Updated almost 10 years ago on . Most recent reply
Renovation Cushion
What percentage of my rehab budget should be set aside as a cushion. Right now the renovation budget is at 45k and we haven't opened any walls, looked at the roof or the furnace. We know we want to update the kitchen, two bathrooms and the basement. Are there other items that should be priority over anything I listed. Does anyone have their own special formula they follow for each rehab?
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Is this your first? Assuming it is... I can't say this strongly enough... you need a detailed scope of work with a line item for every task of the rehab, including expected completion date and cost for each task. If you don't feel like you have enough knowledge to complete this, pay a seasoned flipper or GC to help you do it. It will save you a lot of headache. I've just completed my first rehab and I did a horrible job of planning up front. I went over my initial budget by almost 100%. I hope you'll learn from my mistake.
To try and answer your question, the amount of cushion is dependent on the thought and planning you've put into your estimate. I would guess 10% would be enough if you've done a good job on the front end.