Fix-and-flip financing

What it is

Fix-and-flip financing generally supports buying and renovating an investment property for resale. It is often short-term and property-secured. It is not automatically appropriate for an owner-occupied home or a project with no clear repayment exit.

How it works

Funding may include an initial purchase advance and later renovation draws. A draw is a release of funds for a project stage, often after documentation or inspection. Ask whether costs must be paid first and reimbursed later; the arrangement can require cash before the next draw arrives.

When it may fit

An investor with a defined renovation scope, capable contractors, contingency funds, and a supported resale plan may consider it. Compare a less extensive project or additional equity if the plan only works with an immediate sale.

What providers may review

A provider may assess purchase price, current and expected finished value, renovation scope, permits, contractor capacity, borrower experience, liquidity, credit, and the exit strategy. ARV means after-repair value: an estimate, not a promised sale price.

Costs, repayment & risks

Interest, origination or “points,” inspections, draw fees, extensions, and closing costs can add up. A point is generally one percent of the loan amount; ask which amount the provider uses. Delays, contractor issues, overestimated resale value, and a missed maturity date can threaten the project and pledged property.

Questions to ask

• Is renovation funding advanced or reimbursed after work?
• Is interest charged on drawn funds or another balance?
• What happens if the sale is delayed or the budget increases?
• What extension conditions, fees, and guarantees apply?

Compare any proposal with the cost guide and cash-flow walkthrough before deciding.