Fix and flip loans are somewhat different than conventional loans, so there are a few things you need to be aware of when you’re applying for one of these loans. They are historically designed to cover the purchase price and renovation associated with the property so that it is ready to be rented out or sold. The whole point is to sell the property before the loan balance comes due, and you need the proceeds of the sale to pay off the loan.

Where to Look for Fix and Flip Financing

There are actually several sources that will provide financing for fix and flip transactions, and they’ll all have their own distinct rules related to lending. Some hard money lenders will be willing to finance as much as 65% of a home’s after repair value, and there is typically a high approval rate for these types of loans. However, you need to be prepared for paying a fairly high-interest rate in order to secure approval.

You might be able to get a fix and flip loan through a traditional bank if you have a really good credit score, although this is not one of the more popular avenues for acquiring a loan. One of the newest and fastest-growing opportunities in acquiring financing for fix and flip transactions is through crowdfunding. The terms which you’d be offered by most real estate crowdfunding companies are usually on par with those you’d get from a hard money lender, although the fees would probably be different. 

Things to Keep in Mind

First of all, most lenders will not go much beyond 65% or 75% of the after repair value purchase price, and that means you need to come up with the difference on your own. You’ll also have to be prepared to show any lender the facts and figures behind all costs on a remodeling project. You should be aware that any lender is going to take a close look at your financial track record. If you have been a successful investor with fix and flip operations in the past, you’re much more likely to be approved on your current application.

Need Financing for a Fix-and-Flip? 

Contact us at Ambition Funding Solutions if you’re seeking funding for your next fix-and-flip transaction. We may be able to provide the funding you need, and we can offer very competitive rates.