Figuring Out Rehab Costs For Dummies

Last Updated on August 29, 2025

How to Estimate Rehab Costs for Tax‑Lien Investors

Buying tax‑lien or tax‑deed properties often means dealing with neglected homes that need significant work. A common question is: “How much should I budget for rehab?” The host of Tax Lien TV shares a practical approach for beginners with little construction knowledge. Below is a transcript‑based summary and actionable guide for investors in the Seattle area and beyond.

Step 1 – Get Your Price per Square Foot

First, you need to Find local contractors and rehabbers on sites like Craigslist or Angi. Call general contractors to ask about costs per square foot for a complete gut and rebuild, including a new roof, floors, appliances, and fixtures.

• Starting out, expect higher rates. In the video, they recalls paying $45‑$50/ft² when they began working in Houston because they lacked relationships with contractors.
  
• Build relationships to lower costs. As trust grows and you provide repeat business, contractors may reduce their fees. The host eventually negotiated $30‑$35/ft² for the same work.
  

Step 2 – Calculate Total Rehab Cost

Once you know the price per square foot, multiply it by the home’s size. For example:

1. Check the square footage of the house by looking at information from the county office or by measuring it yourself.
   
2. Multiply: If a property is 1,000 ft² and your local rate is $50/ft², the approximate total rehab is $50,000.
   
3. Imagine you have a house. After fixing it up, it’s worth $100,000. You start by buying it for $20,000 at a tax sale. Then, you spend another $50,000 to fix it. In total, you spend $70,000. When you sell the house, you could have $30,000 left. This is the money you have before paying any closing costs.
   

This simple math allows you to decide whether a tax‑deed property is worth pursuing.

Step 3 – Inspect the Property and Adjust

During your drive‑by or walk‑through:

• Look at the roof, walls and windows. In the video example, a dilapidated roof and long‑term vacancy suggested hidden mold and a full gut rehab.
  
• Talk to neighbors to learn how long the house has been vacant and whether there have been leaks or structural issues.
  
• If the house isn’t completely destroyed, adjust for a “half rehab”. You can cut your per‑square‑foot estimate roughly in half if you’re only doing partial repairs.
  

The host emphasizes that this method yields a rough estimate—but having numbers is better than guessing. As an investor gains experience and consults local contractors, their estimates will improve.

Step 4 – Know Your Major Repair Costs

Beyond the per‑square‑foot calculation, you should know the typical cost of common big‑ticket items. Several sources advise adding the cost of a new roof, windows, foundation repairs or HVAC separately.. Talk to contractors and rehabbers in your area to find out:

• Roof replacement costs per square foot (e.g., asphalt vs. metal).
  
• Foundation repairs for older homes are common in the Pacific Northwest.
  
• Window replacements—a frequent expense in vacant properties.
  
• Landscaping costs to improve curb appeal.
  

Adding these items will refine your budget and help avoid surprises later.

Quick Recap and Practical Tips

1. Call a few contractors in your city to find out their price per square foot for a complete gut renovation.
2. To estimate rehab costs, multiply the cost per square foot by the home’s size.
3. Check the property to see if it needs a full or Half fix-up, and change plans if necessary.
4. Ask local workers about the costs of fixing roofs, foundations, and windows.
5. Use these numbers to check tax-lien and tax-deed properties. This helps you not to pay too much at the auction

Conclusion & Next Steps

Knowing your rehab costs ahead of time is important for a tax-lien investment. Get quotes based on square footage. Do some simple math. Understanding the big repair costs will help you feel sure when you bid on properties and talk to contractors.

Frequently Asked Questions