Should I have extra cash on hand when flipping? (outside of a hard money loan)
The more I learn about flipping, the more I realize how many unexpected problems and costs can arise during a flip
Which makes me wonder.... should I have a couple extra thousand in reserve when flipping in case my hard money loan does not cover all costs?
I feel like id be screwed if there was a major foundation issue, plumbing, etc. and my hard money loan couldn't cover the repair costs.
Most Popular Reply
Hi @Cameron Jones, welcome to BP!
Short answer: yes—100%. You should always have reserves outside your hard money loan.
Hard money typically won’t cover everything (overruns, change orders, holding costs, delays), and those surprises are common, not rare.
A good rule of thumb:
- 10–15% contingency of your rehab budget
- Plus a few months of holding costs (interest, taxes, insurance)
So if your rehab is $50K, you should realistically have an extra $5K–$10K+ set aside.
Big issues (foundation, plumbing, etc.) are exactly why this matters—without reserves, even a solid deal can turn into a problem fast.
Reserves aren’t optional in flipping—they’re what keep you in the deal when things don’t go as planned. Best of luck!
- J Castro
