How to Underwrite a Rehab Budget Without Getting Burned

Rehab budgets are the most-underestimated number in real estate. The default assumption — 'a contractor will give me a quote and that's the cost' — ignores how much actual work scope expands once walls are opened.

Use a 20% contingency on every estimate. For properties built before 1978, add a lead-paint allowance. For pre-1960 properties, plan for at least one major-systems surprise (plumbing, electrical, foundation).

Track every actual project's overrun for a year. Your personal multiplier on contractor estimates is more predictive than any rule of thumb.