At Black Brook Capital, we’ve funded many profitable flips across southeast Wisconsin. We know what works, what to watch out for, and how to help you build a budget that protects your bottom line.
Calculating the Purchase Price
One of the most important steps in budgeting your first house flip is calculating the right purchase price while understanding the 70% Rule. This rule of thumb helps flippers avoid overpaying by creating a simple formula:
(ARV x 70%) – Estimated Repairs = Maximum Purchase Price
ARV stands for After Repair Value, which is what the property should sell for once it’s fully renovated. For example, if your flip’s ARV is $300,000 and you estimate $60,000 in repairs, the most you should pay for the property is $150,000. This leaves room for profit, unexpected expenses, and selling costs.
Why does this matter so much? Profit isn’t made when you sell the house: it’s made when you buy it right. Paying too much on the front end, especially without accurate repair estimates, can destroy your margins before you even start the renovation.
Estimating Renovation Costs
Once you’ve nailed down your purchase price, the next step is building a detailed renovation budget. Be sure to account for big-ticket items like electrical, plumbing, roofing, HVAC, and cosmetic upgrades. Include both material and labor costs, and always get multiple contractor bids to compare pricing and timelines.
But even the most detailed plans can hit bumps, so be sure to always add a contingency. We recommend setting aside 10–20% of your total budget for unexpected expenses. A solid contingency can be the difference between a stressful flip and a smooth, profitable one.
House Selling Costs
When budgeting your flip, it’s easy to focus on purchase and renovation costs, but don’t forget the selling costs. Start with real estate agent fees, typically around 5–6% of the final sale price, which cover both the buyer’s and seller’s agents. Then factor in closing costs, including title services, attorney fees, and transfer taxes. To maximize your resale price and attract buyers quickly, it’s also smart to invest in staging and professional photography. These relatively low-cost marketing tools can make a big difference in how fast your property sells and how much it sells for.
Wisconsin-Specific Considerations
Flipping in Wisconsin comes with unique challenges that directly impact your budget, such as property taxes. Wisconsin ranks among the highest in the nation for property tax rates, so it’s critical to factor those costs into your monthly holding expenses.
Use local data from Milwaukee, Ozaukee, Waukesha, or Racine counties to get an accurate estimate based on your target market. At Black Brook Capital, we work with Wisconsin flippers to help you structure your financing with these local variables in mind.
Important Factors to Remember
One of the biggest mistakes first-time flippers make is being overly optimistic with their numbers. It’s easy to assume everything will go according to plan, but seasoned investors know better. Always overestimate your expenses and underestimate your timelines: build in extra funds for contingencies, expect delays, and account for every possible cost.
At Black Brook Capital, we don’t just lend money. We partner with you, helping you run comps and determining a property’s ARV while evaluating your rehab budget and spotting red flags. Our team offers hands-on support to help you make smarter decisions.
Succeed in Your House Flipping Goals with Black Brook Capital
Your first flip in Wisconsin doesn’t have to be a financial gamble: when you budget correctly, you’re setting yourself up for a smart, strategic investment. The more precise and realistic your budget is, the better your chances of walking away with a solid profit.
At Black Brook Capital, we do more than just provide funding: we partner with local investors to help them navigate the numbers and make confident decisions. With deep experience in the southeast Wisconsin market, we’re here to help you succeed from day one.
Ready to fund your flip? Contact Black Brook Capital today for a hard money loan.
