The biggest mistake I see and hear of with rookie investors is not taking into account for system/appliance failure. Even if your inspection says everything is fine, remember that the inspection is for that day. Many appliances work well one day and don't the next. Always have a percentage of each system/appliance budgeted into your rehab costs. My buffer is that I budget for replacing the heating and air in each unit I buy. Now if the heating and air does need replacing, I use a different method. I'll budget 50% of replacement cost for all appliances in the house. This may sound a bit expensive, but when you have to hold a flip for a while things are bound to break or fail. If you have it budgeted, your not going to have the heartbreak you would as if you had to find another place for the cash.
Just remember, once it sells, any replacement appliance funds that are not spent become profit. This method should make your investing experience must more pleasurable and lessen the stress that comes with the business.
ACD
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