A lot of flips do not get into trouble because of one catastrophic event. The margin often gets chipped away by several smaller misses that compound.

Seven areas I think are worth stress-testing before moving forward with a project:

·   Acquisition price: Did you leave enough room for the project to absorb normal variability?

·   Repair budget: Is the scope complete, and is there enough contingency for items that show up after demolition?

· ARV: Are you using relevant comparable sales, or the value the deal needs in order to work?

·   Contractor: Have you vetted workmanship, references, scheduling, licensing or insurance where applicable, and the ability to finish?

·   Renovation level: Are the finishes appropriate for the neighborhood, price point, and target buyer?

·   Holding costs: What happens if the project takes two, three, or four months longer than planned?

·   Exit strategy: If the resale plan changes, is there a realistic Plan B?

For example, if a $60,000 rehab turns into $78,000, $18,000 of the projected margin is gone before considering any other changes. If an expected $400,000 resale becomes $375,000, that creates another $25,000 difference. The point is not the specific numbers; it is how quickly several modest misses can stack up.

Which of these has caused the most trouble in your projects, and what process do you use to catch it before closing?