What Is Fix and Flip?
Fix and flip loans provide short-term financing for real estate investors who purchase distressed properties, renovate them, and sell for a profit.
Key Features
- Purchase Financing: Funds to acquire the property.
- Renovation Budget: Funds for repairs and improvements.
- Short-Term Terms: Typically 6 to 18 month loan terms.
- Fast Approval: Loans approved in days for quick closings.
- Interest-Only Payments: Keep monthly costs low during renovation.
How Does Fix and Flip Work?
Fix and flip loans (also called hard money loans) provide funds to buy and renovate properties. The loan covers the purchase price plus renovation costs. You make interest-only payments during the renovation period, then repay the full loan when you sell the property.
Benefits
- Buy and renovate properties for profit
- Funds cover purchase and renovation
- Fast approval for competitive markets
- Interest-only payments during renovation
- No income verification for some loans
Pros and Cons
Pros
- Fast approval process
- Covers purchase and renovation
- Short-term commitment
- Based on property value, not just credit
Cons
- Higher interest rates than traditional mortgages
- Points and fees upfront
- Short repayment window
- Property must be sold to repay loan
Who Is Fix and Flip Best For?
Real estate investors who buy distressed properties, renovate them, and sell for profit.
How to Use
Find a property, submit details to lender. Get approved for purchase and renovation funds.
Frequently Asked Questions
How much of the renovation cost is covered? Many lenders cover 80 to 100 percent of renovation costs.
Do I need good credit? Credit matters less than the deal itself and your experience.
Individual results may vary.