How to Estimate Repairs, Control Renovation Costs, and Still Make a Profit
By Marjorie Pellegrini, Broker/Owner – Go North Realty
You’ve watched the HGTV marathons. You’ve seen the dramatic before-and-afters. The “we bought it for $150K and sold it for $325K” success stories.
But here’s what those shows don’t tell you:
Fixer-uppers can absolutely destroy your ROI (Return On Investment) —if you don’t know how to budget smart, plan ahead, and manage the chaos.
In this post, we’ll cover:
- What repair costs really look like in 2025
- How to build a rehab budget that actually holds
- Contingency planning (the thing 90% of newbies skip)
- DIY vs. contractor: what’s worth it?
- Rehab rules every investor needs to know
Whether you’re buying your first rental or flipping for profit, this is your blueprint for renovations that don’t wreck your return.
Why Fixer-Uppers Are a Double-Edged Sword
Let’s start with the truth: distressed properties can be some of the best deals you’ll ever find.
✅ Lower purchase price
✅ Instant equity opportunity
✅ Higher after-repair rent or resale value
✅ Less competition (most buyers want move-in ready)
But… that upside comes with serious risk.
❌ Hidden damage behind walls
❌ Underestimated timelines
❌ Contractor delays and change orders
❌ Permit surprises
❌ Emotion-led upgrades that don’t pay off
If you don’t run your rehab numbers before you buy, the deal doesn’t pencil—it hemorrhages.
How to Create a Realistic Rehab Budget (Not a Fantasy One)
To build a rehab budget that holds up in the real world, break it down into these 3 categories:
1. Mandatory Repairs (Code + Safety)
These are non-negotiables. Think:
- Roof replacement
- Foundation repairs
- Mold/asbestos remediation
- Electrical rewiring
- Plumbing issues
- HVAC replacement
- Smoke detectors, egress windows, handrails
💡 Rule of thumb: Prioritize structural and systems first—cosmetic can wait.
2. Functional Improvements (Tenant/Buyer Ready)
These make the property livable and marketable:
- New flooring or refinishing hardwood
- Kitchen and bathroom upgrades
- Paint (interior/exterior)
- Window replacements
- Lighting and fixtures
- Appliances
🧠 Ask: “Will this increase rent/value—or just make me happy?”
3. Value-Add & Curb Appeal (ROI Boosters)
Optional, but powerful:
- Fencing
- Landscaping
- Decks or patios
- Garage or carport
- Smart home features
- Bonus spaces (loft, office nook)
Don’t go overboard—focus on renter ROI, not retail luxury.
🔍 Pro tip: Get 3 contractor bids before closing. Use those numbers to build your estimate—not ballpark guesses.
Don’t Forget These Hidden Costs
These often get skipped—and blow up your budget:
Permits & Inspections: Some cities charge thousands and require rework if you skip them.
Demo & Dump Fees: Especially for multi-unit or full gut jobs.
Cleaning & Haul Away: After everything’s done.
Delivery Charges: For large appliances, cabinets, or tile.
Storage: You may need temporary space during reno.
Holding Costs: Mortgage, insurance, utilities, taxes while the property earns zero income
💡 Rule: Add 15–20% contingency to whatever your total estimate is. If your budget is $40K, plan for $48K.
The Big Decision – DIY or Hire It Out?
Doing it yourself saves money, but costs time. And sometimes, it costs more if mistakes have to be redone.
DIY is best when:
- You have experience (or a skilled partner)
- You’re not under tight timelines
- The job is cosmetic (paint, flooring, backsplash)
- You want to learn on your first deal
Hire it out when:
- Code compliance matters (plumbing, electric)
- You need permits
- It’s a full gut or time-sensitive flip
- You value sanity
💬 Cheap labor is expensive if it leads to re-do, higher vacancies, or lawsuit
Rehab Rules That Keep ROI Intact
🔑 Rule #1: Know Your ARV (After Repair Value)
Get real comps from your REALTOR®—not wishful Zillow estimates.
🔑 Rule #2: Never Start Work Without Permits
Fast is great. Legal is better. Fines and delays kill ROI.
🔑 Rule #3: Don’t Over-Upfit for the Neighborhood
Granite and gold faucets in a rental? Waste of money.
🔑 Rule #4: Budget for Vacancy During Renovation
No income = no buffer. Can you carry 3–6 months of holding costs?
🔑 Rule #5: The Rehab Budget Is the Deal
A great deal with a bad reno budget? Still a bad deal.
Tools That Help You Budget Better
✅ BiggerPockets Rehab Estimator
✅ Homewyse.com (materials + labor calculators)
✅ Local contractor walkthrough BEFORE closing
✅ Scope of Work spreadsheet for investor contractors
The more homework you do up front, the fewer financial surprises you’ll face later.
Fixer-uppers can absolutely pencil—but only when you treat the rehab budget as a core part of your investment analysis.
Don’t guess. Don’t estimate off vibes.
Use real numbers, plan for contingencies, and always ask:
“Will this repair pay me back?”
With the right plan, your fixer-upper can go from ugly duckling to golden goose.
Need help evaluating a fixer deal?
📅 Schedule your consult at Go North Realty.
Next up:
“Airbnb VS Longterm”
Marjorie's Real Estate Confessions... Spilling the (Real Estate) tea, one confession at a time! 
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