The Simple Formula to Estimate Renovation Costs (2025 Numbers)

BiggerPockets Real Estate Podcast

BiggerPockets

Education, Business, Investing

4.8 • 16.5K Ratings

🗓️ 18 June 2025

⏱️ 42 minutes

🔗️ Recording | iTunes | RSS

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Summary

Your agent just sent you a killer real estate deal with enormous upside, but it needs a bit of work. Here’s exactly how to estimate renovation costs, so you know you’re buying a property with a juicy margin instead of one that will just break even. Whether you’re renovating a rental property, planning to refinance after the rehab with the BRRRR method, or flipping a house for some quick cash, we’ll give you the formula to run your renovation numbers FAST. We’re back with real estate investor questions from the BiggerPockets Forums. First up: how to estimate rehab costs on a distressed property. And, if the renovation costs are high, is the rehab still worth it? Then, once you’ve got your rental portfolio, when should you hire property management? Your agent wants you to sign an exclusivity agreement so you only work with them; here’s when we will (and definitely won’t) do it. Finally, we share a way to access home equity WITHOUT refinancing at a higher rate and killing your cash flow. Got a question? Need answers? Share your real estate investing situation on the BiggerPockets Forums. In This Episode We Cover How to estimate rehab costs and the price-per-square-foot guidelines to follow Accessing home equity without refinancing (a way better option in 2025) How much money should you make on a flip? Why even $40,000 may be too low When to hire a property manager and signs that one will actually take care of your tenants/property Whether or not to sign an exclusivity agreement with your real estate agent And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.biggerpockets.com/blog/real-estate-1136 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[email protected]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	I know I can get rich if I just pull off this home renovation, but I just don't know how much it's going to cost.
0:07.7	And that's a question you've been asking yourself. Today, we haven't answered for you.
0:16.5	What's up, everyone? It's Dave here on the Bigger Pockets podcast. And today we're diving back
0:21.2	into the Bigger Pockets forums to answer a whole bunch of questions that you all are asking
0:26.5	about your own real estate investing. Henry Washington is here with me. So we have about
0:31.8	25 years of combined investing experience on this episode. We've got great questions about how to
0:38.6	project renovation costs, if you've never done one before, when it's time to hire a property
0:43.3	manager, whether it's ever okay to create negative cash flow with a refinance and much more.
0:49.6	Henry, how are you, man? I'm doing well, sir. How about you?
0:53.1	Good. It's been a while since we've done one of these, but these are some good questions.
0:56.6	Are you ready to jump in?
0:58.4	Yeah, man. I love these episodes. Let's do it.
1:00.5	Same. All right. So our first question comes from Chris, who's an investor in the Upper Peninsula of Michigan.
1:07.5	His question says, I'm looking to get into the burgame and trying to estimate how much renovations
1:12.7	will cost for an average distressed, two to three bedroom home, 1,200 square feet or less.
1:18.9	I keep hearing that cost of labor and supplies are rising, so I'm wondering if 50 grand is
1:24.1	reasonable to get a smaller single family home looking like something you'd see on
1:28.9	HGTV. I don't plan on doing any of the work myself. I'd rather stay out of the way and let
1:35.4	professionals do their thing. We'll touch that HGT thing in just a minute, but let's start with the
1:40.9	main question here about just estimating renovation costs.
1:45.2	Is this even possible?
1:47.3	Like, can you ballpark something as broad as a distressed two to three bedroom home,
	...

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