis. And if you don’t need it, it stays in your pocket.
Step five: hunt for the hidden stuff
The expensive surprises usually come from the same places. Look hard at these:
Water
Water is the enemy of every house. Look for stains, soft subfloor around tubs and toilets, musty crawlspaces, efflorescence on block walls, and grading that pushes water toward the house. A small leak today can mean rot, mold and structural repair once the walls are open.
Old electrical
Older homes can have outdated panels, ungrounded circuits or past DIY work. If you open a wall during renovation, your electrician may be required to bring that circuit up to current code. Ask the question before you close.
Drain lines
Older cast iron or clay drain lines can fail quietly. A sewer scope is cheap insurance on an older house. A collapsed line under a slab is not a cheap surprise.
Termites and wood rot
Look at sills, rim joists, porch framing and anything wood that touches the ground. In the South, wood-destroying insects are a real line item.
Permits and code
Know what your local jurisdiction requires a permit for, and budget the time it takes. Unpermitted past work can come back to bite you at resale when the buyer’s inspector flags it.
If any of these show up, bring in a specialist. And re-read the deal-killer list on the red flags page — some of these aren’t repair items, they’re reasons to walk away.
Step six: turn the estimate into a scope of work
Once you’re confident in the numbers, convert your sheet into a written scope of work: room by room, task by task, with materials specified. That document does three jobs:
- Contractors bid against the same thing, so you can compare.
- It becomes the backbone of your schedule.
- It defines what “done” means for every draw.
I go deeper on that in how to manage contractors on a flip.
Step seven: plug it into your offer
Your repair estimate — line items plus contingency — is one of the two inputs in the flipping offer formula: MAO = (ARV × 0.70) − repairs. If your repair number is wrong, your offer is wrong, no matter how clean the math looks. That’s covered on the 70 percent rule page.
Why this matters past one deal
A real estate business runs on repeatable process. When your whole team estimates the same way — same sheet, same order, same price book — you can compare deals, train new people and trust the numbers. That’s the kind of consistency I built into my own operation, and it’s a big part of why I built REI Boss.
Your next step
Print a repair sheet, grab a flashlight, and walk the next house you can get into — even if you have zero intention of buying it. Fill in every system. Then bring that sheet and the photos to REI Skool or check it against the one-page analyzer in my free investor playbook. The more houses you walk, the faster your eye gets. There’s no shortcut for that, but there is a method.
Questions people ask
Is there a good rehab cost estimator online?
Online calculators can give you a sense of categories, but their prices aren’t built for your market, your contractors or your house. Use them to make sure you didn’t forget a line item — then build your own local ranges with a contractor you trust.
How much contingency should I add to a rehab budget?
I start with roughly 15% on top of the line-item total. On older houses, houses I couldn’t fully inspect, or anything with suspected water or structural issues, I add more. A contingency you don’t use is a gift. One you didn’t plan is a problem.
What is a scope of work for a house flip?
It’s a written, room-by-room list of every task and material in the renovation, specific enough that two contractors would bid the same job. It becomes the basis for bids, the schedule and the draw schedule.
Should I get a home inspection on a flip?
On your early flips, yes. A professional inspector sees things you’ll miss, and a sewer scope or specialist inspection on older houses can save you from the most expensive surprises. Use your inspection period to firm up the repair number before you’re committed.