Fix and Flip Loans: The Ultimate Guide to Financing Your Next Flip

What Are Fix and Flip Loans?

Fix and flip loans are short-term financing products designed specifically for investors who buy distressed properties, renovate them, and sell for a profit. These loans typically cover both the purchase price and renovation costs.

Types of Fix and Flip Financing

1. Hard Money Fix and Flip Loans

• LTV: Up to 90% of purchase, 100% of rehab
• Term: 6-18 months
• Best For: Experienced flippers needing speed

2. DSCR Fix and Flip

• LTV: Based on property cash flow
• Term: 12-24 months
• Best For: Properties with rental income during renovation

3. Bridge Loans

• LTV: Up to 80% of current value
• Term: 6-12 months
• Best For: Quick acquisitions before permanent financing

How to Calculate Your Fix and Flip Deal

The 70% Rule

A common rule of thumb: Never pay more than 70% of ARV minus repair costs.

Example:

• After Repair Value (ARV): $400,000
• Renovation Costs: $50,000
• Maximum Purchase Price: ($400,000 × 0.70) - $50,000 = $230,000

Key Metrics to Track

1. ARV (After Repair Value) - What the property will sell for after renovation
2. Acquisition Cost - Purchase price plus closing costs
3. Holding Costs - Loan payments, taxes, insurance during renovation
4. Selling Costs - Agent commissions, closing costs, staging

Maximizing Your Fix and Flip Profits

Tip 1: Get Accurate Renovation Estimates

Underestimating rehab costs is the #1 mistake new flippers make. Always add 10-20% contingency.

Tip 2: Know Your Market

Understand what buyers want in your target neighborhood. Over-improving can hurt returns.

Tip 3: Build Contractor Relationships

Reliable contractors who can work quickly are worth their weight in gold.

Tip 4: Have Your Financing Ready

Pre-approval from a hard money lender lets you move fast on good deals.

Common Fix and Flip Mistakes to Avoid

• Buying at the wrong price - Leave room for profit after all costs
• Underestimating timeline - Delays eat into profits through holding costs
• Over-improving - Match finishes to the neighborhood, not your taste
• Ignoring due diligence - Always get inspections and title searches

Ready to Finance Your Next Flip?

Our fix and flip loans offer up to 90% of purchase price and 100% of renovation costs. Close in as fast as 7 days with competitive rates.