Rehab Cost

Rehab cost is the total estimated expense to repair and renovate a property to reach its after repair value.

Rehab cost is the full budget to take a property from its current condition to its after repair value — materials, labor, permits, dumpsters, and a contingency for what the walls are hiding. Rehabs are usually scoped in tiers: cosmetic (paint, flooring, fixtures), medium (kitchens, baths, some systems), and full gut (everything, sometimes down to the studs).

In a wholesale deal, rehab cost is the second input in the buyer's math, right after ARV. The classic formula — maximum offer equals 70% of ARV minus rehab — means every dollar of underestimated rehab is a dollar of overpayment. Serious buyers build their estimate from a walkthrough or detailed photos and a written scope of work, not from a glance at the listing.

Beginners get rehab numbers wrong by guessing a flat figure with no scope behind it, and by missing the big-ticket systems: roof, HVAC, electrical, plumbing, and foundation. Cabinets and paint are easy to see; the items that blow up budgets are the ones that are not. The fix is discipline, not genius — walk the property or get thorough photos, write a line-item scope, price the majors first, and add a contingency buffer on top. A wholesaler who presents honest rehab numbers builds a reputation that gets the next deal bought faster.