Fix and flip financing is built around a short-term investment business plan: acquire a property, complete a defined renovation, and exit through sale or another financing event. The loan must fit both the property today and the expected finished project. Because Landlord Lending works with multiple investment-property lenders, exact credit, leverage, experience, liquidity, draw, property and documentation guidelines can vary by lender, program and overall deal strength.
What Is a Fix and Flip Loan?
A fix and flip loan is short-term financing for a non-owner-occupied property that an investor plans to acquire, renovate and sell. These loans are built around the project rather than long-term owner occupancy.
What the Financing Can Cover
Depending on the lender and deal, financing may support the purchase or refinance of the property and eligible renovation costs. Rehab proceeds are commonly controlled through a holdback and draw process.
How Lenders Underwrite the Deal
Underwriting can include purchase price, as-is value, ARV, rehab scope, budget, borrower experience, credit, liquidity, property type and marketability.
The Role of ARV
ARV is the lender-supported estimate of what the property may be worth after the planned renovation is complete. Lenders may use ARV to set maximum loan exposure relative to the expected finished collateral.
The Exit Strategy
The loan is typically repaid through the sale of the renovated property. Investors should model the sales timeline, carrying costs and net proceeds before committing to the capital structure.
When a Flip Loan May Not Fit
A property that cannot be sold within the loan term, a renovation scope beyond the investor's execution capacity, or a deal with insufficient margin between total cost and expected ARV may not support a flip strategy.
How Landlord Lending Helps
Landlord Lending helps real estate investors evaluate buy and rehab financing based on the property, renovation scope, budget, exit strategy and overall deal rather than assuming every scenario fits one lender’s program.
Explore the Buy and Rehab Loan.
Related: Buy & Rehab Loans: The Complete Guide · How After-Repair Value (ARV) Affects a Rehab Loan
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Are fix and flip loans only for experienced investors?
Not always. Experience can affect lender options, leverage and terms, but some programs may accommodate newer investors with the right overall transaction profile.
How is a fix and flip loan repaid?
The common exit is sale of the renovated property, although some investors refinance and hold the property as a rental.
Does a fix and flip lender use ARV?
Many rehab lenders consider projected completed value as one factor in sizing and underwriting the loan.