Set a Budget for Flipping

Just like budgeting is an important discipline in personal and corporate money management, so it is with flipping. A budget helps to forecast and control costs, keep the house flipper accountable to their goal and reign-in impulse buys. In order to get the most money out of your flip when selling a home, creating and adhering to a budget is one of the most important tasks in turning over property.

Beginning Stages
A budget will come into play at various stages of a house flip. Once you’ve looked at the property for the first time, it’s wise to get a general idea of what needs to be done to asses whether or not the flip can be profitable. At this stage, start to envision and write out your budget with your target market in mind.

Set Up
Setting up your budget can be done in a variety of ways. If you already have a sure-fire method, go with what you know. For those who want a little guidance at first, it works well to set up your budget room by room. For an example of how this is accomplished, see our budget worksheet.

Research
Once you have written down the items you’d like to redo, start to research and determine the estimated costs. These estimates will help formulate an initial picture of the total costs associated with your flip. As you move on in the flip process, you can refine and add to your budget bit by bit. The more intimate you become with your flip, the more you'll  discover things that require more or less attention; thus, you may have to jostle a few items to stay within your desired spend.

Managing the Budget
Managing the budget is a commitment which requires discipline and day to day attention. At first you’ll have an ideal budget which over time will be updated and actualized. Actualizing your budget is essential to properly managing your incoming and outgoing costs.

Plan to Spend More
The general rule with budgeting for renovations of any kind is people spend at least 20% more than they intend. Therefore, it may be helpful to build this contingency right into your budget worksheets to account for all costs–and then some–from the get-go.

Some dislike budgeting and some live by it, but regardless of your budgeting penchant, producing and managing your house flipping finances can have a massive impact on your flip’s sale price.  At the end of the day, the return is what drives most house flippers.  So, start budgeting, and see how diligently managing costs can impact your bottom line.