How to Build Your First Fix and Flip Budget
Many first time flippers focus on finding the “perfect deal,” but the real key to success is something far less exciting: a realistic, disciplined budget.
A strong fix and flip budget prevents you from:
Surprise expenses
Cash flow shortage
Loan shortfalls
Timeline delays
And profit-destroying panic decisions
If your budget is wrong, even a great property can become a financial disaster. Here’s how to build your first flip budget the right way.
1.Start with Your Purchase Price and Closing Costs
Your budget begins the moment you agree on a price.
Include:
Purchase price
Title and escrow fees
Recording fees
Transfer fees
Legal or entity fees
Lender origination fees (If applicable)
Rule of thumb: Closing costs often run 2-5% of purchase price, depending on financing and location.
2. Build a Detailed Rehab Budget (Line by Line)
Never accept a single lump-sum rehab estimate. You need line-item pricing for every phase.
Include categories such as:
Demolition
Framing
Electrical
Plumbing
HVAC
Insulation and drywall
Flooring
Cabinets and countertops
Fixtures
Paint
Trim and doors
Appliances
Exterior repairs
Landscaping
Cleanup
This level of detail:
Helps prevent contractor surprises
Makes lender draw schedules smoother
Gives you control when changes happen
3. Add a Contingency Buffer (Non-Negotiable)
Every flip has surprises. The question is whether your budget can absorb them.
Recomended contingency
10-15% for light cosmetic rehabs
15-20% for heavy renovations
This protects you from:
Hidden water damage
Old wiring or plumbing
Structural issues
Failed inspections
No contingency = personal cash at risk.
4. Factor in Holding Costs
Holding Costs silently eat profit every month your flip is active.
Don’t forget:
Loan interest
Property taxes
Insurance
Utilities
HOA dues
Lawn care and snow removal
Security systems
Even a modest flip can easily carry thousands per month in holding expenses depending on the market and loan size.
5. Budget for Selling Costs
Your budget isn’t complete until it includes the exit.
Add:
Realtor commissions
Seller credits
Buyer closing costs (if negotiated)
Staging
Photography
Marketing expenses
Final repairs or clean-up
Many first-time flippers forget this — and watch profits evaporate at the finish line.
6. Stress-Test Your Numbers
Before you buy, ask:
What if rehab is 10-15% higher?
What if it takes 30-60 days longer to sell?
What if ARV comes in slightly lower?
If the deal still works under pressure, you’re in a strong position
If one small change kills your profit, the deal is already too tight.
7. Know Your All-In Cost Before You Commit
Your all-in cost includes:
Purchase
Rehab
Contingency
Holding
Selling
This is the number you compare to ARV — not just purchase plus rehab.
This is where real profit is defined.
8. Why First-Time Budgets Are Usually Wrong
Most early flips go over budget because:
Rehab is underestimated
Hidden repairs appear
Timelines slip
Holding costs extend
Scope creeps
That’s normal. The investors who survive their first flip are the ones who:
Budget conservatively
Track spending weekly
React quickly to overruns
Don’t chase emotional upgrades
The Bottom Line
A fix and flip budget isn’t kist a worksheet, it is your financial survival plan. If your numbers are clear, conservative, and pressure-tested, you can make fast, confident decisions and protect your capital from costly surprises.