Identify the Problem
Scrape away bubbled or cracked paint to see what the wood looks like underneath. Damaged paint is a clue that there may be rotten wood underneath, but sometimes it only indicates a poor paint job. It’s best to check. Also look for brown or black stains. These also indicate a problem with wood rot.
Find the Source
Look under the eaves as well as on the roof and in the attic for sources of moisture. Until you find the source of the moisture that is causing the dry rot, you cannot fix it. Typically, leaks are the cause of wood rot, but stagnant air in an unventilated attic space also contributes to rotten wood along the eaves.
Fix the Cause
Repair any leaks with the appropriate caulking or other sealant. Allow the wood to dry to make sure there are no more leaks. If a lack of vents is the problem, install vents in the attic to circulate the air.
Coat the affected area with a borax-based preservative. This kills the fungus that causes the dry rot. Allow the wood to dry.
Repair the Rotten Wood
Remove the guttering and the flashing covering the eaves that contain the rotten wood. Assess how much, if any, of the wood you need to remove. You may be able to treat the rotten wood in place without removing it if it hasn't deteriorated too much.
Tear away any rotten wood carefully. If the boards under the eaves seem to be more or less structurally sound, apply a bonding epoxy. Mix the resin and hardener according to the package directions and apply directly to the wood. Allow it to dry completely before replacing the flashing and gutters.
Cut boards off with severe spots of dry rot. If you can make a clean cut on a non-weight bearing piece of wood, remove the rotten wood and replace it with a new piece. If the board with wood rot is a long piece or is load bearing, connect new pieces with sister boards to keep the structural integrity intact.