What Is It?
Fix & flip financing provides short-term capital to acquire a property, renovate it, and resell it for a profit. The financing typically covers part of the purchase price and part of the renovation budget, and is repaid when the property sells. Because the profit depends on the full project economics — not just getting a loan — the central question is whether the project still makes financial sense after the cost of capital.
When It May Make Sense
- Projects with a realistic After Repair Value (ARV) and margin
- Investors with renovation experience and a reliable contractor
- Properties where the expected resale clearly exceeds purchase + renovation + financing + carrying costs
- Short timelines with a defined resale exit
When It May Not Make Sense
- Thin margins where cost overruns erase profit
- ARV assumptions not supported by comparable sales
- Investors without contingency for delays or unexpected repairs
- Projects where financing cost isn't fully accounted for in the math
What Lenders Typically Evaluate
- Purchase price and renovation budget
- After Repair Value (ARV) based on comparable sales
- Loan-to-cost (LTC) and loan-to-value (LTV)
- Borrower experience with flips
- Contractor qualifications and scope of work
- Project timeline and carrying costs
- Borrower credit and reserves
- Expected resale price and profit margin
Potential Benefits
- Fund purchase and renovation in one structure
- Short-term capital matched to a short-term project
- Can enable value-creating renovations the investor couldn't self-fund
- Drawn funds align with renovation progress
Risks & Considerations
- Renovation cost overruns and timeline delays reduce profit
- Carrying costs (interest, taxes, insurance) accrue until resale
- ARV depends on market conditions at the time of sale
- If the project loses money, the loan still must be repaid
What to Prepare
Common items lenders may request — requirements vary by program and lender.
- Purchase price and property details
- Detailed renovation scope and contractor bids
- ARV analysis with comparable sales
- Project timeline and budget
- Borrower experience and credit information
- Carrying cost estimate and expected resale price
Frequently Asked Questions
ARV (After Repair Value) is the estimated value of the property once renovations are complete, typically based on comparable recently-sold properties. Lenders use ARV to set maximum loan amounts; investors use it to estimate resale proceeds and profit.
Loan-to-cost (LTC) is the loan amount as a percentage of the total project cost — purchase price plus renovation costs. A 90% LTC loan funds up to 90% of those combined costs, with the borrower contributing the rest as equity.
Subtract the purchase price, renovation, financing costs, carrying costs, and selling costs from the expected resale price. If a comfortable profit margin remains after accounting for the cost of capital and a contingency for overruns, the project may make sense. If the margin is thin or negative, the financing cost may not be appropriate for the project.
Explore Your Options
Submit your information and our team will review which available capital structures may be appropriate for your business or project.
Financing is subject to underwriting, eligibility, and approval. Products, terms, and availability vary by program and lender. Submitting information does not guarantee approval or funding. This page is educational and is not financial, legal, tax, or investment advice.