How much does a Water Damage Restoration cost to buy?

A typical Water Damage Restoration sells for 2.5x to 5x annual revenue. With average revenue of $1.2M, expect to pay $3.0M to $6.0M.

How much does it cost to start a Water Damage Restoration?

Startup costs range from $60K to $200K depending on location, equipment, and scale.

Service

/100 score

Strong

Water Damage Restoration

Q: What are the profit margins for a Water Damage Restoration?

The average profit margin for a Water Damage Restoration is around 22%. Labor (technicians, project managers) is 35–45% of revenue. Equipment: industrial dryers, air movers, moisture meters. Key cost: equipment leasing/maintenance and marketing to referral sources.

The business that gets called the minute disaster strikes — and insurance pays the bill

Water damage restoration companies respond to burst pipes, floods, and sewage backups — extracting water, drying structures, and restoring property. The secret: insurance pays. Most jobs are billed directly to homeowner's insurance with virtually no price resistance from the customer. A single water loss can generate $5K–$30K in revenue. Companies with strong insurance adjuster relationships and 24/7 availability build massive recurring pipelines from referrals alone.

Share on X Share on LinkedIn

Compare ↔

Avg Revenue

$1.2M

Profit Margin

22%

Acquisition Multiple

2.5x - 5x

Startup Cost

$60K - $200K

Difficulty

3/5

How It Works

When water damage occurs, homeowners call their insurance company, which dispatches a restoration firm. Companies market to insurance adjusters, plumbers, and property managers for referrals. Crews arrive within hours, extract water, place industrial dryers, and document everything for insurance billing. Full reconstruction (higher margin) follows mitigation.

Revenue Range

Low End

$400K

Typical

$1.2M

High End

$5.0M

Real Acquisitions in This Category

SBA 7(a) change-of-ownership loans · NAICS 562910 · Remediation Services

Deals tracked

30 in last 24 mo

Median loan

$750K

$250K–$1.6M p25/p75

Implied deal size

$882K

median · ~85% LTV

Charge-off rate

0.0%

of loans that finished

Deal Size Distribution

<$150K

$150K–500K

$500K–1M

$1M–2M

>$2M

Deal Flow Over Time

Deals per year · median loan

$806K

2020

$450K

2021

$740K

2022

$1.5M

2023

$800K

2024

$500K

2025

$542K

2026

12-month momentum

-12.5%

deal volume vs prior 12 mo

Median loan Δ

+60.8%

14 recent · 16 prior

Financing Profile

Median rate

10.00%

0% fixed · last 24 mo

Median term

120 mo

standard 10-yr

Collateralized

97%

of loans secured

Median jobs

supported per deal

Top lenders in this space

Live Oak Banking Company28

Byline Bank8

First Internet Bank of Indiana4

BayFirst National Bank3

Clear Lake Bank & Trust Company2

Where deals happen

CA17

FL9

NC8

IN6

IL5

TX5

GA4

MA4

NY4

AL4

Franchise vs independent

Franchised acquisitions finance at $755K median vs $544K for independents — a +39% franchise premium. Franchises make up 38% of deals tracked.

Recent Comparable Deals

Closed	State	Loan	Implied deal	Jobs	Franchise
Dec 2025	NC	$1.0M	$1.2M	14	FRSTeam
Dec 2025	NC	$50K	$59K	14	FRSTeam
Dec 2025	NY	$984K	$1.2M	4	—
Dec 2025	NY	$100K	$118K	4	—
Sep 2025	IL	$1.2M	$1.4M	63	—
Aug 2025	VA	$350K	$412K	8	PuroClean
Jun 2025	MA	$102K	$120K	12	—
Jun 2025	MA	$1.8M	$2.1M	12	—
May 2025	MO	$624K	$734K	9	—
May 2025	MA	$3.7M	$4.4M	43	—

Volume rank #79/534Deal-size rank #233/534Momentum rank #125p90 loan: $3.4MData as of Dec 2025

Source: SBA 7(a) FOIA dataset, filtered to acquisitions (loans where business age is "Change of Ownership"). Implied deal size assumes an 85% loan-to-purchase ratio, a common SBA change-of-ownership structure. Charge-off rate shown only when 10+ loans have resolved (paid in full or charged off). Interest rates reflect last 24 months only. Actual deal values vary with equity injections, seller financing, and working capital terms.

Pros

+Insurance pays the bill — customers rarely negotiate price
+Emergency-driven demand creates 24/7 revenue opportunities
+Strong referral flywheel from adjusters and plumbers
+Full restoration adds $10K–$40K+ on top of mitigation revenue

Cons

-24/7 on-call requirement is operationally demanding
-Insurance billing cycle creates cash flow lag
-Requires IICRC certification and industry-specific knowledge

Best For

Operators who can build relationships with insurance adjusters and manage emergency-response teams

Operating Costs

Labor (technicians, project managers) is 35–45% of revenue. Equipment: industrial dryers, air movers, moisture meters. Key cost: equipment leasing/maintenance and marketing to referral sources.

SBA Financing Estimator

Adjust the deal — see if it cash flows after debt service

$-4959/mo

after debt service

Deal price — $2.4M

Range: $2.4M (2.5×) to $7.2M (5×+)

Down payment — 15% ($360K)

SBA minimum equity injection is 10% for change-of-ownership

Interest rate — 10.00%

SBA median for this category: 10.0%

Loan term — 10 years (120 mo)

SBA median for this category: 120 months

Down payment

$360K

15% equity injection

Loan amount

$2.0M

85% SBA-financed

Monthly payment

$27K/mo

$1.2M total interest

Monthly profit

$22K/mo

at 22% margin

Monthly cash flow after debt service

$-4959/mo

Margin does not cover debt service at these terms. Lower the deal price, increase the down payment, or extend the loan term.

Estimates only. Excludes owner compensation, capex, working capital draws, and taxes. Margin assumes average occupancy and volume. Actual SBA terms vary by lender and borrower profile.