Fix & Flip Without Burning Through Your Cash

You found a property listed at $120,000 that needs about $30,000 in work — and after the renovation, comparable homes in the neighborhood are selling for $190,000. The math looks great on paper. But then reality hits: you'd need to cover the purchase, the rehab, holding costs, and still have reserves left over. If you go all-in with your own cash, you're either broke or stuck waiting for the next deal.

That's the trap most new investors fall into — thinking fix and flip is a cash game. It doesn't have to be.

I've helped clients structure deals where they kept most of their own money in the bank while still closing on the property and funding the renovation. Here's how that actually works.

What Is a Fix & Flip Loan (and How Is It Different From a Regular Mortgage)?

A fix and flip loan — sometimes called a hard money loan or a rehab loan — is a short-term loan designed specifically for investors who buy, renovate, and sell a property quickly. It's built differently than a 30-year mortgage.

• Term: Usually 6 to 18 months
• Based on: The after-repair value (ARV) of the property, not just what it's worth today
• Speed: Can close in 7–14 days, which matters when you're competing for distressed properties
• Down payment: Typically 10%–20% of the purchase price

Using the example above: a $120,000 purchase with 15% down means you'd bring $18,000 to closing — not $120,000. The lender funds the rest of the purchase and can roll the $30,000 rehab budget into the loan. That changes everything.

How the Numbers Actually Break Down

Let me walk through a real-world scenario so you can see this clearly.

The deal:

• Purchase price: $120,000
• Rehab budget: $30,000
• ARV (estimated after-repair value): $190,000

The loan structure:

• Loan amount: ~$135,000 (covers purchase + rehab funds held in draws)
• Your down payment: ~$18,000 (15% of purchase)
• Origination fee: ~2–3 points ($2,700–$4,050)
• Interest rate: typically 10%–13% annualized
• Monthly interest on $135K at 12%: ~$1,350/month

If you sell in 6 months, your total interest cost is around $8,100. Add origination and closing costs, and your total out-of-pocket — outside the down payment — might run $12,000–$15,000.

If you sell at $190,000, your gross profit before those costs is $70,000. Even after all expenses, you're looking at a strong return without ever having needed to use $150,000 in cash.

What Lenders Look At (It's Not Just Your Credit Score)

This is where fix and flip financing surprises a lot of people — especially those who think a less-than-perfect credit score disqualifies them. Hard money lenders care more about the deal than the borrower's financial history.

• The property's ARV — does the numbers support the loan?
• Your experience level — first deal or fifth?
• Your exit strategy — are you selling or refinancing?
• Skin in the game — do you have reserves and a down payment?

Credit still matters, and most lenders want to see at least a 620–650 score, but I've seen deals get done for people who didn't fit the traditional mold. The deal has to make sense first.

Common Mistakes That Kill the Deal Before It Starts

• Overestimating the ARV — always use conservative comps, not wishful thinking
• Underestimating rehab costs — add a 10–15% buffer to your contractor's quote
• Forgetting holding costs — taxes, insurance, utilities, and loan interest add up fast
• No exit plan — know whether you're selling or doing a cash-out refi before you close

Ready to Structure Your First (or Next) Fix & Flip Deal?

Fix and flip doesn't have to mean emptying your bank account. With the right loan structure, you can move on more deals, keep liquidity, and build a real investing pipeline — not just one-off flips.

If you've got a property you're looking at — or even just an idea — reach out to me directly. I'll give you an honest read on whether the deal makes sense and what financing options fit your situation. No sales pitch, just straight talk.