A fix-and-flip loan is a short-term loan used by real estate investors to purchase and renovate a property with the intention of selling it for a profit. These loans are typically offered by private lenders or hard money lenders, and they focus more on the property’s potential value after renovation than on the borrower’s personal financial situation.

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These loans usually have a term of 6 to 18 months, making them ideal for quick projects where the investor plans to sell the property shortly after completing the renovations.

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Fix-and-Flip Loan Requirements

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Fix-and-flip loans have more flexible requirements than traditional loans, but there are still key factors lenders will assess:

• Property Value: Lenders will focus on the property’s after-repair value (ARV) to determine how much you can borrow.

• Down Payment: A down payment of 10% to 25% of the property’s purchase price is typically required, depending on the lender and the project’s scope.

• Experience: Some lenders may require that you have experience with real estate projects or flipping homes, though others may lend to first-time flippers with strong project plans.

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Fix-and-Flip Loan Benefits

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• Quick Access to Funds: These loans are designed for fast closings, allowing investors to purchase properties quickly in competitive markets.

• Flexible Terms: Fix-and-flip loans offer shorter terms and interest-only payments, making them more manageable for short-term projects.

• Focus on Property Potential: Lenders base their decisions on the property’s potential value after renovations, which can make it easier to qualify.

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The Bottom Line on Fix-and-Flip Loans

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Fix-and-flip loans are an excellent option for real estate investors looking to finance short-term property purchases and renovations. If you’re ready to take on your next project, contact us today to explore your options for fix-and-flip financing.