Fix and Flip Financing

A fix and flip loan is a short-term loan for real estate investors used to purchase a property and finance its renovation with the goal of selling it for a profit. These loans cover both the purchase and the repair costs, are typically for 6 to 18 months, and often have flexible terms and different qualification requirements than traditional mortgages. They rely more on the property’s potential profit and estimated value after repairs (ARV) than on the borrower’s credit score alone, though a good credit score is still beneficial.  

How they work

• Purchase and renovation: 

The loan provides capital for both buying a rundown property and covering the renovation expenses. 

• Short-term: The loan is designed for a quick turnaround, typically 6 to 18 months, to complete the renovation and sell the property. 
• Interest-only payments: Some loans feature interest-only payments, and funds for renovations are disbursed in “draws” after an inspection of the completed work. 
• Profit-focused: Qualification often depends less on traditional criteria like income and more on the project’s potential profitability and the property’s estimated value after repairs (ARV). 
• Exit strategy: A clear plan for selling or refinancing the property at the end of the loan term is a key requirement. 
• Refinancing: At the end of the project, the loan is either repaid from the sale of the property or refinanced into a longer-term loan. 

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