Fix & Flip Financing: How to Fund Your First Investment Property

Fix-and-flip investing has made a resurgence as experienced investors take advantage of distressed inventory that entered the market during 2023–2025. But getting the financing right is what separates profitable flips from expensive lessons.

Understanding Hard Money and Bridge Loans for Fix-and-Flip

Traditional banks rarely fund fix-and-flip projects because of the short holding period and the distressed nature of the property. Hard money lenders and private bridge lenders fill this gap. They lend based primarily on the After-Repair Value (ARV) of the property rather than its current distressed value.

How ARV-Based Lending Works

If you are buying a property for $180,000 that needs $60,000 in renovations with an ARV of $320,000, a hard money lender might lend you 70–75% of ARV ($224K–$240K) — enough to cover purchase and renovation with some cushion. Rates typically range from 10–14% with 2–4 points upfront.

Draw Schedules: How Renovation Funds Work

• Renovation funds are held in reserve and released in draws as work is completed
• Lender sends an inspector to verify completion before each draw is released
• Typical draw schedule: foundation/framing → rough mechanicals → drywall/finishes → punch list
• Having a solid contractor and timeline will speed up draws significantly

Exit Strategies

Your exit strategy must be clear before you close. Most hard money loans are 6–18 months. You can exit by selling the property (most common), refinancing into a conventional mortgage and holding as a rental (BRRRR strategy), or if things go wrong, selling as-is mid-renovation. Always model a worst-case exit before committing.