One thing I see investors underestimate is how quickly unexpected costs can eat into the budget on a flip.
A rehab might need more work than expected, materials can cost more, or the project may simply take longer than planned.
That’s why I think having access to additional capital before you actually need it can make a big difference.
Depending on the situation, options can include 0% APR business credit cards, business lines of credit, business loans, SBA 7(a) financing, or revenue-based funding.
The key is still doing your own due diligence on the numbers and only leveraging what you can realistically afford to repay.
For the experienced flippers here: what’s your backup plan when a project unexpectedly goes over budget?
Rental Property Investor · Philadelphia, PA · Member since 2021 · 774 posts · 500 votes
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@Nicholas Floyd - I typically tap into lines of credit when a flip/renovation goes over budget. I have a few unsecured and secured lines for when I have that rainy day!
@Greg Kasmer That’s a solid approach, Greg. Having those lines established before you actually need them gives you a lot more flexibility when something unexpected comes up. I always tell investors it’s better to have access to capital sitting there than to start looking for it once the project is already over budget.
😂 Hopefully it never gets to that point. Contractor issues can definitely turn a profitable deal sideways fast. That’s another reason I’m big on having a contingency built into the numbers and backup capital available before the project starts.