Lender · Princeton, NJ · Member since 2026 · 27 posts · 2 votes
Curious to see what other investors are seeing with Fix & Flip projects lately.
Between rising rehab costs, contractor delays, holding costs, and making sure the numbers still work, there's a lot that can affect a project's profit margin.
What's been your biggest challenge on recent flips, and what have you found helps keep a deal on track financially?
Would love to hear what's working for everyone, especially those actively flipping properties right now.
Scope creep is what kills my rehabs, not the first budget. I buy BRRRR in Memphis under $100K for ARV $180K to $265K, so there is no room to chase pretty finishes. What keeps a job on track is a fixed scope tied to rent: turn a 2/1 into a 3/1 or a 3/1 into a 4/2, convert a carport or garage to a master bed and bath when it adds real rent, and fix roof, HVAC, plumbing and electric first. If an upgrade does not raise rent or pass a Section 8 inspection, I cut it. Every extra week is holding cost with no extra income.
Scope creep is what kills my rehabs, not the first budget. I buy BRRRR in Memphis under $100K for ARV $180K to $265K, so there is no room to chase pretty finishes. What keeps a job on track is a fixed scope tied to rent: turn a 2/1 into a 3/1 or a 3/1 into a 4/2, convert a carport or garage to a master bed and bath when it adds real rent, and fix roof, HVAC, plumbing and electric first. If an upgrade does not raise rent or pass a Section 8 inspection, I cut it. Every extra week is holding cost with no extra income.
That’s a good point, James. Keeping the scope tied to what actually adds value and income makes a big difference, especially when holding costs are eating into the margin. When you’re evaluating a deal, do you typically have your financing and exit strategy mapped out before you buy, or does that depend on the project?
Biggest margin killer lately hasn't been the purchase price — it's time and insurance.
Holding costs + rate carry turn a "fine" flip into a break-even if the GC slips 4–6 weeks. What keeps deals honest:
1. Underwrite a 30–45 day schedule slip as base case, not as a disaster scenario
2. Line-item contingency (10–15%) that lives in your cash, not the lender's goodwill
3. Draw schedule tied to photo hold-points so unfinished work can't hide until the end
4. Exit plan B priced on day one (list as rental / sell to investor) if retail buyer financing stalls
Contractor delays are usually a selection problem dressed up as a market problem. I'd rather pay a slightly higher bid from someone who finishes than "save" 8% and eat two extra months of interest. Track $/week of delay on every project — once you see that number, the cheap bid stops looking cheap.
Well said! That 30–45 day buffer is smart, especially when insurance and interest can eat into a deal’s margin quickly. I also like having a backup exit priced in from day one. Do you usually use short-term financing on your flips, or does it depend on the project?
Before I buy, Darius — every time, not per project. The exit is the refinance, so it gets underwritten first: I buy single-family in Memphis under $100K, I need ARV $180K to $265K after rehab, and the DSCR refinance at 70 to 80% LTV on roughly a 30-year amortization has to return my capital. Rent gets checked the same day: 3BR+ Section 8 at $1,395 to $1,950, clearing the 1% rule. If either side fails on paper, there is no buy, because a project-by-project exit decision usually means the numbers were soft and hope filled the gap. The rehab scope, including a 2/1 to 3/1 or 3/1 to 4/2 conversion, is built to serve those two numbers, not the other way around.
That makes sense, James. Underwriting the DSCR exit before buying gives you a clear target for both the rehab and the rental numbers. Since you're doing this at scale in Memphis, I'd be interested in connecting and learning more about you projects. We can sit down and see how i can be a resource to you on anything you're working on now or upcoming.