How much should you have reserved for your next flip

A lot of investors focus on the purchase price, rehab budget, and projected profit, but what about the money set aside for the unexpected?

Repairs come in higher than expected. Contractors run behind. Permits take longer. The property may sit on the market longer than planned.

Having additional liquidity available can keep one unexpected expense from putting the entire project in a bad position.

That reserve could be cash, a business line of credit, or another source of business capital that you’ve already secured before you need it.

But additional funding should never replace doing your own due diligence on the numbers. I believe in only leveraging what you can realistically afford to repay, even if the project doesn’t go exactly according to plan.

For the experienced flippers, how much of a contingency reserve do you like to have before you close on a deal: a set dollar amount or a percentage of the rehab budget?