Real Estate Fix-and-Flip Non-Traditional Business Funding

Lesley Girouard
2 days ago
3 min read

The Ultimate Guide to Real Estate Fix-and-Flip Non-Traditional Business Funding

Fix-and-flip strategies have gained popularity as a way to achieve substantial returns in real estate investment. However, securing the right funding can be challenging. Many banks will not finance fix-and-flip projects. This guide will help you explore non-traditional business-funding solutions, empowering you to successfully navigate the fix-and-flip landscape.

Capital Row Financial: Your Fix-and-Flip Solution With Non-Traditional Financing

Real Estate Fix-and-Flip Non-Traditional Business Funding

What is a fix-and-flip?

A fix-and-flip project involves purchasing a property, renovating it, and selling it for a profit. The property must be considered residential, which can be from 1 to 4 doors, or a single-family home to a quadplex. Five or more doors is considered commercial, which would fall under different lending scenarios.

Can anyone finance a house as a fix-and-flip?

Lenders expect flippers to be business owners, so owning the property through an LLC or other business structure is typically required.

Can I live in the property while I renovate it?

Since the house is a business project, it cannot be owner-occupied. “House hacking” is not allowed through our lenders. The federal government has strict regulations around financing for residences.

I’m new to fix-and-flip properties. Can I qualify?

Typically, our lenders will want to see someone with contracting experience, since this is a business endeavor and not a personal home renovation. The best way to start out is to partner with an experienced contractor who knows how to do the renovation work so that you develop a track record. Capital Row Financial also has a lender who works with beginners on small-scale projects to build that critical skillset. For those with professional construction experience wanting to enter the fix-and-flip market, this is a great path.

Do I have to sell it, or can I keep it and rent it out?

Yes! Fix-to-rent or fix-and-hold loans typically follow some of the same lending process and criteria. When the construction and renovations are completed, our lenders will finance a loan for ownership. This provides flexibility in how you finance each phase of the project.

What is needed to secure fix-and-flip financing?

Securing non-traditional financing involves several key steps. Prepare a detailed plan outlining your project, including purchase costs, renovation plans, and expected profits to present a compelling case to lenders. Lenders make decisions based on the loan-to-value or loan-to-construction ratios of a project, so it’s important to get the numbers right.

How are the funds paid out?

Bridge loans are used to finance the construction period of a project. During this time, lenders will hold the loan funds to pay out as you provide invoices for completed work, so those detailed purchase plans are an important part of your development strategy. If you plan to hold the property as a rental, once construction is completed, you can refinance to exit the short-term bridge loan to a longer-term DSCR loan.

Why should I work with Capital Row Financial instead of my mortgage broker?

Banks are restricted on how they finance residential properties (remember residential is up to 4 doors), and knowing this up front saves you valuable time. Often, you’ve made an offer on a property and go to your local bank, since it’s a single-family home or maybe a duplex, to request a loan. By the time you’ve been through the process with the bank, your contract time with the seller is ticking down. Our quick, adaptable funding allows you to seize these opportunities and complete renovations efficiently. Capital Row Financial is the ideal solution for your fix-and-flip business opportunities due to our speedy approvals, flexible terms, and tailored options that focus on your project's potential.

Non-traditional business funding with Capital Row Financial provides real estate investors with the flexibility and speed needed to succeed in fix-and-flip projects.

For more guidance on non-traditional financing solutions for your fix-and-flip project, contact Capital Row Financial. Let us help you navigate the fix-and-flip landscape with confidence and ease. Reach out today to explore your financing options.