How the rehab budget works
Most rental calculators ask for one number for repairs. On a fixer, that number decides whether the deal works, so this workbook builds it the way a contractor prices a job.
1. Scope by area
List the work area by area: roof, exterior, foundation, kitchen, bathrooms, floors, plumbing, electrical, HVAC, windows and doors, paint, yard, permits. Each line is a quantity times a unit cost, at your prices or your contractor’s bid. The sheet totals each area, so you see where the money goes before you make an offer.
2. A contingency for what’s behind the walls
Every rehab finds something. The question is how much to hold back for it. You set a base contingency, then answer nine questions a contractor asks on a walkthrough:
| Check | What to look for |
|---|---|
| Foundation | Cracks in the slab or brick, doors that stick, floors that slope |
| Roof | An old roof, soft decking, water stains on ceilings |
| Plumbing | Cast iron or clay drains, galvanized or polybutylene supply lines |
| Electrical | Federal Pacific or Zinsco panel, aluminum branch wiring, no ground |
| Termites and rot | Mud tubes, soft sills, damaged trim |
| Water and mold | Stains, a musty smell, past flooding |
| Built before 1978 | Lead safe work rules apply to paint and demo |
| Vacant 6+ months | Utilities off, pests, freeze or heat damage |
| Unpermitted work | Additions or garage conversions with no permit |
Each Yes adds a percentage you control. A clean house stays near the base. A house that checks four boxes carries a bigger cushion, and the cash you leave in the deal, the cash on cash and the verdict move with it.
3. See what an overrun does
The Sensitivity tab runs the whole deal again with the rehab 10, 20 and 30% over budget. The refinance still uses the same after repair value, since spending more does not make the house worth more, so an overrun comes straight out of the cash you get back. The full version’s example deal is RED before any overrun: cash flow is $84 a unit against a $100 minimum. Each 10% over leaves about $4,850 more of your cash in the deal, and at 30% over the cash on cash falls from 7.3% to 4.8%.
Before you close
Have a contractor open a few spots: under the sinks, the attic, the electrical panel, and a camera down the sewer line. Then answer the checklist with what you saw.