How to Use Fix & Flip Loans to Finance Your Next Investment Property

Apr 1

How to Use Fix & Flip Loans to Finance Your Next Investment Property

Fix and flip loans are designed for one purpose: to help investors buy, renovate, and sell properties quickly. These short-term loans provide fast funding for real estate deals that need speed, flexibility, and a sharp eye for opportunity. For new or experienced investors, fix and flip loans can be the key to unlocking high-margin returns in competitive markets. Traditional mortgages aren’t built for quick turnaround or distressed properties, but fix and flip loans are. They’re tailored for real estate entrepreneurs who need to act fast, move with confidence, and finance both the purchase and renovation under one roof. Whether you're working on your first flip or scaling your real estate portfolio, understanding how these loans work gives you an edge. The process may seem complicated, but once you break it down, it's clear, straightforward, and built for action. This guide explains how to use fix and flip loans to finance your next investment property.

What Are Fix and Flip Loans?

Fix and flip loans are short-term, asset-based loans tailored for real estate investors. They’re used to purchase distressed or undervalued properties, renovate them, and sell for a profit—typically within 6 to 18 months. These loans are easier to qualify for than conventional mortgages because lenders focus more on the property’s potential value after renovation (ARV) than on your personal credit score.

You don’t need to live in the property. These are strictly for investment purposes.

Why Investors Use Them

Speed is everything in a competitive housing market. Fix and flip loans are fast—much faster than traditional financing. While a bank mortgage can take 30 to 60 days to close, fix and flip lenders can often fund a deal in a week.

This quick access to capital allows investors to act fast on promising deals, beat out competitors, and begin renovations right away.

Also, many lenders roll the rehab costs into the loan. That means you can finance both the purchase and the repairs with one loan. It’s a huge benefit for investors who want to conserve cash.

Typical Loan Terms

Fix and flip loans vary depending on the lender, but you can expect:

Terms of 6 to 18 months
Interest rates between 8% and 12%
Loan amounts up to 90% of purchase price and 100% of rehab costs (not to exceed 70-75% ARV)
Origination fees from 1% to 3%

These are not cheap loans. But they aren’t meant to be. They’re tools for investors to make money fast. The higher cost is offset by the opportunity to turn a property quickly and walk away with a profit.

Loan Approval Criteria

Unlike traditional lenders, fix and flip lenders focus on the deal itself. They want to know:

What is the property worth now?
What will it be worth after rehab?
What’s your plan to get from A to B?

Lenders look at your experience, but you don’t need to be a seasoned pro. First-time flippers can still get funded, especially with a strong contractor team or business plan.

Credit scores still matter, but they aren't the main factor. Many lenders will approve borrowers with credit scores in the mid-600s if the deal looks solid.

How the Process Works

Find a property that you believe has strong upside after repairs.
Submit your loan application with estimates for purchase and renovation costs.
Lender evaluates the ARV (After Repair Value) through appraisals and comps.
Loan is issued—often within days—and disbursed in stages as the rehab progresses.
You renovate the property.
You sell the property, repay the loan, and keep the profits.

This model rewards efficiency. The faster you finish the flip and sell the property, the lower your interest cost and the higher your profit margin.

Buying and Flipping Houses with No Money

Here’s the question everyone wants answered: Can I flip houses with no money?

Yes, but it requires creativity and strategy.

Some fix and flip lenders offer up to 100% financing of the purchase and rehab costs, provided the deal meets their ARV and LTV (Loan-to-Value) criteria. This means you can get into a deal with none of your own capital—if the numbers make sense and you can cover closing costs or bring in a partner.

Another option is partnering with someone who brings the money while you bring the hustle. You manage the flip, they fund the deal, and you split the profits. Many successful real estate investors start this way.

Hard money lenders, private capital, or even seller financing can also be leveraged to do no-money-down deals. The key is proving that the deal itself is solid and low-risk.

Common Mistakes to Avoid

Not every fix and flip project goes smoothly. Here are the top missteps that sabotage deals:

Underestimating rehab costs
Overestimating ARV
Hiring the wrong contractor
Delaying the timeline
Ignoring market trends

Always get detailed bids from licensed contractors. Know your comps. Build in a buffer for surprises. Your margins need to be real—not theoretical.

And don’t fall in love with the property. This is a business. Make decisions based on numbers, not emotion.

The Role of a Trusted Lending Partner

Working with a lender that understands fix and flip loans is one of the smartest decisions you can make. These lenders do more than provide capital—they provide guidance. A good lender will review your deal, offer insights, and help you avoid costly mistakes. They’ve seen thousands of flips. They know what works.

Partnering with a lender like BRRRR.com, which specializes in these types of investments, can give you a serious edge. They offer loan programs tailored to fix and flip investors, including flexible terms, fast approvals, and construction funding. Their team understands the urgency and complexity of these projects. They’re not just writing checks—they’re helping you succeed. Choosing a lender with experience in this space can mean the difference between a profitable flip and a financial misstep.

Final Thoughts

Fix and flip loans can be the fuel for your real estate ambitions. They allow you to move fast, minimize upfront costs, and tap into high-return opportunities. But like any tool, they need to be used with skill and strategy.

Study your market. Know your numbers. Surround yourself with experienced professionals. And choose a lending partner who understands the fix and flip process inside and out.

Are you ready to fund your next project? Then it’s time to start looking for a deal—and the right lender to back it.