How to manage your first flip, and what to track so it pays off

Your lender approved a rehab budget. That number is not your budget.

It's the most common mix-up we see from first-time flippers. The loan says $85,000 for the rehab, so the plan becomes "spend $85,000." Then the draws come in slower than the bills, a contractor finds rot under the bathroom floor, and nobody can say how much has actually been spent until the job is almost done.

A first flip doesn't need perfect systems. It needs a few habits from day one. Here they are.

1.Write your own numbers before you close

Before you buy, write down the four numbers that decide whether the flip works. Use your own estimates, not the lender's:

Holding costs are the ones people forget: loan interest, insurance, utilities, property taxes, and the months you'll actually own the house, which are usually more than you planned. Selling costs include agent commissions, closing costs and any concessions to the buyer.

2.Track what you spend, not what you're approved for

Set up a simple list with one line per item: what it was, who you paid, how much, and the date. Group it by area (demo, roof, kitchen, baths, flooring, paint, permits) so you can compare it to your estimate.

Now you know the kitchen ran $2,600 over, and you can decide where to make it up before it's too late.

The approved budget is how much you can borrow. Your spending is how much you'll keep.

3.Plan for draws to lag

Most rehab loans pay in draws. You or your contractor do the work, an inspector checks it, and then the lender releases money. That gap can be a week or several. Keep enough cash on hand to cover at least one full stage of work while you wait, or the job stalls.

4.Keep the flip's money separate

Use a dedicated account, ideally under the LLC that owns the property. Every expense goes out of it. Every draw comes into it. Mixing flip money with your personal or other business accounts is the fastest way to lose track of your real profit.

5.Check your profit every week

Once a week, update two numbers: total spent so far, and expected profit if the rest goes to plan. If the expected profit drops below what makes the deal worth it, you'll know while there's still time to change the finish level, renegotiate or rethink the sale price.

When it sells, compare your final numbers to the ones you wrote before closing. That comparison is the most valuable thing your first flip will teach you, and it makes the second one a lot easier to plan.

Yegly is open now, and the special deal runs through December 31, 2026.

— The Yegly team