Speed is everything in fix-and-flip investing. Discover the financing options available for house flippers, including bridge loans, hard money, and renovation loans — and how to choose the right one.
Why Traditional Mortgages Don't Work for Fix & Flip
When you find a distressed property that needs renovation and resale, time is your most critical asset. Traditional mortgage lenders take 30-60 days to close and often won't even finance properties in need of significant repair. Fix & flip investors need a different kind of financing — and fast.
Bridge Loans: The Fix & Flip Investor's Best Friend
A bridge loan is a short-term loan (typically 6-24 months) designed specifically to fund property acquisition and renovation. Bridge loans are underwritten primarily on the asset value and the projected After-Repair Value (ARV), not just your personal income.
Typical Bridge Loan Terms:
- Loan-to-Cost (LTC): Up to 90%
- Loan-to-ARV: Up to 75%
- Interest rates: 9-13% (varies by deal)
- Draw schedule for renovation costs
- Loan term: 6-18 months
The Fix & Flip Financing Process
Calculating Your Fix & Flip Profit
Before applying for financing, you need to know your numbers:
- Maximum Allowable Offer (MAO) = ARV × 70% − Renovation Costs
- Gross Profit = Sale Price − (Purchase + Renovation + Holding + Selling Costs)
- ROI = Gross Profit ÷ Total Cash Invested
Common Fix & Flip Mistakes to Avoid
- Underestimating renovation costs (add a 15-20% contingency buffer)
- Overestimating the ARV — use conservative comps
- Ignoring holding costs (loan interest, utilities, property taxes)
- Skipping the exit strategy — always have a Plan B (rent instead of sell)
Is Fix & Flip Right For You?
Fix and flip can generate significant returns — often 15-30% ROI per project — but it requires experience, a reliable contractor network, and access to fast capital. If you have the knowledge, NextStar Ventures has the financing.
This article is for informational purposes only. All loans subject to underwriting approval.