Vector Interactive Group

Loan Services

Fix-and-Flip Financing

Purchase and renovation capital in a single facility, with construction funds released in stages as the work is completed.

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How fix-and-flip financing work

Fix-and-flip financing funds two things at once: the acquisition of a property that needs work, and the work itself. The purchase portion funds at closing. The renovation portion is held back and released in draws as the work is finished and verified, so the lender is advancing against value that actually exists on site.

Underwriting looks forward as well as back. The lender assesses the property as it is today, the scope and budget to improve it, and the supportable after-repair value once the work is done. The gap between what the project costs all-in and what it is worth at completion is the margin that protects both of you — which is why a realistic budget matters more than an optimistic one.

A two-storey house under renovation with ladders and scaffolding in the foreground

Potential uses

When this financing fits

  • Buying a distressed or dated single-family or small multifamily property to renovate and resell.
  • Properties that cannot be financed conventionally in their current condition — missing systems, no working kitchen, structural issues or an open permit.
  • Acquisitions at auction, from an estate, or from a seller who needs a fast and certain close.
  • Investors scaling beyond what their own cash allows, who want to keep capital working across several projects at once.
  • A renovation on a property already owned, where a refinance releases equity and funds the work in draws.

Before you borrow

Borrower considerations

An accurate budget protects you, not just the lender

Scopes are reviewed closely, and a budget that is obviously light will slow or sink a file. More importantly, an underfunded renovation is the most common way these projects fail. Price the work properly, include a contingency, and assume something behind the walls will surprise you.

Draws reimburse completed work

Renovation funds arrive after work is done and inspected, not before. That means you need working capital to start each stage and to carry the gap until the draw clears. Ask how draws are requested, how long inspections take, and whether there is a fee per draw, and build that rhythm into your schedule.

After-repair value must be supportable

The resale figure that makes a deal work has to be defensible with comparable sales, not aspiration. An independent valuation will test it. If the valuation comes in below your projection, the loan is sized to the valuation — so stress-test your numbers before you are committed to a purchase price.

Holding costs run the entire project, not just the build

Interest, taxes, insurance, utilities and security accrue through the renovation and through the marketing and closing period that follows. Projects routinely take longer to sell than to build. Budget the carry for the whole cycle with a margin.

Permits and contractors drive the timeline

Permitting delays and contractor availability are the two factors most likely to extend a project, and neither is under the lender's control. Line up your contractor and understand the local permitting process before you commit to a closing date and a loan term.

Know the tax treatment

Profits on a property bought to resell are generally treated differently from long-term investment gains, and frequent flipping can affect how the activity is characterised. Speak to your own tax adviser early — this is not advice we can give you.

The process

What happens, step by step

  1. Share the project

    Address, purchase price, your renovation scope and budget, your projected resale value and the evidence behind it, and your timeline.

  2. Preliminary sizing

    We assess the purchase, the budget and the projected value together, and come back with what the structure can realistically support.

  3. Documentation

    Purchase contract, a line-item scope and budget, contractor details, entity documents, and evidence of the cash you are bringing and the reserves behind it.

  4. Valuation

    An independent valuation establishes both the current value and the supportable after-repair value, which together size the loan.

  5. Terms and closing

    Written terms set out the purchase advance, the renovation holdback, the draw schedule and all costs. Closing funds the purchase portion.

  6. Draws through construction

    As stages complete, you request a draw, the work is verified, and funds are released.

  7. Sale and payoff

    The loan is repaid from the sale proceeds at closing.

Questions

Fix-and-Flip Financing FAQs

Does the loan cover the whole purchase price and all of the renovation?

Fix-and-flip lending is designed to fund a substantial share of both, but it is not 100% financing — you should expect to contribute capital to the deal. How the loan is split between the purchase advance and the renovation holdback depends on the property, the scope, the supportable after-repair value and your experience. We will show you the full structure in writing before you commit.

How does the draw process actually work?

You complete a defined stage of work and request a draw. The work is verified, usually by inspection or by photographic evidence depending on the size of the item, and funds are released against what has been completed. Plan your cash flow around this: you fund each stage first and are reimbursed after. Ask at the outset how many draws are included, how quickly inspections are scheduled, and whether each draw carries a fee.

What if the renovation goes over budget?

Cost overruns are generally the borrower's responsibility, which is why a contingency belongs in the original budget rather than in a later conversation. If a genuine change in scope is required, raise it with the lender promptly — a budget modification may be possible, but it needs to be discussed before the money is spent, not after.

Can a first-time investor get fix-and-flip financing?

Experience is one of the factors in underwriting, and a borrower without a track record will generally find the terms available to them are different from those offered to an investor with completed projects behind them. It is not an automatic barrier. A conservative first project, a credible contractor, a realistic budget and a meaningful equity contribution all strengthen a first-time file considerably.

What happens if the property does not sell?

Talk to the lender well before maturity. Where a completed property is simply taking longer to sell, an extension may be available. Many investors also plan a secondary exit from the outset — refinancing a finished property into a rental loan and holding it rather than selling into a slow market. Having that alternative identified in advance turns a crisis into a decision.

Can I do the renovation work myself?

Policies on owner-performed work vary and are often restricted, particularly for licensed trades and permitted work, since draw verification and the project timeline both depend on documented completion. Raise it early if it is part of your plan so you are not reworking your budget late in the process.

Next steps

Other financing that may fit

Many projects use more than one of these in sequence — a short-term loan to acquire and improve, then longer-term financing to hold.

Private Money Loans

Asset-based financing secured by the property itself, built for investors who need to move faster than conventional underwriting allows.

Learn more

Bridge Loans

Short-term financing that covers the gap between where a property is today and the permanent financing or sale that pays the loan off.

Learn more

Talk to us about your deal

Tell us the property, the plan and the timeline. We will tell you honestly whether we can help and what the realistic next step is.

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