How to estimate rehab costs on a rental property — the honest framework

The three-bucket framework

Every rehab estimate breaks into three buckets. Walk the property with these in mind and you'll have a workable estimate by the time you leave.

• Cosmetic: paint, flooring, light fixtures, door hardware, plumbing fixtures, blinds. The stuff you see.
• Functional: kitchens, baths, appliances, water heater, HVAC. Big-ticket items that affect rent.
• Structural / systems: roof, foundation, electrical, plumbing, framing. Expensive, often hidden, hardest to estimate from a walk.

The bucket order is also the risk order. Cosmetic costs are predictable. Functional costs have some variability. Systems costs can swing your entire deal — and they're the hardest to see during a walkthrough.

Bucket 1: Cosmetic — $5-12/sqft

Full cosmetic refresh on a 1,200 sqft property runs $6,000-14,400. What that covers:

• Interior paint, all rooms ($2,500-4,500 for 1,200 sqft)
• Flooring replacement — LVP throughout ($3-7/sqft installed = $3,600-8,400)
• Light fixtures throughout ($400-900)
• Door hardware, switch plates, smoke detectors ($300-500)
• Window treatments / blinds ($300-700)
• Final cleaning + trash haul ($400-900)

Cosmetic-only refreshes are the lowest-risk rehab type. If you can keep the kitchen and bath functional and just paint + floor + clean, you can produce a rent-ready property for under $10k in many markets.

Bucket 2: Functional — the big-ticket items

Kitchen: $8-15k for rental-quality

Rental-quality kitchen (not flip-quality) on stock cabinets, laminate or quartz counters, mid-tier appliances:

• Cabinets ($2,500-5,500 for stock; $7,500+ for semi-custom)
• Countertops ($1,500-3,500 for laminate or entry quartz)
• Sink + faucet ($350-700)
• Appliances — range, fridge, dishwasher, microwave ($1,800-3,200 for mid-tier)
• Backsplash + cabinet hardware ($600-1,200)
• Plumbing + electrical adjustments ($500-1,200)
• Demo + install labor ($1,500-3,000)

Don't over-improve. Granite + soft-close cabinets + Bosch appliances in a $1,400-rent neighborhood doesn't move rent enough to justify the cost. Match finish quality to rent tier — landlords in C-class neighborhoods waste $5-10k routinely by buying B+ finishes.

Bathroom: $4-9k each

• Vanity + sink + faucet ($400-1,200)
• Toilet ($200-500)
• Tub / shower surround ($1,000-3,500)
• Tile floor ($400-1,200 installed)
• Mirror, lighting, exhaust fan ($300-600)
• Plumbing connections + labor ($800-1,800)

Most rentals need bath updates — they're the most-used room and they age fastest. Budget at least one bath update on any pre-2000 property.

HVAC: $4-12k depending on type + size

• Central AC + furnace replacement: $7-12k for 1,500-2,000 sqft home
• Heat pump replacement: $5-10k
• Mini-split system (2-3 zones): $5-9k
• Furnace only: $3-5k
• AC only: $4-7k

HVAC is the most common "surprise" rehab cost. Verify age + condition during inspection. Systems over 15 years old should be in the budget regardless of current functionality.

Water heater: $1,200-2,500

Standard 40-50 gallon tank: $1,200-1,800 installed. Tankless: $2,500-4,500. Water heaters fail without much warning; if it's over 8-10 years old, budget replacement.

Bucket 3: Systems / structural

Roof: $8-25k

• Asphalt shingle reroof (2,000 sqft): $8-15k
• Architectural shingle reroof: $11-18k
• Standing seam metal: $18-28k
• Partial repair (a few squares): $1-3k

Roof age >20 years = budget reroof. Insurance carriers increasingly require roofs under 15-20 years for coverage; in some markets they'll refuse to write a policy on a 25+ year old roof.

Electrical: $3-15k

• Service panel upgrade to 200-amp: $2,500-4,500
• Knob-and-tube replacement (whole house): $8-18k
• Aluminum wiring remediation: $5-12k
• Add circuits / GFCI updates: $500-2,000

Pre-1960 homes often have knob-and-tube. Pre-1980 homes sometimes have aluminum branch wiring. Both are insurance disqualifiers in many markets. Verify during inspection — these are easy to miss on a walkthrough but $10-18k surprises.

Plumbing: $4-20k

• Replace galvanized supply lines (full house): $4-9k
• Replace cast-iron drains: $6-15k
• Sewer line replacement: $3-12k
• Water main replacement: $2-5k

Galvanized supply + cast-iron drains in pre-1970 homes typically need replacement within 5-10 years of purchase. Budget it if you're planning a long hold.

Foundation: $5-50k

Wide range because foundation issues vary enormously. Small crack repairs $500-2,000. Pier installation $5-15k. Major underpinning $20-50k+. Always get a structural engineer's opinion if any visible cracks. Don't guess foundation costs from photos.

The 25% contingency rule

After you total bucket 1 + bucket 2 + bucket 3, multiply by 1.25. That's your real budget.

The 25% covers:

• Hidden conditions revealed once you open walls
• Scope creep (you find something you didn't see during the walk)
• Material cost increases between estimate and execution
• Contractor change orders
• Permit + inspection fees
• Holding costs while work is in progress

The honest reason: every rehab has surprises. The 25% buffer is the difference between a deal that pencils and a deal where you're writing checks from your savings to finish the work.

On-site walkthrough checklist

Use this in the order you encounter things on a typical property walk:

1. Outside: roof age + condition, gutters, siding, foundation visible cracks, grading + drainage, driveway, exterior paint
2. Mechanical room (basement): furnace age, water heater age, electrical panel size + condition (knob-and-tube? aluminum? federal pacific?), plumbing supply material (galvanized? PEX? copper?)
3. Main floor: flooring condition, paint condition, window age + functionality, smoke detectors
4. Kitchen: cabinets condition, counters, appliances age + functionality, plumbing under sink, GFCI outlets present
5. Bathrooms: tile condition, grout state, vanity, toilet, tub/shower, exhaust fan
6. Bedrooms: closets, paint, flooring, outlets, ceiling condition (water stains?)
7. Attic: insulation depth, signs of leaks, ventilation, framing inspection

For larger rehabs, walk the property with a contractor — even at $200-400 for the walk, it's the cheapest insurance you can buy against a bad estimate.

Use the calculator before you bid

TrueCap's rehab cost estimator applies the sq-ft pricing above against your property's scope. Use it to sanity-check your walkthrough number before committing to an offer. Then run the whole deal through the full TrueCap analyzer to see if BRRRR cash-out math works at your estimated rehab. Related reading: 7 red flags that kill rental deals and the 7 lies in seller pro formas.