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What is Real Estate Fix and Flip Loan?

Real Estate Fix and Flip Loans (also known as hard money loans, rehab loans, or investment property rehab loans) is an asset-based lending product provided by non-bank lenders and Investors.

This product is used exclusively for commercial or residential real estate purchases that are intended to be rehabbed and sold within a short period. Terms on these loans typically range from 12 months to up to 36 months from the date of purchase, 12 months is the average term length.

Real Estate Fix & Flip Financing can provide the capital needed for up to 85% to 90% of Purchase Price of the property and 100% of Rehab Costs. As long as the property is below taking out between 65% of the ARV for experienced flippers and up to 75% ARV novice flippers. (ARV after rehab value) of ARV.

Our goal is to be our client's trusted business financing partner from inception to the day they sell their business.
ADC Business Consultants are here to offer our clients all of their years of experience in providing capital to companies to grow and expand.
We have custom-tailored options to meet a company's specific needs. ADC works diligently to provide each client with funding terms that fit their goals.
We pride ourselves on going the extra mile for every client that we work with and excel at delivering the capital they desire to grow their business.
The most common users including but not limited to Professional House Flippers, Real Estate Investors, and Real Estate Developers, although even a novice can utilize the asset-based lending product for their first Real Estate transaction.

Real Estate Fix and Flip Loans provide short-term funding solutions that are backed by the property itself – the asset, instead of the borrower’s personal finances. Only for Real Estate will be purchased, renovated, and sold within the next 12 to 24 months from the purchase date of the Real Estate.

The residential or commercial property is the collateral in a Real Estate Fix and Flip Loan. Once a real estate flipper has isolated the property they want to secure, then the lender finances up to 90% of the cost to purchase the property and up to 100% the improvements or remodeling.

As long as the property purchase price and rehab cost have to be below 75% of the current market value of comparable properties in the area, the process can continue to move forward. Plus, the buyer(s) must be able to cover the balance of 10% of the purchase price and 10% rehab cost of the property.

The average Real Estate Fix and Flip Loan have a term of one year with a longer durations up to 36 mos are also available. Once approved, a borrower receives the loan for the home purchase and the first set of renovations. As stages of the property are cleared, the borrower can turn to the lender to release additional capital. For instance, after the contractor completes the initial property improvements, the borrower can drawdown additional money for the next round of renovations, and so on

From this point on the ultimate goal is for the Investor to sell or rent the property under the following three conditions:

  • Minimize the facelift and renovation expenditure as much as possible
  • Maximize the market value of the property
  • Retain the property for the shortest possible time

Once the rehab is complete, and the value of the property increased, the property has two options to close out the Real Estate Fix and Flip Loan from the property, depending on their goals.

If the goal is to sell the property, then the loan will be paid off in the closing of the sale. If the goal is to keep the property, then the borrower must be able to refinance the Rehab loan with conventional financing that they can hold for years to come.

Whether a Real Estate Investor is fixing up their first property to list on the market, or it’s a seasoned pro at fix and flip projects, Real Estate Fix and Flip Loans can provide tremendous benefits.

A Real Estate Fix and Flip Loan or Rehab loan doesn’t focus solely on a borrower’s credit score; instead, it focuses on your property’s after repair value.

It can work for Investors unable to qualify for Conventional Financing

Payments on Rehab Loans are typically Interest only monthly, with no interest reserve required and most of our lenders do not charge Interest on the Rehab Portion until Funds have been drawn

Real Estate Fix and Flip Loans can be used in hot real estate markets where investors must have ready access to cash in order to close transactions quickly.

Rehab Loans are also integral for more sophisticated investors who take on more than one flips at a time. Since traditional banks will rarely loan money for more than a few concurrent projects, Real Estate Fix and Flip Loans can offer room to grow.

For fix and flip investment loans, the Investor repays the loan once the property is improved and sold.

No interest charged on unused rehab funds
Typically fewer hurdles than with traditional mortgage loans leading to a very user-friendly and streamlined process

Rehab Loan Amounts can range from $75,000 to $3,500,000 depending on the market, the borrower, the lender, and the market value of the property

Rehab Loan Interest rates vary depending on borrower profile

It can work for both Short Sale Purchase Rehab’s and REO or Bank Owned Purchase and Rehab’s

Rehab Loans are typically the are fully amortized loans

Rehab Loans can work for Multi-family housing with multiple units (5+) with loan amounts of $250,000+.

Rehab Loans can work for Mixed-use properties with blends of residential and commercial mixed-use projects with loan amounts from $250,000+.

Often, the distressed house is sold at auction for cash, or the seller offers a better deal for an all-cash purchase. In this situation, the borrower needs the money for renovation, Real Estate Fix, and Flip Rehab Loans can provide the liquidity needed to capitalize on those opportunities.

With real estate investments, rehab typically needs to start right after the close; Rehab Loans are able to offer Real Estate Fix and Flip Loans financing the day after closing.

By utilizing a Rehab Loan, the real estate serves as collateral, whether that is the property or land involved in the offering. In case of a default, a lender could take ownership of the collateral.

Fix-and-flip offerings are short in duration–typically 12-24 months–and there is no penalty for repaying the loan early.

Rehab Loans can work for the following Property Types – Single Family, 2-4 unit, Condos, Townhouses

Average Rehab Loan closings are in 5-10 business days

Qualifying for a fix and flip loan is fundamentally the same as any other type of loan. A borrower, real estate investor, has to put their best financial foot forward, showing that they can pay back any cash that is borrowed. All lenders will assess your financials and other factors to determine if extending a loan to you is an acceptable risk

To determine eligibility for a Fix and Flip loan, here are the requirements.

These may vary from first-time Flippers to experience flippers, as listed below:

  • Business tax returns for loans over $250,000, 85% LTV and 100% of cost,
  • 00 minimum FICO
  • Rehab Loan must be in First Lien Position only
  • Borrower(s)/Investor(s) must create a business plan for Real Estate flip so that the lender knows exactly the plan to work the property from beginning to end.
  • Borrower(s)/Investor(s) must map out a clear estimation of the renovation costs, and also provide a clear scope of work. In order to let the lenders know that the owners are clear on where every penny is going in the project.
  • Properties with Rehab Loans must be owned by an entity prior to closing, so the borrower(s)/investor(s) need to choose a name for LLC/Corp name and register the entity.
  • Business and Personal bank statements are the only financial documents required – Usually, there are no borrower DTI requirements
  • Rehab Loans are for Non Owner Occupied properties only (no homeowner loans)

First Time Flippers may need to also provide:

  • Pay stubs or other documentation of income
  • Credit card, loan, and other debt documentation
  • Access to your credit report
  • Information on past industry experience, in some cases
  • A house flipping business plan, in some cases
  • Previous years Business and Personal Tax Returns, in some cases

Experienced Flippers may need to also provide:

  • Access to your credit score, which ought to be at least 640, with a score of 720+ being more desirable
  • Evidence of cash reserves in savings accounts
  • Documentation of prior house flip/renovation projects
  • Business and Personal Tax returns
  • Pay stubs or other documentation of income
  • Credit card, loan, and other debt documentation

If you are a Real Estate Investor or Developer that is looking to buy reduced-priced properties, fix them up, and sell/flip them within the next 12 to 24 months.

Available Capital Limit

Up to $2M per property

Standard Interest Rates or Cost

8% to up to 13.5% per property

Typical Underwriting TimeLine

5-10 Business days

Average Term Limits

12 to 36 Month Terms

In closing, We understand that time is of the essence, after finding a unique Real Estate investing opportunity. Good properties come and go off the market quickly, and borrower(s)/Investor(s) need to be prepared with the proper financial backing to support your purchase and rehab.

Having reliable access to the capital needed to secure a property is crucial to be able to seize great opportunities. AmeriDream Capital has a team of seasoned Business Financing Consultants that specialize in providing clients with access to Real Estate Fix and Flip Loans. Please apply online, email us for an appointment, or call us today. Our team is committed to helping your business grow with a Rehab Loan, and we will guide you through the loan process each step of the way.

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Call us 1-929-216-1362
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