How Do You Keep Renovation Costs Under Control When Prices Spike?

Question

I’ve been hearing from a lot of investors lately about how renovation costs keep sneaking up — whether it’s materials, labor, or even permit delays. For those actively flipping, this can turn a solid deal into a stressful one fast.

I’m curious: what are your go-to strategies to keep rehab costs predictable and profits steady?
Do you lock in materials early, build relationships with consistent contractors, or budget a certain percentage buffer?

Would love to hear how you’re all adapting, especially with so many market shifts happening this quarter.

(For those who’ve got projects on deck but need fast funding options to stay ahead of costs — happy to share what’s been working for other investors lately.)

Sandi Harris · Answer

@Kelly Schroeder Setting a 7-10% hard cost contingency is typical for renovations. Yes, locking in/purchasing materials early and building relationships with contractors can help you. If you use subcontractors that cover multiple trades, like roofers can do gutters also, or HVAC guys sometimes also do plumbing, then they a lot of times agree to reduce costs in order to get awarded the work for both trades.

Andy Sabisch · Answer

Yes, a good question.  Permits seem to be more of an issue of late - not sure if the inspectors that are coming in are trying to make a name for themselves but we have experienced that on a project in the works.  Took us 3 weeks to get power which had downstream effects.  Luckily we always build in a contingency, but we like to have that left at the end . . . at least we have that expense addition covered.

I guess the answer to your question is to ensure you have a solid contingency in the numbers and additional time on the timeline so even if the worst case comes to pass, you are still in the black.

As they say, hope for the best but plan for the worst.  It may mean that the purchase price needs to come down since you make your money on the buy not the sell.  We would rather lose a deal or two than chase those that turn into a bundle of surprises.  Unfortunately, there seem to be investors that buy too high and then when the overages arise and the delays pop up are jammed up against HML payments resulting in fire sale pricing to get out from a bad deal.  Patience and sticking to numbers is the key at this time.

Michael Hernandez · Answer

Great question, Kelly. This is something every active investor is feeling right now. What has helped me and many others is building strong relationships with contractors who value repeat business. When you have that trust, they’re more likely to give you priority and fair pricing. Also, I recommend locking in quotes for key materials early and adding a 10 to 15 percent buffer to your rehab budget from the start. What’s in it for you is peace of mind (fewer surprises, smoother timelines, and deals that stay profitable even when small costs shift).