The rehab budget is the number on a flip you have the most control over and get wrong most often. The purchase price is negotiated, the sale price is the market’s call, but the rehab is a figure you write down yourself before anyone opens a wall.
It is also the number the rest of the deal is built on, because the offer comes out of it. So being 20% out on the rehab is not a 20% problem.
What does a rehab actually cost?
The honest answer is that it depends on the house and the market, and the range is wide enough that any single figure is useless to you.
ATTOM’s special analysis of Q1 2026 flips, published July 2, 2026, uses loan-level data from the lender Backflip and reports the average construction budget on fix-and-flip loans funded that quarter by metro. Charlotte and Dallas-Fort Worth came in at $58,857 and $68,680. Atlanta averaged $190,000 and Denver $431,250 (ATTOM, Special Analysis: How Pricing, Renovation Costs and Timing Shaped Returns in Q1 2026).
That spread is more than seven to one between two metros in the same quarter. Labor rates differ, but most of the gap is what investors in each market are buying: a cosmetic refresh in one place, a gut renovation on a more expensive house in another. Which tells you the only way to get your own number is to price your own house.
How do you build the estimate?
Walk the house room by room with a list, and write a line for every item you will touch. Then get the big lines quoted by someone who will do the work.
Three categories deserve their own attention, because they are where budgets break:
- The systems. Roof, HVAC, electrical panel, plumbing supply lines, water heater. These are age-based, not condition-based. A twenty-year-old roof that does not leak today is still a roof you are replacing or disclosing.
- What the walls hide. Anything behind drywall, under flooring or in a crawl space is unpriced until it is opened. Knob-and-tube wiring, cast iron drains, joist rot and a failed vapor barrier are the classic four.
- Permits and the delay they add. A permitted job has an inspection schedule, and the schedule is not yours. That cost lands in holding, not in the rehab line, which is why an overrun and a delay usually arrive together.
Then add a contingency on top as an explicit line, not a padded guess buried in the other numbers. You want to know how much cushion you have, which means it has to be visible.
What does an overrun cost?
Take a house bought for $175,000 with a $59,000 rehab, sold at a $320,000 sale price after six months. Holding runs $950 a month. The loan is 15% down at 10% interest with 2 points, and the rehab is in the loan. Those terms are the example’s assumptions, not a quote.
| $59,000 budget | 20% over | $85,000 | |
|---|---|---|---|
| Sale price | $320,000 | $320,000 | $320,000 |
| Selling costs (8%) | −$25,600 | −$25,600 | −$25,600 |
| Purchase price | −$175,000 | −$175,000 | −$175,000 |
| Buying closing costs (2%) | −$3,500 | −$3,500 | −$3,500 |
| Rehab | −$59,000 | −$70,800 | −$85,000 |
| Holding costs (6 months) | −$5,700 | −$5,700 | −$5,700 |
| Loan points (2%) | −$4,155 | −$4,391 | −$4,675 |
| Loan interest, 6 months | −$10,388 | −$10,978 | −$11,688 |
| Net profit | $36,657 | $24,031 | $8,837 |
These are example figures, not a quote.
The middle column is the one to sit with. A 20% overrun is $11,800 of extra work, and it costs $12,626 of profit. The rehab is financed, so each extra dollar also buys 2 cents of points and 5 cents of interest over six months. Every $1,000 you go over costs $1,070.
The right-hand column is a $26,000 overrun, which on a house this size is a roof, a panel and a bathroom nobody planned on. It leaves $8,837, or 2.8% of the sale price.
How far over can the budget go before the flip loses money?
On this deal, the rehab breaks even at about $93,259. That is 58% over the estimate.
That sounds like a lot of room until you notice what it is doing. Every dollar of that cushion was your profit. A flip that survives a 58% overrun has not survived it in any sense that matters, it has just avoided a loss, after six months of work.
Time makes it worse, because overruns and delays travel together. Take the 20% overrun and add two months to the schedule for the extra work, and the profit falls from $24,031 to $18,472.
What number should you put in the calculator?
Put in the quoted scope plus a visible contingency, and then check the deal at the contingency spent rather than unspent. A flip that only works if nothing goes wrong is a flip that only works sometimes.
The rehab figure also sets your ceiling on the offer. The 70% rule subtracts the rehab from 70% of the sale price, so a $12,000 miss on the rehab is a $12,000 miss on what you should have paid. The 70% rule, and when it is wrong has that arithmetic, and it depends on the sale price being right too: how to work out a house’s resale value covers that half.
For the rest of the stack the rehab sits inside, what it costs to flip a house lists every line. Then put your own scope in the flip calculator’s Rehab budget field, raise it 20%, and decide whether you still want the deal at that number. If you do not, the offer is too high.