Permanent Loans for Fixing and Flipping Commercial and Multifamily Properties

Permanent Financing for the Rehabilitation and Resale of Multifamily and Commercial Developments  

While permanent financing might a good idea for an individual purchasing their own home, isn't usually the best idea for a fix and flip transaction. Mainly, this is because permanent loans typically don't allow borrowers to purchase properties in poor or distressed condition-- and, in most cases, they don't provide any funds for property rehpair or rehabiliation. However, that doesn't mean that permanent loans don't have their place in the fixing and flipping equation.

For example, if a investor wanted to fix up a property with their own funds (or perhaps, with funds from a HELOC or an investment property line of credit) and hold the property for a few years before reselling, or 'flipping' it, a permanent loan could be a good idea. Despite that, for investors who want to purchase, repair, and quickly flip a distressed property, a permanent loan usually isn't in the cards. 



Sample Terms For Fix and Flip Permanent Loans

Size:  Varies

Term:  15 to 30 years 

LTV/Leverage:  Up to 96.5% LTV 

Interest Rate:  4.00% – 6.00%

Lender Fees:  Typically up to 1.00% 

Closing Costs2.00 - 5.00% 

Credit Score: 640+ 

Debt-to-Income (DTI) Ratio: 45% or less

Timing:  These loans typically close in between 30 to 45 days 

Advantages:

  • Lower interest rates and fees than other kinds of fix and flip financing

Disadvantages: 

  • May be difficult or impossible to get for properties that are in poor condition
  • Provides no additional funding for rehab/renovations