Fix-and-Flip Loan

Why This Product is Life-Changing for Businesses

Fix-and-flip loans unlock capital velocity — the ability to deploy funds across multiple deals simultaneously rather than tying up all cash in a single project. This is the single biggest growth lever for real estate investors.

Case 1: W-2 Employee to Full-Time Flipper

A teacher, nurse, or engineer purchases a distressed property using a hard money loan because they lack cash reserves or conventional loan history. Conventional lenders reject the property due to condition.

Typical deal: 120K−180K purchase, 30K−50K rehab, ARV 220K−280K
Loan: 80-90% of purchase + 100% of rehab held in escrow draws, 10-13% rate, 1.5-3 points, 6-12 month term
Outcome: 25K−50K net profit on first flip. Completes 2-3 flips in year one, quits W-2 by year two
Why it matters: Speed of close (7-14 days vs. 30-45 for conventional) is what wins the deal in competitive markets. No other financing channel serves this borrower.

Case 2: Scaling from 1 Flip to 10+ Simultaneous Projects

An experienced flipper with 3-5 completed projects hits a capital ceiling — traditional banks won't extend multiple investment property loans due to Fannie Mae's 10-financed-property limit and the condition of distressed assets.

Typical portfolio: 8 active fix-and-flip loans, 250K−400K each, 85% LTC / 75% ARV
Rates: 9-11% with volume discounts for repeat borrowers
Outcome: 15-25 flips/year, 600K−2M annual gross profit. Many graduate to rental portfolios via DSCR refinance
Why it matters: The lending relationship is the growth engine. A broker who provides reliable, fast capital for every deal in the pipeline is indispensable.

Case 3: Mom-and-Pop Team to Regional Development Company

A couple starts flipping part-time using personal savings. After 1-2 deals they hit a capital ceiling — all cash is tied up in the current project.

Growth trajectory: 2-3 flips/year (cash) → 5 flips/year (first hard money loan) → 12-15 flips/year by year 5
Outcome: Revenue grows from sub-$100K/year to 500K−1M+ in annual profit. Some become private lenders themselves.
Why it matters: A broker who captures this client early retains them for years as deal volume and loan sizes increase.

Case 4: Cash Buyers Converting to Leverage (Untapped Market)

Per ATTOM Data, 70% of flips are done with all-cash. These investors are leaving money on the table. A flipper doing 2 cash deals/year at 66Kgrossprofit(132K) could do 5-6 leveraged deals at 50Knetprofiteach(250K-$300K) — nearly doubling annual income.

Market-Level Data (ATTOM 2025 Year-End Report)

Metric	Value
Homes flipped nationally	297,045
Median gross profit	$65,981
Median gross ROI	25.5% (lowest since 2008)
Median time to flip	166 days
Flips using financing	37.7% (growing trend)
Top state ROI	Pennsylvania (73%)

Verifier corrections — important context:

Gross vs. net profit: After loan interest, origination points, closing costs on both sides, agent commissions, carrying costs, insurance, and taxes, realistic net profit is 15, 000−30,000 per flip — not the $65K headline number
ROI compression: Five consecutive quarters showed returns in the ~20% range. The era of 40-60% ROI ended around 2020. Marketing citing 30-50% ROI as "typical" uses stale data
Capital requirements understated: "Only 10-15% down" is technically true for the loan, but actual cash needed is 50K−75K including down payment, origination, closing costs, and carrying reserves
Career replacement timeline: Industry consensus is first-time flippers should expect zero profit on first 3 deals. Realistic timeline to full-time income: 2-4 years

Sources: ATTOM 2025 Year-End Report, CNBC March 2026, Kiavi Customer Stories, BiggerPockets Success Stories, Lima One Case Studies

Documentation Required for Full Underwriting

Borrower Documents

Document	Requirement Level	Notes
Government photo ID	Universal	Valid, unexpired
Credit authorization / report	Universal	Most lenders: 620+ FICO minimum (not 600 as sometimes stated)
Bank statements (2-3 months)	Universal	Proof of liquidity to close and fund first draw cycle
Proof of funds / reserves	Universal	Down payment + working capital for reimbursement draws
Personal guarantee	Universal	Even when borrowing through entity
Background check authorization	Universal	Criminal + bankruptcy check
Tax returns (1-2 years)	Uncommon	NOT standard for fix-and-flip — this product is asset-focused, not income-focused
Personal financial statement	Sometimes	Mostly institutional lenders; rare for regional hard money

Business / Entity Documents

Document	Requirement Level	Notes
Articles of Organization / Incorporation	Universal	For LLC/Corp borrowers (which is the norm)
Operating Agreement	Universal	Must authorize borrowing and name managing member
EIN letter (IRS CP575)	Universal
Certificate of Good Standing	Universal	Must be dated within 30-90 days
Organizational chart	Sometimes	Institutional lenders; rare for private
Borrowing resolution	Sometimes	Institutional lenders when multiple members

Collateral / Property Documents

Document	Requirement Level	Notes
Purchase contract	Universal	Including all addenda and assignment docs
Preliminary title report	Universal	Ordered through title company
Title insurance commitment	Universal
Property appraisal or BPO	Most lenders	Verifier correction: NOT universal — Kiavi uses proprietary in-house valuations and skips traditional appraisals. Some lenders waive below $750K
As-is AND after-repair value (ARV)	Universal	Dual-value analysis is unique to fix-and-flip
Property insurance (builder's risk)	Universal	Standard homeowner's insurance does NOT cover active renovation — builder's risk policy required
Environmental / survey	Large deals only	Phase I typically required above 750K−2.5M

Product-Specific Requirements (Unique to Fix-and-Flip)

Document	Requirement Level	Notes
Detailed scope of work (SOW)	Universal	Line-item rehab budget with costs per category
Draw schedule	Universal	Milestone-based payment plan for renovation funds
Contractor bids	Most lenders	Some accept single bid; 2-3 is best practice
Contractor license + insurance	Most lenders	Institutional lenders verify; private lenders may not
Experience documentation (SREO, track record sheet, prior HUD-1s)	Universal	Directly impacts pricing tier — see below
Exit strategy	Universal	Sale comps or refinance pre-qualification

Experience Tiers and Their Impact on Pricing

Experience directly determines leverage, rates, and max loan amounts:

Tier	Experience	Typical LTC	Rate Impact
New investor	0 flips	75-85% LTC	Highest rates
Some experience	1-4 flips	80-90% LTC	Standard rates
Experienced	5-9 flips	85-92.5% LTC	Reduced rates
Professional	10+ flips	90-95% LTC	Best rates + advance draws

Verifier note: Kiavi goes up to 95% LTC, Lima One to 92.5%, LendingOne to 92.5% for experienced borrowers — higher than the commonly cited "85-90%" range.

Lender Type Variations

Factor	Private Individual	Regional Hard Money	Institutional / Conduit
Documentation burden	Lightest	Moderate	Heaviest
Closing speed	1-7 days	7-14 days	14-21 days
FICO minimum	Often none	550-620	660+
Appraisal required	Rarely	BPO or desktop	Full interior-exterior
Tax returns required	No	No	Sometimes
Best for	Speed, flexibility	Balance	Best rates on larger deals

Sources: Kiavi, Lima One, RCN Capital, LendSure, LendingOne, Anchor Loans, Easy Street Capital, Groundfloor

Process Flow: Application to Funding

Phase 1: Pre-Qualification (Days 1-3)

Step	Description	Who's Involved	Timeline
Initial contact	Investor contacts lender or broker submits on their behalf	Borrower, broker	Day 1
Preliminary review	Lender reviews: property address, purchase price, rehab estimate, projected ARV, exit strategy	Lender processor	Day 1-2
Credit + background check	Lender pulls credit, runs background check, verifies experience	Lender underwriter	Day 2-3
Pre-approval letter	Conditional approval issued (if property not yet under contract)	Lender	Day 2-3

Phase 2: Application and Document Collection (Days 3-7)

Step	Description	Who's Involved	Timeline
Full application	Formal loan application submitted with all borrower + entity docs	Borrower, broker	Day 3-4
SOW + budget submission	Detailed line-item scope of work, contractor bids, draw schedule	Borrower, contractor	Day 3-5
Property docs	Purchase contract, title order, insurance binder	Borrower, title company, insurance agent	Day 3-7
File review	Lender processor checks completeness, requests any missing items	Lender processor, broker	Day 5-7

Phase 3: Appraisal / Valuation (Days 5-15)

Step	Description	Who's Involved	Timeline
Appraisal ordered	Full appraisal, BPO, or proprietary valuation depending on lender	Lender, appraiser	Day 5
Property inspection	Appraiser visits property, evaluates as-is and ARV	Appraiser	Day 7-12
Report delivered	Valuation report returned to lender	Appraiser	Day 10-15

Common bottleneck: Traditional appraisals take 1-2 weeks and cost 400−800. Lenders using BPOs or in-house valuations (like Kiavi) can skip this entirely, saving 5-10 days.

Phase 4: Underwriting (Days 7-12)

Step	Description	Who's Involved	Timeline
Full underwriting	Lender verifies all docs, validates ARV, reviews SOW feasibility, checks exit strategy	Lender underwriter	Day 7-10
Conditions issued	Underwriter requests additional items (stips) if needed	Underwriter, broker, borrower	Day 8-11
Clear to close	All conditions satisfied, loan approved	Underwriter	Day 10-12

Phase 5: Closing and Initial Funding (Days 10-14)

Step	Description	Who's Involved	Timeline
Closing scheduled	Title company prepares closing package, HUD-1/settlement statement	Title company, lender closer	Day 10-12
Closing executed	Borrower signs loan docs, wires down payment	Borrower, title company	Day 12-13
Funding	Lender wires acquisition funds to title company; renovation funds placed in construction holdback	Lender, title company	Day 13-14
Title transfer	Borrower takes title to property	Title company	Day 14

Typical total timeline: Application to initial funding

Borrower Type	Realistic Timeline
Repeat borrower, established lender relationship	5-10 days
Experienced borrower, new lender	10-14 days
First-time borrower	14-25 days
First-timer with appraisal delays	25-40 days

Verifier note: Many lenders advertise "close in 5-10 days" — this IS achievable for repeat borrowers with pre-assembled docs, no appraisal, and clean title. But 14-25 days is realistic for most borrowers. Claims of "48 hours" or "5 days" are outlier best-cases.

Phase 6: Renovation and Draw Process (Weeks 2-24)

This is the most operationally complex phase and the most commonly misunderstood.

How the construction holdback works:

Renovation budget is held in escrow controlled by the lender
Funds are NOT released upfront
Released in 3-6 milestone-based draws as work is completed
Draws are reimbursement-based — borrower pays contractors first, then requests reimbursement
Advance draws (pay before work) available only to borrowers with 5+ completed flips

Draw process per milestone:

Step	What Happens	Timeline
1. Complete work phase	Borrower completes renovation milestone per SOW	Varies
2. Submit draw request	Photos, contractor invoices, lien waivers	Day 1
3. Lender orders inspection	Third-party inspector visits property	Day 2-4
4. Inspector verifies work	Confirms work matches SOW and approved budget	Day 3-5
5. Lender releases funds	Wire from holdback to borrower	Day 5-10

Inspection cost: 150−300 per draw
Typical draws per project: 3-5
Total draw cycle time: 5-10 business days from request to cash received

The Dutch interest problem (critical hidden cost):

Dutch interest ("full boat"): Interest accrues on the ENTIRE loan amount including unreleased holdback from Day 1. On a $300K loan with $100K holdback, you pay 10-13% on the full $300K even while renovation funds sit untouched in escrow.
Non-Dutch interest ("as disbursed"): Interest only accrues on funds actually released. Significantly cheaper.
Always ask the lender which method they use. This is the single most impactful hidden variable in loan economics.

Phase 7: Project Completion and Exit (Months 4-9)

Sale exit (most common):

Step	Description	Timeline
Final inspection	Lender confirms all work complete per SOW	1-3 days
List property	Agent lists on MLS at or near ARV	1-2 weeks
Contract + buyer financing	Retail buyer offer through close	30-45 days
Loan payoff	Title company uses buyer's funds to pay off fix-and-flip loan balance in full	At closing

Refinance exit (BRRRR strategy):

Step	Description	Timeline
Tenant placement	Renovate, place tenant, stabilize	1-3 months
DSCR refinance	Refinance into long-term DSCR loan at 6-8%	30-45 days
Loan payoff	Cash-out proceeds pay off the fix-and-flip loan	At closing

Typical total project duration: 6-12 months (closing through payoff)

When Things Go Wrong

Over-budget scenarios:

Lender does NOT cover cost overruns
Options: fund gap from personal reserves, request budget reallocation within existing total, reduce scope, or request loan modification (requires re-underwriting)

Over-timeline scenarios:

Most lenders offer 1-2 extensions of 3-6 months each
Extension fees: 0.5-2% of loan balance (typically ~1% for 3-month, ~2.5% for 6-month)
Extensions must be requested while payments are current
Default rate: less than 0.5% of originated loans end in foreclosure

Verifier note: Lenders strongly prefer to work with borrowers on extensions rather than foreclose. Proactive communication is essential — borrowers who alert lenders early about delays get far better treatment.

Sources: Anchor Loans, Hard Money Bankers, Offermarket, Ridge Street Capital, Stormfield Capital, BiggerPockets Forums, Grafton Funding, Loan Ranger Capital

Broker Commission Ranges

Standard Broker Commission: 1-3 Points

Broker Tier	Commission Range	Context
New / low volume	1-1.5 points	Building lender relationships
Established / moderate volume	1.5-2.5 points	Sweet spot for most brokers
High-volume / preferred partner	2-3 points	Volume tier bonuses apply

Verifier-confirmed lender programs:

Lender	Broker Comp	Structure
Kiavi	Up to 2% YSP	Platinum program: 50 bps floor or $999 minimum
Lima One	Up to 2 points on HUD	Points preferred over YSP in high-rate environment
RCN Capital	Flexible (points, YSP, or flat fee)	Average 1.2% per funded deal
LendingOne	Up to 3 points HUD + 1 point YSP	4 points total maximum
Roc Capital	~1.36% broker points + 0.25% YSP	Example from verified deal

Total Borrower Cost vs. Broker's Cut

Component	Range	Who Receives
Lender origination fee	1-3 points	Lender
Broker commission	1-3 points	Broker
Total to borrower	3-5 points	Split

Regional variation: Chicago averages 4% total origination, Detroit 2.6%, New York 2.4%.

Commission by Deal Size

Deal Size	Total Origination	Broker Commission	Dollar Amount to Broker
Under $200K	3-5 points	2-3 points	2, 000−6,000
200K−500K	2-3.5 points	1.5-2.5 points	3, 000−12,500
500K−1M	1.5-2.5 points	1-2 points	5, 000−20,000
$1M+	1-2 points	0.75-1.5 points	7, 500−15,000+

Note: Many lenders have minimum fee floors — Kiavi: $999, LendingOne: $2,000. On small deals these floors create effectively higher percentage commissions.

Payment Structure

Structure	How It Works	Prevalence
Borrower-paid points (broker adds fee on HUD)	Borrower pays 3-4 points total; broker's fee is a separate line item	Most common for independent brokers
Lender-shared origination	Lender charges 2-3 points, shares 1-1.5 with broker	Common with lender partner programs
Yield spread premium (YSP)	Lender pays broker from rate premium; borrower sees lower upfront cost	Less common post-2022 — high base rates make rate bumps costly

Who pays: The borrower pays in virtually all cases (~80%+), though the fee comes out of loan proceeds at closing. Lender-paid/YSP model accounts for ~10-15% of deals.

Regulatory note: Fix-and-flip loans are business-purpose (non-owner-occupied), so they are EXEMPT from Dodd-Frank's Loan Originator Compensation Rule. No federal cap on broker points, no dual-compensation prohibition. State law still applies.

Additional Fees Brokers May Charge

Fee	Typical Amount
Application / underwriting fee	500−1,500
Processing / admin fee	500−1,000
Document preparation fee	250−750

Best practice: High-volume brokers bundle everything into origination points. Clean fee structures generate more repeat business.

Comparison to Other Loan Products

Product	Broker Commission	Closing Speed	Repeat Deal Potential
Fix-and-flip	1-3 points	5-14 days	Very high (5-20 deals/yr)
Conventional mortgage	0.5-1.5 points	30-45 days	Low
Commercial (CRE)	0.5-2 points	30-90 days	Moderate
SBA 7(a) / 504	0.5-3 points	60-120 days	Low
MCA	5-20%	1-3 days	Moderate
Equipment financing	5-15 points	3-14 days	Moderate

Key advantage of fix-and-flip brokering: Best combination of high per-deal comp, fast closing cycle, high repeat rate, and lower regulatory overhead than conventional lending.

Trailing Commissions and Volume Incentives

No trailing commissions exist in fix-and-flip — loans are too short (6-18 months) for residual comp. However, significant volume incentives exist:

Incentive	How It Works	Typical Threshold
Tiered point structure	Higher comp per deal as volume increases	5+ deals/month
Volume bonus	Quarterly/annual bonus payment	5M−25M+ quarterly
Rate improvement	Better rates for your borrowers	Consistent volume
Priority processing	Faster underwriting queue	3+ deals/month
Dedicated account manager	Single point of contact	5+ deals/month

The real residual: One active flipper doing 10 deals/year at 2 points on 300Kaverage = **60,000/year from one borrower**. A stable of 10-20 active flippers creates a very predictable revenue stream.

Sources: RCN Capital Broker Program, Lima One Broker Program, Kiavi Partner Program, LendingOne, Private Lender Link, AAPL, Scotsman Guide