Real Estate Rehab Budget + Contingency 2027 Calculator
Build a realistic rehab budget for a real estate flip in 2027 — line items for major systems (roof, HVAC, electrical, plumbing) plus kitchen/bath/floor finishes. Add 10-20% contingency, calculate carrying cost, and flag the deal if profit margin is too thin.
The 70% Rule
Flip rule of thumb: max purchase + rehab = 70% of ARV. The remaining 30% covers carrying cost, selling cost, and target profit. For an ARV of $290k, the 70% maximum offer is $203k MINUS rehab. If rehab is $55k, max purchase is $148k. Going above the 70% line systematically destroys flip profitability. The 70% rule self-enforces discipline — many beginning flippers overpay then learn the lesson hard.
Why Contingency Matters
Every flip has surprises — hidden water damage, electrical code violations, foundation issues, lead paint, asbestos. The 10-20% contingency on rehab budget is the cushion. Experienced flippers run 15% on standard rehabs and 20%+ on older homes (pre-1978) or unknown condition. Skipping contingency to make a deal pencil is the single most common reason flips lose money.
Carrying Cost Math
Carrying cost includes loan interest (often 8-12% on hard money or short-term construction), property tax + insurance + utilities, and HOA if any. A typical flip on a $200k house with hard money costs $1,500-2,500/month. Six months hold = $9-15k. This is often the largest "hidden" cost beyond the rehab itself, and it grows linearly with every month the property sits.
Selling Cost Reality
Selling costs typically run 7% of ARV — 5-6% agent commission, 1% closing costs/title insurance, plus any seller concessions to buyer. On a $290k sale, that's $20k. Some flippers sell FSBO to save the listing commission (3%) but typically achieve 3-5% lower sale price — netting roughly the same. Plan for 7% as a default unless you have specific selling strategy.
Sources: biggerpockets.com flip cost benchmarks, hud.gov 203k rehab limits. Last updated: May 2026.