New to Real Estate · Waterford MI · Member since 2026 · 2 posts · 2 votes
Hi everybody
I'm based in Metro Detroit and working toward my first flip. For the initial deal analysis, I'm trying to get a rough number for renovation costs.
So my question is what renovation cost per square foot are you currently using for your initial underwriting in Metro Detroit?
If possible, I'd appreciate numbers for
Cosmetic/light rehab
Moderate/full cosmetic rehab
Heavy rehab
I understand that cost per square foot is only a rough estimate and the actual cost depends on different factors. I’m mainly trying to establish a reasonable local starting point for initial deal analysis.
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
6d
Natsuki, I’d be careful about using one rehab $/SF number as anything more than a very early screening tool.
For a first-pass flip analysis, I’d rather break the rehab into scope buckets than trust a blanket number. A 1,200 SF house needing paint, flooring, fixtures, and a basic kitchen refresh is a completely different project from a same-size house needing roof, HVAC, electrical, plumbing, windows, foundation, and layout changes.
For Metro Detroit specifically, I’d use local contractor pricing and recent bids to build your own baseline over time. The more flips you analyze, the more useful your own cost history becomes.
For a first flip, I’d also keep a separate contingency on top of the visible scope. Older housing stock can hide a lot once walls open up, so I’d rather underwrite conservatively than make the deal work by forcing the rehab number down.
From the tax side, because this is a flip, the rehab and carrying costs should be tracked very cleanly by project. Flip activity is generally active business activity, and if you start doing these consistently and profitably, I’d also evaluate whether an S-Corp makes sense based on profit level, volume, payroll, reasonable compensation, and the broader structure.
And if you eventually combine flips with rental real estate, there can be a strong tax-planning opportunity. Depending on participation, depreciation, entity structure, and whether the rental losses are actually usable, those losses may sometimes offset active real estate income. In the right fact pattern, taxable income can potentially be reduced very significantly, even to zero, but it has to be planned correctly.
Feel free to DM me, I’d be happy to send over a few resources that might help with flip underwriting, rehab-cost tracking, and downside planning.
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