Estimate the entire project
Purchase and repairs are only part of a flip budget. Include acquisition closing costs, financing fees, interest, property taxes, insurance, utilities, permits, selling costs, and the time needed to complete and sell. Some costs rise every month the project remains open.
Divide repairs into visible work and unknowns. Get trade-specific opinions for structural, electrical, plumbing, roofing, and moisture concerns. A contingency should reflect uncertainty rather than serve as a universal percentage applied blindly.
Avoid double counting. If interest is already included in holding costs, do not deduct it again under financing. Separate loan principal repayment from project profit calculation: the purchase price is already a project cost. Document who supplied each estimate and when.
Purchase $100,000 + repairs $30,000 + contingency $5,000 + acquisition costs $3,000 + finance/holding $9,000 + resale costs $13,000 = $160,000 total project cost. A $180,000 sale leaves $20,000 before income taxes.
Decision checklist
- Itemize every acquisition, repair, finance, holding, and resale cost.
- Separate known work from hidden-condition uncertainty.
- Check that each cost appears once and has an evidence source.
Check your understanding
Why is loan principal payoff not an extra profit deduction after counting the purchase price?
Show the answer
The purchase price already accounts for acquiring the property. Reconcile financing separately to avoid double counting acquisition cost.
Your next action
Build a complete budget and identify the costs that increase with every additional month.
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