Fix and Flip Loans for Beginners

Fix and flip loans for beginners

In times of financial difficulties or constraints, fix and flip loans can seem like a blessing in disguise. This is especially true when you’re short on time or are facing credit issues. However, before taking the big step, there are things you should know about this loan option available for house flipping.  

If you’re a beginner, the idea of fix and flip loans can be equally fascinating and traumatizing. However, if you take a leap without prior knowledge, you may not be able to benefit from it as much as you’d like. This is why it is crucial to educate yourself about the subject as much as possible.

Read on to learn some essential things you need to know about fix and flip loans for beginners.

Fix and Flip Loans for Beginners

There is no doubt that fix and flip loans can play a huge role for house flippers who are on the hunt to gather capital for their startups. And yes, you do not necessarily need a loaded bank account for this business.

However, this doesn’t mean that you can just jump heads in and expect to be rewarded. Oftentimes, house flippers are denied loans for various issues, with bad credit scores being a major one of them. At the same time, CNBC estimates that home prices in the US are expected to rise further, irrespective of increasing mortgage rates. This could result in a lot of profit potential in the house flipping industry.

As you can see, there are pros and cons of venturing into this business. Therefore, it is crucial to understand what you’re getting into beforehand.

If you’re planning on making it big as a house flipper, here are some of the first steps that you need to take.

· Fix and Flip Loans Process

Fix and flip loans follow a unique and methodical process towards securing approval – typically within 8 to 10 days – and emphasizes solely on the asset itself. Investors can secure capital for buying, permit charges, closing expenses, and renovation all in one credit. This process is generally called asset-based underwriting.

In asset-based underwriting, instead of focusing on the borrower or his/her credit, the application process focuses on the asset itself. Put simply, loans for flipping properties or multifamily projects can be accessible for investors with a limited credit history or poor credit scores.

Asset-based loans are an extremely helpful tool for real estate investors since the creditors evaluate the property first instead of concentrating on the borrower. Conventional banks and lending institutions may be hesitant in providing loans for flip and fix projects since it’s riskier. Moreover, borrowers with recent bankruptcies and short sales on their credit reports may also be disqualified completely grounded on their credit history.

· Terms& Conditions

With anything, you need to make yourself aware of the terms and conditions of the loans. Remember that fix and flip loans can vary from borrower to borrower, as well as for every property. Each property is evaluated on a separate basis by real estate professionals and experts.

Loan terms that are apt for a triple-tenant apartment off a busy street are going to vary for an office building in the middle of a commercial area. However, there are some typical terms and conditions that all real estate investors can expect to receive. These include:

  • Funding will start in at least one week.
  • Starting interest rate can be expected at 8%.  
  • Loan to value (LTV) is usually up to 90 percent or 100 percent of restoration costs.
  • Loan duration begins from around 3 months. Shorter financing may also be available.  
  • Origination and fees differ by loan and property parameters.

· Make a Budget

When money is involved, the first thing you need to do is set up a budget. Yes, you can start your business as a house flipper without much money in your bank account. However, you still need some commodities to ensure that you can gather the funds required for the business.

For this purpose, you will have to start by researching the real estate market. Once you narrow down the type of properties you are targeting, you will have a better idea of how much capital you need to start your business. It may also serve you well to compare the current value of a property to the potential price you can sell it at after renovation.

Your initial budget should be set after taking the current price of the property and the future renovation cost into account. A lot of people fail to consider the latter, which leads to a huge disappointment in the initial days. Make sure you don’t make a similar mistake.

· Keep Necessary Documents Ready

Any investor will require you to present the necessary documents along with other forms. It is recommended to keep your documents ready with you at all times. Not only will this prevent any issues during the loan process, but you will also be aware if you are missing any documents and will be able to obtain them in time.

Make sure that you go through the requirement lists for loan approval and ensure that you have all the necessary documents ready.


We understand that fix and flip loans can be a complicated and tedious process. This is why we take all the steps to ensure that you get the best service ever. If you are looking to make things easier for yourself, head over to DFW Specialty Lending. It is also important to remember that we extend loans based on the value of your assets instead of your credit.