How to Calculate Renovation Costs

Ronda Sharp
May 29
2 min read

How to Calculate Renovation Costs

Whether you're flipping a house, property wholesaling, buying a fixer-upper, or planning a major remodel, knowing how to calculate renovation costs can make or break your budget. Getting this right means fewer surprises, better profit margins, and smarter decision-making.

Let’s walk through how to estimate renovation costs step-by-step — even if you’re new to real estate.

🔨 Step-by-Step Guide to Estimating Renovation Costs

1. Walk the Property Thoroughly

Start by assessing every area of the home, inside and out. Pay attention to:

Kitchen and bathroom updates
Roof, HVAC, electrical, and plumbing
Flooring, walls, and ceilings
Landscaping and exterior paint
Foundation or structural issues

Tip: Take photos and notes room by room so nothing gets missed.

2. Break Down the Scope of Work

Make a list of all the tasks needed. For example:

Replace cabinets
Install new flooring
Paint interior walls
Repair the roof
Upgrade bathroom fixtures

Tip: Be specific — instead of “fix bathroom,” write “replace toilet and re-tile shower.”

3. Get Material and Labor Estimates

Now assign an estimated cost to each item:

Material costs: Go to stores like Home Depot or Lowe’s online and price out items.
Labor costs: Use contractor pricing averages or reach out to local professionals for quotes.
Tip: Go to the Hardware store's pro desk and submit your findings. They will calculate the material costs for you typically for free.

4. Use Online Tools to Help

Here are some great tools to calculate renovation costs:

HomeAdvisor's True Cost Guide – Gives national and local averages for home improvement projects.
Remodeling Calculator – A free estimator for everything from paint jobs to roof replacements.
Propstream - Provides an interactive tool to calculate renovation costs.
Zillow Zestimate – While not a renovation tool, this helps you gauge after-repair value (ARV), which is essential when calculating profit potential.

5. Add a Contingency Budget

Things often cost more than expected, so add 10–20% to your total to cover surprises. If your initial estimate is $40,000, expect to possibly spend $44,000–$48,000.

6. Double Check with Contractors

Before you finalize your renovation costs, share your list with a contractor for feedback. They can validate your estimates or flag any areas you may have under- or overestimated.

💡 Final Thoughts on Renovation Costs

Being able to accurately estimate renovation costs is a critical skill for any real estate investor or homeowner. With a solid process and the right tools, you can avoid budget blowouts and make smarter investment decisions.

Pro Tip: Always walk the property with your contractor if possible. They may notice issues you missed — and give you a faster, more accurate number.

The information in this article are of the experience and opinion of the author. Due diligence should always be done before investing in real estate.