Fix-and-flip loans typically come in a variety of flavors, including: 

• Hard money loans

• Cash-out refinancing

• Home equity lines of credit (HELOCs)

• Investment property lines of credit (LOCs)

• Bridge loans

• Permanent loans

Keep in mind, while fixing and flipping can be done with properties of any size, certain forms of financing, such as HELOCs, are likely to only support the purchase of single-family homes or smaller, two- to four-unit multifamily properties. 

Terms For Fix and Flip Loans in 2023

Size:  $50,000 to $2.5 million (individual loans), up to $10 million (lines of credit)

Term:  12 months (extensions are typically available)    

LTV/Leverage:  90% of purchase price, 95% of rehab, 75% LTV/ARV     

Credit Requirement: Typically 620 or higher 

Advantages

• Generous leverage allowances; loans permitted up to 90% of purchase price

• Loans are typically flexible, allowing extensions if needed

• Non-recourse options are available

Disadvantages

• Requires relatively good credit to be approved

• Interest rates are higher than longer term real estate loans

• Some loans may be recourse, depending on the individual loan agreement

Fix and Flip Hard Money Loans

If you're an investor looking to for a fast source of financing to fix and flip a property, especially if you don't have the greatest credit, a hard money loan could be an ideal fit.

Hard money loans may be more expensive than other types of multifamily financing, but they close faster, often in fewer than 15 days — and are available for a much wider variety of borrowers. Typical terms for fix and flip hard money loans are between 12 and 36 months, and they usually have interest rates of between 7 and 12%. Plus, hard money loans can offer generous LTVs of up to 90%, and usually don't have any prepayment penalties.

How Does a Fix and Flip Loan Work?

There are various types of financing for fixing and flipping a multifamily property, as mentioned above. These types of loan do have some common threads.

First, each loan type is secured by the property you're buying and rehabilitating. If you as the borrower default on the loan, the lender can pursue the propert — and maybe more.

While some hard money and bridge loans are non-recourse, many are not. It's critical to understand the distinction with this type of financing. In a full-recourse loan, a lender may pursue your personal assets if you default on the loan.

Second, all fix-and-flip loans will look at the loan-to-value ratio for your property. While some lenders will look at the acquisition price or current value for their leverage calculations, others may use the ARV, or after-repair value, to determine the maximum loan amount.

An Example of a Fix and Flip Loan

Let's use an example: You want to buy a 20-unit property for $1.2 million, and you have plans that should put its value at $2 million once your work is complete.

Lender A offers financing to a maximum of 90% of the purchase price — in this case, that could give you a loan of $1.08 million.

Lender B cares more about the after-repair value, and they max out at a 75% LTV. WIth Lender B, you would be eligible for a loan of up to $1.5 million.

Of course, that doesn't always mean it's best to go with a lender that ties your loan to the after-repair value. You may estimate the property will be worth $2 million, but they are likely to assess it far more conservatively.

Loan-to-Value Calculator

Run your own numbers using the loan-to-value calculator below.

Finding the Best Fix and Flip Multifamily Loan

The key to finding your best financing option is to get competiting quotes from different lenders.

That's where we come in: Our platform matches you effortlessly with hundreds of banks, credit unions, bridge lenders, and more across the country.

Get a free quote by completing the form below.

In this article:

1. Fix-and-Flip Loans for Multifamily Property Rehabilitation and Resale
2. Types of Fix-and-Flip Loans
3. Terms For Fix and Flip Loans in 2023
4. Advantages
5. Disadvantages
6. Fix and Flip Hard Money Loans
7. How Does a Fix and Flip Loan Work?
8. An Example of a Fix and Flip Loan
9. Loan-to-Value Calculator
10. Finding the Best Fix and Flip Multifamily Loan
11. Get Financing