Main Content

How to Really Budget for a Fixer-Upper

Home loan / reverse mortgage or transforming assets into cash concept : House paper model , US dollar hessian bags on a wood balance scale, depicts a homeowner or a borrower turns properties into cash

Many of us have stared in awe at the listing page of an old house with overgrown landscaping and bathroom tiles from the early 1900s. And many have imagined fixing up said old house—but few ever do. After all, it takes a special kind of person to call a realtor and take a tour with a contractor to see just how much it would cost to polish that hidden gem. Why? Fear of inheriting a money pit—or just the intimidation of rehab costs—can keep anyone from buying their dream house that needs work.

But it is possible to buy and flip a home without spending your life savings. You just have to plan it right. Ahead, five experienced rehabbers from across the country share their top tips for first-time fixer-uppers.

1 – Khari Washington, California
Where and when did you buy a house that needed work?

I have rehabbed and/or flipped many houses throughout the years and helped many others do the same. I have done deals in cities all across California and in San Antonio, Texas.

How much did you spend to buy and repair them?
Houses on the low end cost $125,000-$500,000 and take around 45 days to complete. Rehabs have been getting more expensive; I used to spend $30,000 per home, and now it’s closer to $45,000.

What was your most costly fix and how did you tackle it?
Converting a den into a master bedroom and bathroom, which cost $20,000 and took about to month to complete. I found a contractor who was very affordable and used him for most of the framing, plumbing, and electrical. I had handymen paint, put in the fixtures, and install flooring.

What advice would you give aspiring rehabbers?
Make sure that whoever you hire for a certain task is very good at that task. Make a detailed list of everything you want done and what you expect from the contractor. Price out finishes beforehand, so you aren’t surprised by huge costs after paying. Discuss with your contractor ahead of time all the things that might come up, so you can hold them to an estimated price range for worst-case scenarios.

2 – Nikki Webster, Florida
Where and when did you buy a house that needed work?

Two months ago, I purchased a 1962 fixer-upper in Hernando Beach to be an Airbnb rental/vacation home. I plan to stay there in the summer and rent it out during winter. My Orlando home was a rehab that could not be rehabbed; we ended up having to tear down the existing home and build a new one.

How much did you spend to buy and repair the beach house?
The house cost $349,000, and I spent $20,000 to make it habitable over the course of two months.

What were your most costly fixes and how did you tackle them?
Bringing the electrical up to code: $2,000
Painting home exterior: $3,000
Re-epoxying carport and patio: $1,000
Removing a dilapidated shed: $1,000
New water heater: $750
Plumbing that turned into a new bathroom: Still working on pricing, but should cost ~$3,000
It’s also worth mentioning that the A/C went out on day two, despite passing inspection. Fortunately, I have a home warranty, so that was addressed with just the deductible.

What advice would you give aspiring rehabbers?
Everything that can go wrong will. For example, say the bathroom needs repair—on the surface, it’s a simple pipe job. In reality, we have to take out an entire wall to access it, the all-in-one unit is in bad shape, and the drain is shot. Once this project begins, it’s possible that the drain has to be re-done. In other words: Go into these things expecting the worst.

Don’t cut corners; they always come back to bite you. You can put a Band-Aid on an issue, but it will cost you twice as much in the long run. Anytime I do rehabs and estimate “known costs,” I add in another 30%. There is always an unknown expense lurking. Plus, no matter how good you think you are at estimating, it always ends up costing more.

3 – Nick Disney, Texas
Where and when did you buy a house that needed work?

In San Antonio, where I’m the owner of Sell My San Antonio House.

How much did you spend to buy and repair your latest rehab?
The house cost $75,000, and we spent another $75,000 to make it livable over the course of 10 months. When it was done, we decided to rent it out to generate monthly income.

What was your most costly fix and how did you tackle it?
All of the plumbing that needed to be repaired. After purchasing the property, we discovered several breaks in the sewer line; the entire thing needed to be replaced. Once the plumber replaced them, we found a leak inside the slab foundation from one of the lines coming into the house. We had to remove new flooring and break out concrete to repair the leak. By the time we were done, we had spent $18,000 on plumbing alone.

What advice would you give aspiring rehabbers?
You have to plan for unexpected costs. Have several thousand dollars built into the budget for overages and hidden problems. If you don’t need it, great—but if you do, you will be glad it was in the budget.

4 – Andy Kolodgie, Washington D.C. and Virginia
Where and when did you buy a house that needed work?

My most recent rehab was in Petersburg, VA, just outside of Richmond.

How much did you spend to buy and repair it?
The house cost $90,000, and I spent $60,000 to make it habitable. The $60,000 went towards new windows, installing HVAC and ductwork, upgrading the kitchen, adding a full bath, new flooring, patching/painting the walls, and taking down a couple problematic trees.

After considering renting it out, the numbers did not work out favorably. We sold the property off-market to a buyer looking to purchase a home without an agent.

What was your most costly fix and how did you tackle it?
Installing HVAC and ductwork, but we budgeted for that when purchasing the home. There is no way to save on HVAC, except cheaper components and running less duct.

If you don’t know how much the rehab will cost, bring a professional (i.e. licensed contractor) to the property to assist with pricing in your local area.

What advice would you give aspiring rehabbers?
Partner with someone experienced in the area when you’re first starting. Splitting a deal with an experienced rehabber will make you more money than going at it alone in the beginning. In addition, you only need to bring max 50% of the finances to the deal; depending on the agreement you have with your new partner, it could be less. This brings less exposure, and most beginners will not have the funds to do it themselves.

5 – Tawana Shorter, Connecticut
Where and when did you buy a house that needed work?

I purchased my home, a 3-family in Bridgeport, CT, in 2019.

How much did you spend to buy and repair it?
I bought it for $375,000, paid $3,000 down, and came out with no additional costs. I walked away from closing with $3,000 in security deposits, so I guess I got that back. And I gained about $25,000 in equity last year, without considering the renovations.

What was your most costly fix and how did you tackle it?
The house was habitable for myself and tenants but needed some renovation. I increased value by updating the kitchen and bathrooms, and raising the rent price. I was lucky to find a property that pretty much pays for itself: the two apartments cover 95% of total property cost. The kitchen cost $25,000-$30,000 to fix using high-end materials.

What advice would you give aspiring rehabbers?
I made really good choices during my search. I had a real-estate strategy and this property was part of my five-year real estate plan. I knew what I was looking for, what needed renovating, and market trends.

First, understand your market and have financial goals. Then, create your network. You need to build relationships with licensed contractors and realtors. Build a team of people you can trust.