Fix & Flip Budget Mistakes That Delay Funding (and How to Avoid Them)
We’re based in Des Moines, WA and work across Seattle & select states. If your budget is bulletproof, underwriting moves faster—every time.
The 7 Budget Mistakes We See Most
- No scope detail: A single line “Kitchen – $25k” isn’t enough. Break out cabinets, counters, appliances, electrical, plumbing, finishes, labor.
- Optimistic timelines: Trades, permits, inspections, and lead times rarely align perfectly. Padding realistic durations prevents draw friction.
- Missing contingency: Old homes surprise you. A 10–15% contingency is common; complex rehabs may need more.
- Ignoring holding costs: Taxes, insurance, utilities, interest. Buyers often underestimate total carry during rehab + marketing.
- Weak comps: ARV comps older than 3–6 months or outside the micro-neighborhood raise flags. Align bed/bath, style, and improvements.
- No permit plan: If structural, electrical, or plumbing is touched, outline permit status. Silent plans slow underwriting.
- Unclear draws: Lenders fund completed work. Stage milestones so inspections are efficient and cash flow stays smooth.
What a “Fundable” Rehab Budget Looks Like
- Line-item scope: Materials & labor separated where possible, with vendor quotes or references for bigger items.
- Milestone-based draws: E.g., Demo/Rough-in/Close-in/Finishes/Final. Tie each to visible, inspectable progress.
- Realistic durations: Include lead times for windows, custom items, inspections, and utility appointments.
- Proper contingency: Sliding scale by scope; heavy structural = higher contingency.
- ARV support: 3–5 recent comps, tight radius, similar condition post-rehab.
Seattle-Area Example: 1940s SFR
Scope highlights: roof replacement, panel upgrade, partial re-pipe, kitchen + 2 baths, windows, refinished floors, interior/exterior paint, landscaping.
Draws (sample):
- Demo & Rough-In — 20% (demo, framing fixes, MEP rough-ins)
- Exterior Systems — 20% (roof, windows, panel)
- Interior Close-In — 20% (insulation, drywall, prime)
- Kitchens & Baths — 25% (cabs, counters, tile, fixtures)
- Finishes & Final — 15% (floor refinish, paint, landscaping, punch)
Budget Template (Copy & Adapt)
| Category | Scope | Budget | Notes |
|---|---|---|---|
| Demo | Interior demo, haul-off | $ | Dumpster & permits |
| Structural | Framing repairs, headers | $ | Engineer sign-off if needed |
| Electrical | Panel upgrade, circuits | $ | Permit/inspection |
| Plumbing | Re-pipe sections, fixtures | $ | Permit/inspection |
| HVAC | Tune-up/replace as needed | $ | Manual J if replacement |
| Windows/Doors | Energy-rated windows | $ | Lead times noted |
| Kitchen | Cabs, counters, appliances | $ | Electrical/GFCI plan |
| Baths (x2) | Tile, vanities, fixtures | $ | Waterproofing details |
| Flooring | Refinish hardwoods | $ | Dust control plan |
| Paint | Interior/exterior | $ | Prep & primer |
| Exterior | Siding repairs, gutters | $ | Color approvals if HOA |
| Landscaping | Curb appeal, cleanup | $ | Drainage if needed |
| Permits/Fees | City permits, utilities | $ | Inspection allowances |
| Contingency | 10–15% typical | $ | Higher for structural |
| Holding Costs | Taxes, insurance, interest | $ | Time-buffer built-in |
How to Keep Draws Moving
- Stage wisely: Group work into visible milestones that inspectors can verify quickly.
- Photo logs: Date-stamped photos and brief notes speed approvals.
- Sign-offs: Keep inspection stickers & permit confirmations handy.
Get a Quick Read on Your Budget
Want a second set of eyes on your scope, comps, and contingency? Send your outline and we’ll give practical feedback for underwriting.
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Disclaimer: Examples are illustrative and not commitments to lend. Terms vary by property, location, experience, and underwriting.
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