Fix and flip investing — buying distressed properties, renovating them, and selling at a profit — remains one of the most active real estate investment strategies in the country. The financing that makes it possible is the fix and flip loan, also called a hard money loan or rehab loan. Understanding how these loans work, what lenders actually look for, and how to structure a deal correctly is what separates investors who close consistently from those who struggle to get funded.
Most flips are really the first half of a longer play. The financing step most BRRRR investors get wrong traces a Newton, NJ deal from the rehab loan into permanent debt, and the DSCR cash-out refinance page covers the seasoning window that decides whether the take-out hands your money back or leaves it in the property.
What Is a Fix and Flip Loan?
A fix and flip loan is a short-term, asset-based loan that provides financing for both the acquisition and renovation of an investment property. Unlike a conventional mortgage — which underwrites the borrower's income, employment, and credit history — a fix and flip loan underwrites the deal. The lender asks: what is this property worth today, what will it be worth after renovation, what does the renovation cost, and does the math produce enough margin for everyone to get paid. If the answer is yes, the loan gets funded. Your tax return is irrelevant.
How After-Repair Value (ARV) Drives Everything
ARV is the single most important number in fix and flip financing. It's the estimated market value of the property after all planned renovations are completed. Every other number in the deal — maximum purchase price, maximum loan amount, required down payment — is derived from the ARV. Lenders typically want the total loan (purchase plus rehab) to stay at or below 75% of ARV. That margin protects the lender if the project runs over budget or the market moves during renovation. It also ensures the investor has real profit potential at exit.
Getting the ARV right is the most critical skill in fix and flip investing. Overestimating ARV is the most common reason flips go wrong. Use conservative comparable sales — properties that have actually sold, not listed, within the past 90 days, within a half mile, of similar size and condition after renovation. Have your lender's appraiser verify your numbers before you're committed to the deal.
Renovation Draw Schedules
Renovation funds are not disbursed as a lump sum at closing. They're released in draws as work is completed, on a draw schedule — typically three to five draws over the course of the project. Before each draw is released, a draw inspector visits the property to verify the work claimed has been completed satisfactorily. This protects both the lender and the investor by ensuring funds are only deployed for work actually done. Having an organized renovation timeline and contractor schedule significantly speeds up the draw process and keeps your project on track.
Exit Strategy: Why It Matters to Your Lender
Every fix and flip loan requires a clear exit strategy — how you plan to repay the loan at the end of the term. The two primary exits are sale (selling the renovated property on the open market) and refinance (converting into a long-term DSCR rental loan). The fix and flip loans Dominick Prevete arranges carry a 12-month term with interest-only payments and the balance due at maturity. Extension available for up to 6 months, for a fee. Your lender needs to understand your exit before funding because that's how they get repaid. A realistic, time-bound exit strategy is required for any flip loan — particularly for first-time investors who don't yet have a track record of successful exits.
How does a fix and flip loan compare to a bridge loan, a HELOC, or paying cash?
| Fix and flip loan | Bridge loan | HELOC | Cash | |
|---|---|---|---|---|
| Sized against | Purchase price and after-repair value | As-is value (up to 75% LTV/CLTV) | Equity in a property you already own | — |
| Renovation funds | Up to 100% of rehab, in inspected draws | Not built in on most programs | Draw as needed against the line | Out of pocket |
| Typical close | 7–14 days | 7 days on the fastest programs | Several weeks; the line must exist before the deal does | Immediate |
| Income documentation | None | None — asset-based | Full personal income and DTI on most lines | None |
| Payments during the project | Interest-only | Interest-only | Interest-only during the draw period, variable rate | None |
| What is at risk | The project property | The project property (or cross-collateral) | The property securing the line | Your liquidity |
| Arranged by Dominick Prevete | Yes | Yes | No — business-purpose loans on investment property only | — |
| Best for | A purchase-plus-rehab with a 6–12 month sale or refinance exit | A fast close or a property that needs time, not construction | An investor with an existing line who wants no origination cost | A deal that must close this week; refinance out afterward |
Structures and timelines are typical of the programs Dominick Prevete arranges and places across his lender relationships. The HELOC column describes a consumer credit product offered by third parties, as the market runs it — it is not a product arranged here.
No rate figure appears in this table by design. Current fix and flip pricing is shown once on this page, dated, and every file is priced on its own deal specifics.
That table sets the flip loan against the other ways to pay for a renovation. The comparison investors search more often is the one against permanent financing: DSCR loan vs hard money works the carry cost of both over a twelve-month hold and shows where the handoff between them happens.
Fix and Flip Loans vs. Conventional Financing
Conventional lenders won't touch most fix and flip deals for three reasons. First, the properties are distressed — they don't meet conventional habitability standards and won't pass standard appraisals. Second, the holding period is too short — conventional mortgages are 30-year products; a 6-month flip doesn't fit. Third, the qualification requirements — W2 income, DTI limits, long processing times — all conflict with the speed and investor profile that fix and flip transactions require. Fix and flip hard money loans are specifically designed for this use case. They exist because conventional financing doesn't work for it.