Selecting the best fix-and-flip lenders is key to ensuring you can close quickly and obtain the necessary amount of capital for a project. Ultimately, it determines how reliably you can continue to grow and scale.
Financing involves more than just interest rates. It can have a direct impact on your ability to secure a deal ahead of competitors. It can also determine the speed at which a rehab can be completed and affect overall margins.
The best lender will be different for each investor and will be determined by how well it fits your unique strategy. This guide breaks down the top criteria to be considered in selecting the right financing for fix-and-flip projects.
Key Takeaways
- The best fix-and-flip lenders can execute to align with an investor’s priorities, whether it be speed, reliability, leverage, or underwriting flexibility.
- Along with pricing, closing timelines, funding processes, and eligibility criteria are some of many factors that define the best fix-and-flip lenders.
- The best lender will vary for different investors, as each has lending solutions catered for various scenarios.
Criteria Used to Define the Best Fix-and-Flip Lenders
Comparing the best fix-and-flip lenders should begin with factors that impact the ability to execute on business strategies. This can be broken down into the following six major areas:
- Speed to Close: Closing quickly can impact whether an investor can secure a deal and whether closing timelines can be met, budgets maintained, and margins maximized. Closing should occur within one to two weeks.
- Leverage and Capital Coverage: Loan-to-cost (LTC) and after repair value (ARV) limits dictate how much an investor must contribute from their own funds. Greater leverage typically translates to better portfolio growth and capital efficiency.
- Rehab Draw Process: Consistent and quick draws for additional funds are key to ensuring projects are kept on schedule. Here, virtual inspections can also save time in comparison to in-person inspection requirements.
- Underwriting Approach: The best lenders have flexible approval criteria to maximize approval odds. This can include property-based underwriting, as well as a wide range of experience and income requirements.
- Transparency and Communication: Keeping unexpected surprises to a minimum, if not nonexistent, can be done with clear terms, fees, and consistent communication.
- Exit Flexibility: Whether an investor wants to sell or refinance a property, the specific prepayment terms and exit options can have a significant impact on return on investment (ROI).
The Best Fix-and-Flip Lenders
Below is a comparison table of the best fix-and-flip lenders that met the criteria mentioned above. These companies are commonly considered by investors and differ in funding speeds, terms, exit options, and more.
1. LendingOne
LendingOne is a nationwide lender that focuses on providing financing solutions to residential fix-and-flip investors through its fix-and-flip loan program.
Loans are underwritten based on property fundamentals such as their potential to generate income, rather than assessing an investor’s individual income.
In many cases, investors can secure financing up to a 92.50% loan-to-cost and 75% ARV. Closing can also occur in 10-14 business days, depending on deal complexity.
Funds for rehab projects can be released through a draw process that allows for virtual inspections at each stage. While LendingOne usually works with experienced investors, eligibility criteria can vary based on each individual deal.
LendingOne charges no prepayment penalties to allow for exit flexibility. This is often evaluated by investors seeking quick financing speeds and the ability to apply a consistent financing structure across multiple projects.
2. Renovo Financial
Renovo Financial is a private lender offering financing in select markets across the U.S. Notably, this company offers competitive LTC and ARV terms and eligibility criteria on both purchases and rehab projects.
While exact timelines can vary by market and deal complexity, most closings are completed efficiently. Like some other lenders, rehab draws are available on a continuous basis following completed work and satisfactory inspections.
With regards to underwriting criteria, Renovo Financial is typically geared towards investors who have a track record of experience in managing fix-and-flip projects. The company evaluates both historical success as an investor, as well as the fundamentals of the property being acquired.
Ultimately, Renovo Financial is often evaluated by experienced flippers that are in markets where this company offers financing.
3. Anchor Loans
Anchor Loans is an established private lender offering residential fix-and-flip and bridge financing nationwide.
The company offers competitive terms and eligibility criteria that offer flexibility for both new and seasoned investors. Although, the company’s best terms may only be available to those with a track record of success.
Investors who choose to work with Anchor Loans can also expect quick closings and standard exit options with refinancing or selling properties. This may be relevant for investors wanting to work with a lender that has a nationwide footprint.
4. Easy Street Capital
As a private lender, Easy Street Capital offers short-term residential loans to investors in a handful of states. Purchase and rehab financing are available, with rehab funds being released on a standard schedule based on completed work and subsequent inspections.
While there can be flexibility in eligibility criteria, available terms may not be determined until after application. This is because it can be dependent on the deal structure, investor profile, and property characteristics.
In general, Easy Street Capital’s underwriting focuses on a mix of property fundamentals as well as investor experience. It is often considered by investors seeking straightforward fix-and-flip financing on standard deals.
5. Conventus
Although it does not offer financing nationwide, Conventus is a private lender focusing most of its activity in coastal and urban markets.
The company offers purchase and rehab financing with terms that can vary based on the details of the deal. This can include investor experience, property characteristics, and market conditions. These items can also impact closing timelines.
As a general rule of thumb, Conventus works primarily with seasoned investors. Notably, repeat borrowers may benefit from its relationship-based underwriting methodologies, which may be relevant for investors seeking a long-term lending partner.
6. Archwest
Archwest is a private lender that offers bridge and fix-and-flip financing for residential investors nationwide. Underwriting and eligibility criteria are flexible, as the company caters to both new and seasoned investors alike.
However, note that the timeliness of closing can be impacted by the complexity of deals. Newer investors likely need to provide additional documentation to ensure eligibility, something that can cause slightly longer closing timelines.
With that said, Archwest offers a wide range of financing for purchases and rehabs alike. It evaluates both property fundamentals as well as borrower-specific items such as track record and income.
This company may be sought after by investors seeking nationwide availability and a more traditional lending process.
How to Choose the Best Fix-and-Flip Lender for Your Strategy
To select the best fix-and-flip lender for your circumstance, prioritize the criteria that will have the largest impact on what matters to you the most.
For example, new investors may benefit from lenders that offer consistent and reliable draws, along with clear or more traditional processes and loan terms. Experienced investors, on the other hand, may prefer speed and leverage.
Similarly, investors working on multiple deals simultaneously may prioritize fast closings. These can offer a more efficient use of capital and the ability to scale a fix-and-flip investment without tying up cash.
Remember to also consider the balance between speed and leverage. Being able to close quickly can help you secure more deals, but long-term growth is fueled by efficient use of capital. You may also want to consider the best markets for fix-and-flip investment.
Finally, consider your exit strategy, whether it’s to sell or refinance. It can impact the best options for things like prepayment terms and long-term flexibility.
Why Real Estate Investors Choose LendingOne Fix-and-Flip Loans
The best fix-and-flip lenders can help drive outcomes in the form of consistency and reliability for closings, clear expectations and timelines for rehab funding, and repeatable terms that investors can use across multiple deals.
With these in mind, LendingOne is often evaluated by investors who value speed, capital efficiency, and reliable execution time and time again.
To see how LendingOne’s financing solutions can align with your next deal, see your rate and review terms unique to your specific flip.
FAQs About Choosing the Best Fix-and-Flip Lender
How Much Experience Do I Need to Qualify?
Required experience varies from lender to lender. It can also depend on the overall strength and complexity of your application. Certain lenders may be able to work with first-time flippers on smaller projects, while others prefer investors with completed renovations.
Underwriting criteria can also consider an investor’s track record along with property characteristics in determining eligibility, pricing, and approval timelines.
How Quickly Can I Close on a Fix-and-Flip Loan?
It’s possible to close within one to two weeks. However, exact timelines will vary depending on the complexity of the deal, the lender’s own internal processes, and the strength of your application. In general, private lenders are also a bit faster than marketplace lenders.
How Do Rehab Draws Work?
Rehab funds are released in stages after completed work is verified by inspections. If the inspections are satisfactory, funds can then be released, so the next stage of work can be conducted.
Are Rates or Leverage More Important?
Both are important and depend on your specific business strategy. Lower rates reduce carrying costs, while higher leverage can aid the efficient use of capital.
Investors managing multiple projects simultaneously often prioritize leverage, while single-project investors typically care more about minimizing costs.
Can I Refinance Instead of Selling?
While refinancing as an exit strategy can be done, most fix-and-flip lenders expect the primary exit strategy to be a property sale. Be sure to discuss this upfront to avoid any unexpected surprises, as you may need to secure separate financing from another lender.
Do Fix-and-Flip Lenders Require Income Verification?
Most fix-and-flip lenders evaluate the property characteristics rather than the personal income of the investor.
While personal income can be a compensating factor, most deals will be evaluated by the property value, income-generating ability, renovation plans, and the investor’s track record.
