5 Rehab Costs Investors Often Underestimate

[Siahna Im]

Don't forget about the “small” expenses:

• Permits and fees
• Dumpsters and cleanup
• Material waste
• Holding costs
• Change orders

Individually, they may not seem significant. Together, they can seriously affect your margins.

What rehab cost would you add to the list?

[Nicholas Floyd]

I’d add financing and extended holding costs when a project runs behind schedule. Extra interest, insurance, utilities, taxes, and even lender extension fees can eat into a deal quickly. That’s also why I’m a big believer in having a contingency reserve or access to additional business capital before the rehab starts instead of trying to find funding once an unexpected expense hits.