A fix-and-flip loan is a short-term funding solution real estate investors can use to purchase a fixer-upper. These loans could help you renovate a property and sell it for a profit.
However, a potential drawback is that this type of financing can come with higher rates than standard home loans. Below, we compiled a list of the top fix-and-flip loans for investors. And we discuss the pros and cons to help you assess whether this option is right for you.
Table of Contents Skip to Section
- The top fix-and-flip loans for investors
- How to choose a fix-and-flip lender
- How to get a fix-and-flip loan as an investor
- How to apply for a fix-and-flip loan as a real estate investor
- Pros and cons of fix-and-flip loans for real estate investors
- Alternatives to fix-and-flip loans when investing in real estate
The top fix-and-flip loans for investors
The real estate market can be lucrative for those who know where to invest. With the right financial support, you can buy a property at a low price, make necessary improvements, and sell it for a substantial profit.
Here are five lenders that offer specialized fix-and-flip loans, each with unique benefits.
| Lender | Best for |
| New Silver | Borrower incentives |
| BlueVine | Business line of credit |
| Kapitus | Customization |
| OnDeck | Fast funding |
| Funding Circle | New investors |
New Silver – Best for borrower incentives
- Attractive cash-back incentives
- Quick approval and funding
- Dedicated customer service
New Silver understands the needs of real estate investors. It designed its hard money fix-and-flip loans to be fast and easy, with approvals often happening in just one day. The process is streamlined to help you start your project as soon as possible.
New Silver also stands out by offering cash-back incentives, which may give you additional financial leeway and further increase the profitability of your project.
BlueVine – Best for business line of credit
- Flexible line of credit
- Fast and easy online application
- Decisions made in less than 24 hours
BlueVine specializes in business lines of credit to handle the expenses associated with fix-and-flip projects. Rather than a traditional loan, you can use your credit line whenever you need it.
The application process is quick and easy. In under 24 hours, you can get a decision from BlueVine. Quick access to funds can be a game-changer when you locate a lucrative property opportunity.
Kapitus – Best for customization
- Fully customized loan solutions
- Funding in 3 days
- Variety of loan products
Kapitus believes every investment project is unique and needs a unique financing solution. It provides customized loan options, allowing you to align your financing with your investment strategy.
Quick funding is another advantage of Kapitus—you can get the funds in your account in as little as three days. Kapitus offers a variety of loan products, further enhancing its appeal to investors.
OnDeck – Best for fast funding
- Decisions made in minutes
- Funding as fast as 24 hours
- Competitive rates
For those who need quick funding, OnDeck offers a solid solution. The lender can make a decision in minutes, with funding hitting your account in as little as 24 hours.
OnDeck prides itself on competitive rates, making it an attractive choice for businesses seeking efficient financing without compromising on costs.
Funding Circle – Best for new investors
- Simple and straightforward application process
- Competitive rates
- User-friendly online platform
If you’re new to fix-and-flip investments, Funding Circle makes the loan process simple and straightforward. Customer service is a top priority for the lender, so you’ll always find support when you need it.
Funding Circle also offers an intuitive online platform and competitive rates, making it a terrific choice for new investors starting their property flipping journey.
How to choose a fix-and-flip lender
When shopping for a fix-and-flip loan, consider these factors.
- Loan amount. Select a lender that offers the amount you need to purchase the property. Some lenders may require you to have a certain percentage of equity in the property, and others may offer 100% financing.
- Annual percentage rates (APRs). When shopping, pay close attention to the APR range listed on a lender’s website. This helps you estimate the amount of interest you’ll pay, plus any fees the lender charges.
- Option to prequalify. To check estimated rates and terms without harming your credit, select a lender that allows you to prequalify online.
To ensure you have a chance of qualifying with a lender, review your credit score, annual revenue, and time in business.
How to get a fix-and-flip loan as an investor
Eligibility requirements vary depending on the lender you’re applying with, but many lenders consider these factors when you apply.
- Annual revenue. If you apply for a traditional business loan, some companies might require your business to earn a certain amount of revenue each year.
- Years in business. Some traditional business loan providers require you to have at least two years in business.
- Credit score. The lowest credit score you can have varies by lender. You’ll have a better chance of qualifying for a loan and securing a competitive rate with good credit.
- Flipping experience. Some lenders require you to have a certain amount of years flipping houses to qualify for the loan.
- After-repair value (ARV). Lenders that provide loans based on the property’s value often consider ARV when calculating the loan amount. The ARV is the home’s purchase price plus the value added once you’ve renovated the home.
How to apply for a fix-and-flip loan as a real estate investor
The application process varies. But when you apply, a lender might ask for the following documents.
- Tax returns
- Business documents
- Detailed project plans
- Bank statements
You can often apply for a fix-and-flip loan on a lender’s website. If you apply for a loan that uses the property as collateral, the lender might require an appraisal.
Once you’re approved, the lender will send you a loan agreement to review. Read it carefully before closing on the loan.
Pros and cons of fix-and-flip loans for real estate investors
Like all financing options, fix-and-flip loans come with advantages and disadvantages. Here are a few to consider when deciding whether they’re a good match for you.
Pros
-
Fast funding
Some lenders can deposit funds into your business account as soon as the next day.
-
Accessible to borrowers with fair to poor credit
It’s possible to qualify for the above lenders’ fix-and-flip business loans with a FICO score as low as 625.
-
Can purchase a distressed property
When you apply for a standard mortgage, lenders might reject your application if the property needs major repairs. But this generally isn’t the case with a fix-and-flip loan.
Cons
-
A profit isn’t guaranteed
After you purchase and renovate a property, there’s no guarantee you’ll sell it for a profit.
-
Longer-than-expected renovation time frame
If making improvements to the home takes longer than expected, it can ruin your project’s budget and eat into profits.
-
Higher rates
Fix-and-flip loans tend to come with higher rates than traditional home loans.
Our expert recommends: Consider the risks
Given the higher interest rates, borrowers should have a clear understanding of cash flow needs and the time horizon for the money. A lump sum upfront to buy the property is understandable, but if you expect the renovation to take a considerable amount of time, reduce interest costs by taking money on an as-needed basis.
Alternatives to fix-and-flip loans when investing in real estate
A fix-and-flip loan isn’t right for every borrower. If you think it might not be a good fit for you, explore these alternatives.
- Traditional mortgage. A conventional mortgage—a mortgage not backed by the federal government—could be a better choice if you plan on turning an investment property into a rental. Other types of standard mortgage programs may require you to live in the home for at least a year before selling.
- Home equity line of credit (HELOC). If you have enough equity in your home, you could borrow against it with a HELOC. HELOCs allow you to borrow against your home up to a specific limit as needed. However, a downside is that if you default, a lender can foreclose on the property.
- Business credit card. You could also use a business credit card to purchase a property. It could be an excellent option if the card comes with a 0% or low-interest promotional period. However, a disadvantage is that the card’s standard annual percentage rate (APR) will kick in once the promotion expires.