Concept

Rehab

What it is

Rehab is the physical work that turns the house you bought into the house you sell. It’s every dollar between closing and listing: demo, framing, mechanicals, drywall, flooring, paint, trim, fixtures, exterior, punch list. It sits between the deal sourcing side of the business and the sale side, and it’s usually where new flippers blow up their budget.

The scope is not HGTV. The scope is whatever the neighborhood demands at the price point you need to hit. Serving gourmet food in a truck-stop diner loses money. Match the finish level to the comps you are underwriting against, not to your personal taste.

Why it matters

Rehab is the biggest variable in a flip. arv is a number you can comp your way to. Acquisition is a number you can negotiate. Rehab is a number most people guess at, and then live with the consequences. A rehab budget that’s 30% wrong on a $150K all-in deal wipes the margin.

Fear tax gets paid here. If you don’t understand the work, you overpay every contractor, you miss red flags on walkthroughs, and you let scope creep eat the weeks. If you do understand the work, you can walk a property with a SMART SOW in your head and know what the job costs before you sign the purchase agreement.

How it shows up

Scope it early, scope it hard. Walk the property, build a line-item scope of work before you close, and refuse to guess. Split the work into categories: demo, rough trades, framing, drywall, finish, paint, flooring, exterior, punch. Get bids against a written SOW, not against a verbal summary. Manage the crew on a lazy PM cadence: weekly walk-through, photos, payment tied to completion.

The trap is treating rehab as one big lump. It isn’t. A wet basement is a french drain before it’s a finished room. A roof stain is a new roof before it’s paint. Sequence matters. Pay stages, not deposits. Inspect before you release the next draw. If a crew disappears, you should not have more than a week of their labor unpaid.

scope of work, SMART SOWs, lazy PM, fear tax, contractors, rehab budget, recruit contractors