How Much Cushion Is Enough?

Question

For those doing fix-and-flips, how much contingency are you building into your rehab budget these days?
With unexpected repairs and changing material costs, having some breathing room can make a big difference.

What percentage do you typically reserve for surprises?

Maurizio Pisciotta · Answer

I'd say 15–20% is a pretty reasonable cushion, depending on the property's condition. For a recently renovated property with a clear scope of work, 10% might be enough, but for older properties I'd lean closer to 20%, especially if you're dealing with plumbing, electrical, or structural issues.

One thing I've learned with real estate is that surprises are almost guaranteed, and it's usually not one big expense but several smaller ones that add up quickly. I'd rather budget a little extra upfront than have a deal that looks profitable on paper but gets eaten up by unexpected repairs!

Siahna Im · Answer

Well said! Having a realistic cushion upfront can help protect the deal's profitability, especially when working with older properties or projects involving major systems. Those smaller unexpected expenses can add up quickly. Have you found that 15–20% is usually enough, or do you adjust it based on the scope of work?

Maurizio Pisciotta · Answer

Usually, yes, but like you mentioned, older properties can sometimes require more.

I always keep a cushion available or use 0% APR credit cards if something unexpected comes up (especially since most of the properties I invest in are over 100 years old in the Cincinnati area).

Hossein Sharifi · Answer

@Siahna Im I'd vote "more," but I split it in two. About 10% on the rehab for surprises, plus a separate line for time. On a $200K loan at 11%, interest alone is about $1,800 a month, before taxes, insurance and utilities. A two-month delay costs $4-5K, and delays are usually more common than a single big surprise repair. A budget with 10% contingency and no schedule buffer is underfunded.

Addy Chupa · Answer

Agree with Jimmy's ranges. One thing that helps more than picking a single percentage is setting the cushion line by line, based on how much each item can actually move.

Items with firm quotes and little hidden risk (paint, flooring, fixtures, appliances) can carry 5% or less. Items where you can't see what you're buying (plumbing, electrical, subfloor, roof decking, foundation, anything behind walls) deserve 20-30% on their own. Add it up and you get a blended number that fits that specific house instead of a rule of thumb.

The cheapest way to shrink the cushion is to find surprises before you close: sewer scope, a contractor walk-through with written bids, roof and HVAC age, and the permit history from the city. Every unknown you turn into a known lets you carry less in reserve.

For material prices, ask for quotes with an expiration date and order long-lead items (windows, cabinets, electrical panels) early, so a price change or a backorder doesn't hit you mid-job.

Keep three buckets separate: the rehab contingency, a time buffer for holding costs if the job runs long, and a sale-side buffer for price cuts or buyer concessions. They get eaten by different things.

Last check before making the offer: run the numbers with the contingency fully spent and a couple of extra months of holding costs. If the deal only works when nothing goes wrong, it isn't really a deal at that price.

Jimmy Samaha · Answer

On mostly cosmetic jobs I carry 10%. If it's an older house or we're opening walls, touching plumbing or electric, or the roof is questionable, I go 15 to 20%. Anything built before about 1950 I'd lean 20 no matter how clean it looks.

The thing that keeps that number honest is doing real inspections before you close. Get a sewer scope on any older house, a collapsed line can easily run 10k plus and you'll never see it on a walkthrough.

Also keep holding costs separate from the rehab cushion. Taxes, insurance, utilities, and interest every extra month the job runs long add up fast, and that's usually what eats the profit, not the surprise repair itself.

Noah Wright · Answer

I'd vote 15 percent as a floor on most flips, and where that cushion sits matters about as much as how big it is. Draws are commonly reimbursed against the approved scope of work, and some lenders let you carry a contingency line inside the rehab budget while others won't. Where they won't, a surprise repair that isn't on the scope usually comes out of your own cash first. At some lenders, even moving savings from one line item to another can take weeks. A number of institutional lenders have also gotten stricter about budget changes and extensions lately. A cushion only protects you if you can get to it the day the bill shows up. Are you funding the rehab through lender draws or out of pocket?

Siahna Im · Answer

Absolutely, time is a cost that can easily get overlooked when running the numbers. Even a manageable repair can become expensive when holding costs keep adding up. Planning for both unexpected repairs and possible delays is key. How many extra months do you typically allow for your projects?

Siahna Im · Answer

We like the idea of setting the contingency line by line based on the actual risks of the project. Not every repair carries the same level of uncertainty, and identifying potential issues early can make a big difference. Do you find that older properties tend to need the biggest adjustments to your original budget?

Siahna Im · Answer

Great point about separating holding costs from the rehab contingency. A project can have a solid repair budget and still lose profit when the timeline runs longer than expected. Inspections before closing can definitely help investors plan ahead. Do you usually build your holding cost buffer around a fixed number of months?

How Much Cushion Is Enough?

How Much Cushion Is Enough?

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