A fix and flip loan is a type of short-term real estate financing used by property investors to purchase, renovate, and quickly resell (or “flip”) a property for profit. These loans are usually provided by hard money lenders, private lenders, or specialized investment finance companies, rather than traditional banks.
Loan Terms
- Used to acquire and rehab a property
- Short Term: Usually 6-18 month, but longer if necessary
- Points/Fees: 1-3% Origination, plus closing costs
- Usually interest onlyÂ
- We base loans off the After Repair Value (ARV) and the price of the property + rehab.
- 70-85% of ARV is common.
- We can finance up to 100% of repair costs
- Down Payment or Equity is typically 10%-25% (better with the more experience you have).
Loan Terms
- Credit Score: 640+. You can have a lower credit score if the LTV is right but may require a more expensive hard money loan.
- The property itself is the collateral, usually not requiring personal guarantees.
- Funds are often held in escrow and released as the work is completed.
Exit: We require a clear exit plan.Â
- Sell (flip) the property or
- Refinance into a long term loan.
