What a $40K rehab actually looks like, line by line

Question

Everyone asks me what I spend on a rehab. Here's a real $40K breakdown on a typical Memphis single-family — buy under $100K, ARV $180K–$265K:

Roof — $6,500. If it leaks, nothing else matters. I price a full tear-off, not patching.

HVAC — $5,000. New system, sized right. A dying compressor will kill your first summer.

Flooring — $5,500. LVP throughout. Looks clean, tenants can't destroy it, cheap to replace a section.

Kitchen — $5,000. Stock cabinets, laminate or quartz-looking counters, stainless package. No $15K kitchens on a rental.

Bathrooms — $4,000. One full redo: tub, surround, vanity, toilet, tile floor.

Electrical — $2,500. Panel upgrade if needed, outlets, switches, GFCI. Section 8 inspectors check these.

Plumbing — $2,500. Water heater, fixtures, supply line repairs. Old galvanized gets replaced, no debate.

Windows — $3,000. Roughly 10 vinyl replacements. Energy costs eat you alive with single panes.

Interior paint — $2,500. Whole house, two colors max. Same paint on every house I own.

Exterior/cleanup — $2,000. Exterior paint touch-up, landscaping, debris haul-off. Curb appeal is real.

Permits/dumpsters/misc — $1,500. The stuff nobody budgets for and everybody needs.

Total: $40,000. The rule that keeps me out of trouble: line-item the budget BEFORE I close, and if a walkthrough can't be rehabbed for the number my offer assumed, I renegotiate or walk.

What's the line item that always runs over budget on YOUR rehabs?

Mike B. · Answer

All the galvanized replaced AND a new water heater for $2,500?! I'm not questioning you, there are people in this thread agreeing that it's inline with what they're paying, but we're easily paying 2X+ this in Chicago with a licensed plumber.

Also, Are you doing demo yourself or how is that factored?

James Jones · Answer

Henry — correct, that $5,000 is a replacement system in a typical Memphis single-family, not a conversion from a boiler or wall unit with all new duct runs. That is a different house and a different budget, and I price it before I close, not after. My rule is the same as the rest of the $40K scope: if a house needs work outside the standard scope, I re-price the whole deal at purchase under $100K against ARV $180K to $265K and rent at the 1% rule, and if it does not clear, I walk. The $5,000 number only holds because the scope is repeatable house after house.

James Jones · Answer

Jaron — yes, complete system at that $5,000 number, and the reason is volume and repetition, not magic.

I buy the same floor plans in the same 9 Memphis ZIPs — 38109, 38111, 38112, 38114, 38116, 38117, 38118, 38122, 38128 — and I run the same rehab scope house after house across 236 doors. Same paint, same flooring, same kitchen package, same HVAC spec. When a crew prices the same job for the tenth time, there's no learning curve in the number and no custom work hiding in it.

Your $50K to $55K comparison is the honest one for a one-off BRRRR. My numbers only work because the scope never changes and the work never stops. Change either one and I'm paying your prices too.

Chris Seveney · Answer

Here is what we are seeing in some markets:

Roof — $6,500. thats not bad pricing

HVAC — $5,000. we are closer to around 7-8k we are seeing in most markets

Flooring — $5,500. in line

Kitchen — $5,000. with appliances I would say this is low. I would budget 8k

Bathrooms — $4,000. We are typically around 7500

Electrical — $2,500. This is in range,. could be slightly higher

Plumbing — $2,500. in line

Windows — $3,000. we are around 600-800 window so we are around double this.

Interior paint — $2,500. we are around 2x this.

Exterior/cleanup — $2,000. in line

Permits/dumpsters/misc — $1,500. The stuff nobody budgets for and everybody needs.

In most places if you are not doing 100+ properties this reno in my mind would be closer to 55-60k

Henry Lazerow · Answer

For HVAC you are not counting running duck work in that are you? Just replacing the furnace and AC? For us to convert a old steam boiler or wall hvac unit to modern hvac with ducks is around $15k in Chicago.

Simon W. · Answer

Nice breakdown. One thing worth thinking about on the tax side: a lot of these lines aren't repairs you write off that year. Roof, HVAC, windows, the panel upgrade, flooring throughout, a full bathroom redo, those are mostly improvements that get depreciated. And if the rehab happens before the place is rented for the first time, pretty much all of it goes into your basis anyway.

So keep this exact line-by-line list with the receipts for each property. It makes it a lot easier for your CPA to split out what goes on 27.5 years and what might get a shorter life, and it matters again when you sell since it's part of your basis.

The same paint on every house tip is underrated too. Makes touch-ups at turnover cheap and quick.

Jaron Walling · Answer

@James Jones As an investor that's bought in the exact same price range I have to say wow... those numbers are fantastic.

I don't know if you have long term relationships with contractors or a crew you built up or own, but most of those line items are cheaper than anything we have done. The painting, HVAC, and windows are shocking cheap compared to what I've paid. When you say HVAC are you talking about a complete system? On our last property we paid $5k for ONLY the A/C; no furnace. Even your roof budget is $4k cheaper than what we typically pay (10-14 squares).

I need to shop around and get a few more quotes before I get into another BRRRR. The same renovation for us would be like $50-55k.

Nicholas L. · Answer

@Jaron Walling

I am with you, I'm around $4500-5000 for an AC and $3000-3500 for a furnace. I'm at $600 a window installed. Paint a whole small house including ceilings at least $4000. Kitchens and bathrooms are highly variable.

What a $40K rehab actually looks like, line by line

What a $40K rehab actually looks like, line by line

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