How to Finance a Fix-and-Flip from Acquisition to Sale

Securing financing for a fix-and-flip involves more than just getting the money to buy the property. Investors must also fund the renovations and manage cash flow throughout the project lifecycle. Hard money loans are specifically designed to meet these needs, offering a structured approach to funding both acquisition and rehab.

Acquisition Financing

Hard money lenders typically fund a percentage of the purchase price (often up to 80-85%) or a percentage of the After Repair Value (ARV). The investor is responsible for the down payment and closing costs.

Because the loan is based on the property's potential value, lenders will require a detailed scope of work (SOW) and contractor bids before approving the loan.

Managing Rehab Draws

The funds for renovation are held in escrow and released in increments, known as draws, as work is completed. This ensures the lender's capital is protected and the project stays on track.

Investors must manage their cash flow to pay contractors upfront or negotiate terms, as lenders typically reimburse for completed work after an inspection.

Efficiently managing your financing and draw schedules is just as critical as managing the construction itself. A reliable hard money partner can help ensure your project runs smoothly.