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The Fix N Flip loan, also known as fix and flip loan, fix n flip bridge loan, or acquisition and rehab bridge loan, is a high leverage, quick close, private lender program for investors buying, fixing, and selling or renting, 1-4 unit residential properties.
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What is a Fix N Flip Loan?
A fix n flip loan is a private construction loan for 1-4 unit residential investment property. The borrower pays back the loan within 1-24 months by selling or refinancing the property. Fix n flip loans used to be in the realm of hard money construction financing- they were private lender loans with high minimum interest and points. The market for fix n filp lenders opened up in the late 2010s and early 2020s and now there are several operators with similar rates and parameters, and an apparent institutional market for lenders to sell their fix n flip loans. Fix n flip loans for real estate investors offer attractive leverage and convenience compared to getting a bridge loan from a bank, using term loans, or self-funding. Fix n flip loans are loans for flipping houses.
- For projects that are complete or near completed, and ready for term refinance, please refer to the DSCR loan page.
- For property types other than 1-4 unit residential, please refer to the bridge loan programs on the multifamily and commercial and mixed-use loan pages
How to Qualify for a Fix N Flip Loan
Call 609-468-9324 or email rick@nonbankclearing.com to discuss your strategy or property and we will provide current lender parameters. We can evaluate for purchases, property you already own, and mid project refis. Same day fix n flip loan preapproval or approval with loan application. Hope to earn your business!
Fix N Flip Loan Calculator
Fix n flip loans and New construction loans are typically 12 month, 18 month, or 24 month balloon loans, interest only, where the borrower intends to repay the loan by either refinancing (taking out) the bridge loan with a permanent loan, or selling the property and repaying the loan at sale.
The “Rehab Holdback Use Factor” is a simplification to help estimate the total monthly interest payments. Our lenders typically don’t charge interest on undrawn amounts, so we’ve included this percentage to adjust for not using the entire rehab holdback amount from the beginning of the loan. Our lenders typically have no minimum term length. They get you on the up front points and fees and then the total interest paid is variable depending on how soon you draw the money and how many months until you pay it back, with no minimum interest.
| # of Months to Sell or Refi | 3 months | 6 months | 9 months | 12 months |
|---|---|---|---|---|
| Total Interest Estimate, Sum of Monthly Payments ($): | ||||
| Output: Up Front Loan Costs: | ||||
| Output: Up Front Appraisal and 3rd Party Fees: | ||||
| Total Up Front Loan Cost including 3rd Party ($): | ||||
For a fix n flip example, $250k purchase price and $50k rehab budget, you could model 85% of the purchase price for purchase loan amount ($250,000 x 85% = $212,500) and $50,000 for the rehab holdback amount (rehab budget).
For a new construction loan example, with $50k lot cost and $250k project budget to build a house, you could model $50k down to pay for the lot in cash and then borrow $250k rehab holdback amount, so $0 purchase loan amount and with $250,000 rehab holdback amount.
Terms and leverage parameters vary for fix n flip loans and new construction loans. Call us to check your assumptions 609-468-9324.
What is the highest LTV Fix N Flip Loan?
Purchase Scenario
| 90% of purchase price + 100% of rehab | Highest leverage fix n flip |
| 85% of purchase price + 100% of rehab | Regular leverage fix n flip |
| 75-85% of purchase price and rehab | Reduced leverage fix n flip |
| 70% of purchase price, no rehab. | Lowest leverage fix n flip |
Fix n flip purchase loans are always a percentage of the purchase price and construction rehab budget. There is no cash out purchase loan product even if you buy a property at a steep discount. There are some lenders that can look at deep discount bridge purchase at 100% loan to cost with the closing costs financed, but we do not have those financing packages readily available, and if you find one its because of an existing lender relationship, friendly local lender, or because the money is more expensive than most fix n flip loans.
Mid Project Refi Scenario
|
65% of as is value 75% of after repair value |
Fix n flip refi, hard money refi Assumes property owned at least 6 months |
“Give me a place to stand, and I will move the world.”
- Archimedes, regarding the lever.
What are the terms of Fix N Flip Loan?
| Loan Amount | $75k-3mm per property. |
| Loan Term | 12, 18, or 24 months. |
| Property Types | 1-4 unit residential, including single family, duplex, triplex, 4plex, and condo. |
| Up front points and fees | Yes. |
| Monthly Payment | Interest only. |
| Balloon Payment | Pay back the loan balance at sale or refinance. |
| Interest charged on undrawn amounts | No interest on undrawn amounts. |
| Purchase funding | 85-90% of purchase price. |
| Rehab funding | 100% of rehab budget (holdback). |
| Cash to close from borrower | 10-15% of purchase price + closing costs. |
| LTARV requirement | 75% LTARV, meaning the loan amount can be no more than 75% of the as complete value. |
Fix N Flip Loan Process
Step 1- Initial Discussion, Loan Application, and Term Sheet
- Discuss the loan scenario including rehab construction plan, costs, and end value
- Suggest relevant loan programs and provide parameters
- Scope of Work form and recent experience schedule (we can get this over the phone too)
- Loan application and initial info request (we can get this over the phone too)
- Term Sheet and Appraisal Fee (if required)
Step 2- Initial Info Required for Fix N Flip Loan
- Loan Application and Appraisal Fee if required (see previous step)
- Photo of ID and void check
- Contact information for your title agent and insurance agent
- If borrower is an LLC, then LLC Operating Agreement and EIN Letter
- Bank statements with cash to close and required reserves
Step 3- Appraisal, Title, Insurance, and Additional Info from Borrower
- Appraiser visits the property and completes the appraisal report or borrower submits photos for lender (for our lenders that do desktop appraisal).
- Lender reviews the appraisal report, internally re-checks value and reviews for property condition, or completes internal valuation (desktop appraisal).
- Title agent provides title policy, works with lender on revisions and clarifications
- Insurance agent provides insurance policy, works with lender on revisions and clarifications
- Lender usually comes up with other things to ask for from borrower
Step 4- Final Underwriting, Closing, and Funding
- Lender sends complete file to underwriting, and they may find issues or require more things at that point
- Final coordination between title company and lender on loan docs and scheduling
- Closing and Funding
Step 5- Draws
- Borrower sends draw requests directly to lender
- Draws are requested and distributed as a proportion of work already completed on the property based on the Scope of Work form and budget from the loan application
Fix N Flip Loan Requirements
Most of the requirements for Fix N Flip loans are outlined in the graphic above. If you are getting your stuff together to apply for a Fix N Flip loan, please be ready to meet the following requirements:
- Loan Application
- Scope of Work Breakdown for Rehab (if applicable)
- Real Estate Owned and Real Estate Investor Experience Form (if applicable)
- LLC documents including Operating Agreement
- Title Policy meeting lender requirements
- Insurance Policy meeting lender requirements
- Purchase contract (if purchase)
- HUD1 from purchase (if purchased recently)
- Summary of work already completed since purchase (if applicable)
- Completed appraisal or desktop appraisal (ordered by lender, paid for by borrower)
- No investor experience required
- No income verification required
There is no firm minimum credit score for fix n flip loans, and lenders are flexible on experience, but the highest leverage requires 700+ FICO score. We have fix n flip loans for borrowers with 600-699 FICO score, but the leverage gets lowered the further away you are from 680-699 FICO and depending on the reasons for the lower credit score. Pricing and leverage will also vary based on borrower experience (# of projects completed as an investors last 2 years that included a rehab, and # of rental properties owned), as well as projected after repair value (ARLTV), and rehab as a proportion to purchase price. These are typical fix n flip loan or hard money bridge loan requirements. This list is not intended to be comprehensive, lenders usually ask for more stuff, and all loans are subject to credit approval.
Are Fix N Flip Loans for First Time Investors?
First time investors can get approved for a fix n flip loan especially with credit score 700+. The lenders are more favorable to 1st time investors when the project is a light rehab, and not a full gut rehab. Certainly if a rehab cost is greater than the purchase price, that would be difficult to get as a first time investor. Also, lenders count experience for projects completed all cash as an investor- its not like a credit report where you have to borrow money to show as experience.
Do we have quick close Fix N Flip Loan?
The usual 14-21 day timeline to close is pretty quick. Having some time to close will get you the best leverage and terms for your bridge loan.
We do have super quick close fix n flip loans, appx. 3 days to close with title, but it is much lower loan to cost, e.g. 60% of purchase price, and the interest rates and points are higher.
Fix N Flip Loan vs. Bank Loan vs. Self-Fund
| Fix N Flip Loan | Bank Loan | Self-Fund | |
|---|---|---|---|
| Time to Close | 14-21 days | 30-60 days | up to you, it is all your money |
| Leverage | Highest leverage, up to 90 pp + 100 rehab | Almost as high as fix n flip loan | 0 leverage, it is all your money |
| Availability | Readily available | Not offered by all banks, only some | it is available, if you have the money |
| Cost of Capital | Private bridge rates | Slightly lower rates and points, but still tied to prime / floating | 0 interest and points, but you have to use your own money |
Fix N Flip Loan vs. DSCR Purchase Loan
| Fix N Flip Loan | DSCR Loan | |
|---|---|---|
| Rates, points and fees | Higher Rates and points | Near bank rates with good FICO score |
| Property needs repairs | Loan includes a rehab budget | Can’t close a DSCR loan with any non-cosmetic repairs needed or any safety issues. |
If your project involves a rehab, and not all the units are rent ready, then DSCR loan is not an option.
If the property you are buying is rent ready, and doesn’t have any property condition or safety issues, then you could visit purchase programs on the DSCR loan page.
Fix N Flip Purchase with DSCR Refi vs. DSCR Purchase for Fix and Rent Scenarios
| Fix N Flip Purchase with DSCR Refi | DSCR Loan Purchase | |
|---|---|---|
| Rates, points and fees | Higher Rates and points. 2 loan closings and the fix n flip money isn’t cheap | Near bank rates with good FICO score |
| Leverage | Highest leverage. Up to 90% of purchase price and 100% of rehab. If it is truly a discount buy and values hold, then DSCR refi can be this amount or higher. Results not guaranteed. | Rates are best at loan amount 75% of purchase price. 80% of purchase price available at slightly higher rate. Any rehab would have to be out of pocket - it is not like a 203k. |
The above are two different ways to structure fix and hold loans aka fix and rent loans. If the property is in good existing condition, the rental economics are ok, you don’t need maximum leverage, and you want to minimize loan costs, then you can consider DSCR purchase loan instead of the highly structured fix n flip purchase loan to DSCR refi loan strategy. Fix n flip purchase loan with DSCR refi loan provides maximum leverage albeit more financing costs.
Fix N Flip Loan Pros and Cons
| Fix N Flip Loan Pros | Fix N Flip Loan Cons |
|---|---|
| Quick close relative to any other loan product | Still not as quick as cash |
| Highest leverage available for a flip strategy | To get the leverage, it is costly in points, fees, and interest |
| Can potentially be refinanced with DSCR loan for high leverage BRRRR method strategy | 2 loans is more loan closing costs, even if someone calls it a 1 close loan, it’s really 2 |
Questions to Ask a Fix N Flip Lender?
You should ask a fix n flip lender about their application and loan process, draw process, extension provisions, and whether lender frequently takes title. If a high percentage of their loans don’t perform, then that means obtaining property, instead of just loaning, is more than an incidental part of the lender’s business model.
It is most important to ask yourself if you want to take on a given project, and if you can realistically support the down payment, interest payments, and construction costs between draws, complete the project on time, and sell or refi to repay the loan within the 12 months.
What is a Fix N Flip Refi?
Fix N Flip refi refers to either a delayed purchase bridge for a property recently purchased with cash, a new loan on a property owned to begin construction, or refinancing an existing fix n flip bridge or construction loan with a new fix n flip bridge refi. Refinancing a completed fix n flip project with a DSCR would be considered DSCR refi.
Fix N Flip Refinance Scenarios
| Delayed Purchase Refi (financing for recent cash purchase) | Terms similar to fix n flip purchase. |
| Refi Property Long Owned (financing for property already owned more than 6 months) | Loan max is 65% of as is value and 75% of as complete value for property owned at least 6 months. |
| Fix N Flip Mid Project Refi (project already started with a construction loan in place) | Loan max is 65% of as is value and 75% of as complete value for property owned at least 6 months. |
Nonbank Clearing Advantages
- Quick underwriting and structuring
- Competitive rates and leverage
- Premium service loan processing
- Access to super quick close outlets when required
- Bridge refi or new loan mid-project available
