Fix-and-Flip Loans
TL;DR: Fix-and-flip financing can pair acquisition funds with a controlled renovation budget. Build the request around supported resale value, executable repairs, and enough cash to carry the project.
What do you need to know first?
A fix-and-flip loan supports the purchase and renovation of a non-owner-occupied investment property for resale. Wholesale lenders review current condition, projected finished value, repair costs, and investor execution capacity. Hard Money Bot shops financing as a mortgage broker, helping you compare acquisition proceeds and rehab draw requirements before you commit.
How do you separate purchase funds from rehab funds?
The purchase and the renovation create different cash needs. Acquisition proceeds help settle the purchase, while a rehab allocation may remain under lender control until work satisfies draw conditions. Do not assume the entire renovation budget reaches your account at closing. Ask which expenses you must pay before requesting reimbursement.
Map your cash position across the project rather than looking only at the settlement statement. Contractor deposits, materials, insurance, utilities, and carrying expenses can arrive before a draw. Keep contingency cash outside the approved scope so an uncovered repair does not stop work or force an unplanned change to the resale strategy.
How do you support finished value with usable evidence?
After-repair value, or ARV, estimates what the property may be worth when the proposed renovation is complete. Lenders use their valuation process and program rules to assess that estimate. Loan sizing can reflect acquisition cost, current value, finished value, and eligible repair expenses. A larger projected resale price does not automatically produce more usable cash.
Choose comparable sales that resemble the finished project in location, layout, condition, and buyer appeal. Explain why your renovation belongs in that competitive set. Active listings show competing inventory, not completed transactions. If your scope depends on a layout change or added living space, document permits and valuation assumptions before relying on the uplift.
How do you make the rehab budget inspectable?
An underwriter needs a scope that connects work to cost. Break out trades, materials, labor, and meaningful project stages. Vague allowances make it harder to assess whether the proposed funds cover the actual work. Identify structural repairs and hidden-condition risks separately from finishes that can change without affecting basic property function.
Contractor experience matters when the work is more complex than cosmetic repairs. Supply relevant project history, licensing where required, insurance, and an executable schedule. Clarify who purchases materials and who handles permits. If you plan to manage trades yourself, explain that arrangement instead of submitting a budget that assumes a general contractor.
How do you understand the draw sequence?
A draw releases eligible renovation funds under the loan agreement. The lender may require completed work, invoices, photographs, inspections, and lien documentation before disbursement. Ask which evidence applies to each stage and whether stored materials qualify. The contractor payment schedule should work with these rules rather than contradict them.
Change orders need attention before the extra work becomes a bill. A lender may require consent to reallocate funds or alter the scope. Inspection confirms progress for the financing process; it does not replace your own quality control. Check workmanship and remaining costs after every stage so the approved budget still matches the unfinished project.
How do you underwrite the sale and the fallback?
Model the resale after selling costs, carrying expenses, and financing charges. Test what happens if the market supports a lower price or the renovation takes longer than expected. Pricing depends on the wholesale lender and the file and is not shown on this site. Request written terms covering interest, points, fees, maturity, and extension conditions.
A refinance can be a fallback only if the property and borrower can qualify for it. Rental coverage, lease status, ownership history, and property condition may affect that route. Confirm those requirements before buying. A profitable sale estimate and a workable rental refinance are separate analyses, even when they concern the same house.
Who is this financing designed for?
A good fit when
- Non-owner-occupied renovation and resale projects
- Purchases supported by relevant comparable sales
- Itemized rehab scopes with capable contractors
- Investors able to carry expenses between draws
Not the right tool when
- Renovating a home for personal occupancy
- Projects relying on unsupported finished values
- Budgets with no allowance for cash-flow gaps
How does the financing process work?
Package the purchase
Send the contract, photos, comparable sales, scope, and renovation budget.
Review structure
Compare acquisition cash, rehab controls, costs, and exit conditions.
Complete property review
Resolve valuation, contractor, title, and insurance requirements.
Manage draws and exit
Document work, track remaining funds, and prepare the sale or qualifying refinance.
What else do investors ask about this loan?
Does an approved rehab budget mean all repairs are prepaid?
No. Rehab funds may be disbursed after work meets the lender’s draw conditions. You may need cash for deposits and early invoices. Review the exact disbursement policy with your contractor before signing a work agreement that requires payments the loan cannot support.
Can a new investor request fix-and-flip financing?
You can submit a deal for review, but experience requirements differ among wholesale lenders. A documented contractor team, realistic scope, and adequate liquidity help explain execution capacity. None of those items removes the lender’s credit review or establishes that a particular project qualifies.
What happens when the rehab scope changes?
Notify the lender through the agreed process before altering funded work. Changes can affect the budget, valuation, inspections, and completion schedule. Keep written change orders and identify the source of any additional cash. Do not assume unused funds from another category can be moved without consent.
Can I keep the property instead of selling?
A rental exit may be possible through separate qualifying financing. Check rent coverage, property condition, title, and any ownership-history requirements first. The fix-and-flip loan still has its own repayment deadline, so changing your investment strategy does not change the obligation automatically.
What should you read next?
Ready to discuss your investment property?
Address, purchase price or value, your rehab budget and exit plan. We read it the way a private-money underwriter will and tell you which wholesale programs are worth an application.