How Much Cushion Is Enough?

Question

For those doing fix-and-flips, how much contingency are you building into your rehab budget these days?
With unexpected repairs and changing material costs, having some breathing room can make a big difference.

What percentage do you typically reserve for surprises?

Jimmy Samaha · Answer

On mostly cosmetic jobs I carry 10%. If it's an older house or we're opening walls, touching plumbing or electric, or the roof is questionable, I go 15 to 20%. Anything built before about 1950 I'd lean 20 no matter how clean it looks.

The thing that keeps that number honest is doing real inspections before you close. Get a sewer scope on any older house, a collapsed line can easily run 10k plus and you'll never see it on a walkthrough.

Also keep holding costs separate from the rehab cushion. Taxes, insurance, utilities, and interest every extra month the job runs long add up fast, and that's usually what eats the profit, not the surprise repair itself.

How Much Cushion Is Enough?

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