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6 Ways to Get Funding for a Fix and Flip

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Starting a fix and flip business can be a great way to profit in real estate. It is a high-risk and high-reward venture, though.

Buying and fixing properties to sell can be an expensive and unpredictable process. There are so many costs involved for one. You need to buy the property, renovate, and get permits. Project sponsors also pay broker fees and holding costs if the property isn’t sold right away.

Getting funding is the number one obstacle for investors who are new to flipping houses. Good candidates generally have at least one successful fix and flip under their belt. They also have a credit score of at least 650 and no recent bankruptcies, foreclosures, or tax liens.

If you don’t fall into that category, that’s okay. This post covers a few ways to get funding for a fix and flip, with options for both experienced and inexperienced investors:

1. RealtyShares

Types of projects: debt and equity

Loan term: 3 – 18 months

Rate: as low as 9%

Closing time: 10 days

Loan to cost: up to 85%

RealtyShares, a leading real estate crowdfunding platform, has helped investors finance over 550 projects. Overall, the platform has raised $300 million from 92,000 registered investors. Project sponsors can get financing for their fix and flip projects in as little as 10 days and choose whether they want their financing to be debt or equity.

The online application takes minutes and project sponsors can be pre-qualified in 24 hours. For debt investments, RealtyShares looks for sponsors with a FICO credit score of at least 600, a loan to cost of less than 80%, and an estimated loan to after repair value of less than 65%. Companies in consideration go through a thorough background and credit check before being approved by RealtyShares. Approximately 5% of proposals on the platform are approved for funding.

The next step once you are pre-qualified is to submit documents for underwriting. As part of their service, RealtyShares underwrites, approves, and funds the project. Once the project is funded they manage the investor relations and payouts.

RealtyShares and other real estate crowdfunding platforms offer experienced investors the opportunity to get fast funding for their fix and flip projects. Real estate crowdfunding is possible because of the JOBS Act and is now available in most states across the US. Even so, the majority of fix and flips tend to happen in certain states, according to RealtyShares CEO, Nev Anthwal, quoted in the Attom Data Solutions September 2016 Housing News Report:

“We’re a national platform, but most of our short-term loans are in six or seven states, including California, Texas, Illinois, New Jersey and Florida.” 

This relatively new way of funding real estate investments is fast, affordable, and uses the power of the ‘crowd’. Depending on the platform, project sponsors can raise money from groups of accredited and sometimes unaccredited investors. The platforms act as mediators between sponsors and investors.

2. Hard Money or Private Loans

Types of projects: debt

Loan term: around 12 months, can occasionally extend to 2 – 5 years

Rate: around 10 – 18% with points from 2-6%, depending on the loan terms

Closing time: about a week

Loan to cost: up to 75%

Hard money and private loans are good options for investors who are new to fix and flips or who have tarnished credit. For these investors, the borrower’s credit score is less important. In these cases, collateral can be more important than a FICO score.

Some hard money lenders will provide a higher percentage of financing based on the property’s expected after repair value.

Hard money and private loans are one of the primary forms of financing for first-time fix and flips, especially since they may finance a property in bad shape that a bank would have to turn down for a loan. Hard money and private lenders are typically found online, through word of mouth, or at local real estate meetups.

Networking is important when it comes to creating relationships with hard money and private lenders because they are based on personal relationships and trust. These lenders are also taking on high stakes and they want to earn their expected return.

This is another reason why they usually want investors to put some of their own money into the deal, so that they are sharing the risk.

3. Bank Financing a Fix and Flip

Types of projects: debt

Loan term: can be longer than other funding sources

Rate: approximately 5 – 6%

Closing time: 1 – 3 months

Loan to cost: usually up to 65%

Bank financing is a good option for investors who have about 2 years of proven experience fixing and flipping properties, a great credit score (700+), and existing capital. To qualify for bank financing, investors must have a registered fix and flip business and be willing to put in a down payment.

Bank financing for a fix and flip takes longer to attain but does come with a few benefits. Rather than a lump-sum loan, bank financing usually means opening a line of credit. This is good because borrowers only pay interest on the money they spend rather than the full amount of a loan. The rates are also a lot lower compared to hard money lenders.

When looking to bank finance a fix and flip, make sure that you compare rates and terms at different banks. Going with your personal bank without considering the alternatives means you might miss out on a better deal.

Bank financing for fix and flips can be harder to find because their typically shorter terms mean that banks make less profit.

To improve your chances of fast approval, make sure that you accurately report your income, provide verified income and asset statements, employment history, and provide any other documentations that the bank requests in a timely manner.

4. Online Mortgage Lenders

Types of projects: debt

Loan term: usually longer than other options, 15 – 30 year options for investment properties

Average rate: as low as 3.96%

Closing time: as fast as 30 days

Loan to cost: n/a

Online mortgage lenders like Guaranteed RateLending Tree, and Quicken Loans make it easy for fix and flip investors with a little experience get more funding for their next project.

Unlike real estate crowdfunding, this is more of a traditional mortgage that they manage online rather than a loan that a group of people invests in.

The benefit of online mortgage lenders is the way that they use technology to make the process of applying convenient and automated. For people who want to go with more experienced companies, a lot of traditional lenders are also offering online mortgage services.

Approval from online mortgage lenders takes a little bit longer than a real estate crowdfunding platform, but typically a little bit less long than a bank.

The perk to this type of funding for a fix and flip loan is the significantly lower rate. The downside is that these loans take longer to repay, although some online mortgage lenders offer shorter term options.

5. Home Equity Loan

Types of projects: debt

Loan term: typically, 5 – 15 years

Average rate: 5%

Closing time: 2 – 3 weeks

Loan to cost: n/a

Another option that is available to those looking to fund a fix and flip is a home equity loan. If you have built up equity in your home, you can essentially take out a second mortgage and make monthly payments to get the funding needed to fix and flip one or many properties.

The problem with this method is that your house becomes collateral, which means that you can lose it if you don’t make money on the fix and flip. This option is good for those with a proven track record and a solid plan but it isn’t an option that we recommend for people doing their first fix and flip.

Real estate investors can also take out equity loans on their rental properties to finance more real estate investments. These investments are long term but the rates can be low depending on the terms. A line of credit will be more affordable and more short-term than a refinance loan.

6. Friends and Family

Types of projects: debt or equity

Loan term: typically, 12 to 24 months

Average rate: 6 – 20%

Closing time: 2 – 3 weeks

Loan to cost: up to 65%

Friends and family are other last-resort sources of funding for a fix and flip. This isn’t always a good idea unless the sponsor’s friends and family understand the real estate industry and the risks involved.

Not only are you risking disappointing investors in this situation. You are also risking damaging personal relationships if the investment doesn’t work out.

One perk of this option is that the interest rates set with friends and family are generally lower than other funding options, like hard money lenders. If you do choose to go down this road, make sure that your investors understand the project and the risks. Put the deal in writing so that the terms of the loan are clear to everyone involved.


It is important to prepare and do some research before you seek out funding for a fix and flip. Investors should know about the local real estate market that they plan to invest in. This includes information about the neighborhood and what reliable contractors operate in the area. Lenders are looking for investors with experience and a solid plan, not just good credit.

If you are ready to start your next project, there are many funding options available. Online mortgage lenders and real estate crowdfunding platforms make it easier than ever to get funding for real estate projects. Traditional funding sources can take longer and have higher rates, but they also have benefits for some borrowers.

This post contains affiliate links.

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Krystine Therriault

Journalist & Blogger at CrowdCrux
Krystine Therriault is a journalist, blogger, and the community manager for CrowdCrux. She loves learning about new trending projects and dissecting them to bring new tips and information to creators.
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