What is a significant risk associated with the fix and flip strategy?

A significant risk associated with the fix and flip strategy is indeed running out of money to finish repairs. This is crucial because the success of the fix and flip hinges on accurately estimating renovation costs and completing the project within budget. If an investor underestimates expenses or encounters unexpected repair issues, they may find themselves in a financial bind, unable to cover the costs necessary to bring the property up to market standards.

This financial strain can delay the project, leading to increased holding costs such as property taxes, insurance, and utilities, which can erode profits. Additionally, if the renovation is not completed on time, the investor may miss favorable market conditions or opportunities to sell the property at a profit. Effective budgeting and having contingency funds are essential to mitigate this risk in the fix and flip strategy.