How are you estimating costs for renovations?

[Alexis DeAngelis]

Quick background — I run a fix-and-flip operation in the RDU Triangle (NC) and Huntsville, AL. Completed 7 flips last year with average rehab budgets around $110K per property.

One thing that kept burning me early on was inaccurate cost estimation. Not by a little — by 20-30% on some projects. The usual approach of getting 2-3 contractor bids and averaging them sounds reasonable until you realize most contractors are estimating based on gut feel too.

So I started building my own system. Tracked every invoice, every change order, every material receipt across all my projects. Broke it down by room, by trade, by market. A few things jumped out:

— Material costs between my two markets (Raleigh vs Huntsville) differ by 25-40% depending on the category. National average calculators are basically useless for deal analysis.

— Kitchens and bathrooms account for roughly 45-55% of total rehab spend on a typical flip, but they're the rooms where estimates are most likely to be wrong because of hidden plumbing and electrical work.

— Contingency budgets under 15% are a gamble. Across my 7 projects, the average unplanned cost was 12% of the original estimate.

All of that data completely changed how I underwrite deals now. I won't even make an offer unless I've broken the rehab down room by room with market-adjusted numbers. It takes more time upfront but it's saved me from at least two deals that looked good on paper but would've been losers.

What's your process? Are you relying on contractor bids? Using software? Running your own spreadsheets?

Would love to compare notes. Drop your approach below — especially if you're operating in secondary markets where data is harder to come by.

[Bruce Woodruff]

Quote from @Warren Ifergane:

Great observations. The investors I see who estimate most accurately usually end up doing something similar to what you described — building their own cost database over time.

A couple patterns I’ve noticed across flips:

• Kitchen + bath surprises are almost always plumbing/electrical once walls are opened. That’s where estimates drift the most.
• Market differences are huge — labor especially. I’ve seen 20–30% swings between cities that are only a few hours apart.
• Most experienced flippers seem to land around 10–15% contingency once they’ve done enough projects to tighten their scope.

One thing that seems to help is breaking rehab into standardized scopes (paint, flooring, light cosmetic, full kitchen, full bath, etc.) and assigning rough ranges based on previous projects rather than starting from scratch each time.

Curious — have you found certain trades consistently underbid upfront and grow during the project? Electrical and plumbing seem to be the usual ones.

"Curious — have you found certain trades consistently underbid upfront and grow during the project? Electrical and plumbing seem to be the usual ones."

Having done remodels for decades, the answer is no. However this always involved Sub-Contractors that I used on job after job for years.....you have to treat your Subs really well and they will keep their bids tighter and eat the small oooops that pop up on every project....