Quote · BiggerPockets Real Estate Podcast
If House Flipping is “Dead,” How Is She Flipping 10+ Houses THIS Year?
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Rehab Budgeting: Contingencies, Surprises, and Market Rates
At 15:34 · chapter starts 14:30
The rehab budget section opens with Dominique's striking data point: on 70 to 80 percent of her projects, she encounters a surprise cost item exceeding $10,000 [1] — Dominique Gunderson "70–80% of flips hit $10k+ surprises: Dominique Gunderson estimates that 70 to 80 percent of her rehabs produce a surprise cost item of $10,…" 15:00 . The key reframe, she argues, is that this isn't bad luck — it's predictable, and should be systematically planned for. Her recommendation: a 10% contingency on top of the full estimated rehab cost for fully-inspected deals, rising to 20% for sight-unseen or limited-access purchases. Henry builds on this with his own rule: he always underwrites rehab costs at full market rates, never at the discounted prices his preferred contractors offer. His reasoning is practical — contractors raise prices, crews disappear, and any underwriting built on special relationships is fragile. By anchoring to market rates and adding a 10% contingency on top, he builds in a double layer of protection. Any savings from his preferred contractors become upside, not assumptions.
Dominique Gunderson has found that 70 to 80 percent of her rehab projects produce a surprise cost of $10,000 or more. The key insight: this isn't bad luck, it's predictable. Knowing surprises are coming means you can budget for them — and a 10% contingency on a fully inspected project is the floor.
Dominique Gunderson estimates that 70 to 80 percent of her rehabs produce a surprise cost item of $10,000 or more, making contingency planning essential.
For fully-inspected rehab projects, Dominique recommends a 10% contingency on top of the estimated rehab cost to cover inevitable surprises.
For sight-unseen or limited-access property purchases, Dominique Gunderson recommends doubling the contingency to 20% of the estimated rehab cost.
Contractors raise prices. Crew members disappear. Henry Washington's solution: always underwrite to market-rate renovation costs, never to the discounted rates your personal contractors give you. If you get the deal done cheaper, that's upside. If your guy bails, you're not underwater.
