Stewardship Capital

Fix and Flip and Investor Bridge Loans

Investors need money that moves fast. Fix and flip loans, bridge loans and a few related tools are built for that. They are different from a regular home loan. This page explains how they work, what lenders look at and which tool fits which plan.

What is a fix and flip loan?

A fix and flip loan is a short-term loan for an investor who buys a home, improves it and sells it, or refinances it. The loan is usually based on the property and the plan, not only on the borrower's income. Most include money for the repairs, and that money is released in stages as work is finished. These loans are often made by private or specialty lenders, not the big banks.

What do lenders look at?

Lenders judge the deal as much as the person.

• The purchase price and the repair budget
• The expected value after repairs, called the ARV
• Your experience with similar projects
• Your credit and your cash for the down payment and reserves
• Your exit plan: a sale or a refinance

Newer investors can often still qualify, but the terms may be different. Rules vary by lender, and Stephen confirms them on the specific file.

What is a bridge loan for investors?

A bridge loan covers a gap. An investor might use one to close fast on a property, then refinance into a longer loan once it is fixed up and rented. Speed is the main benefit. The tradeoff is that these loans are short, so the exit plan must be solid.

What is a portfolio or blanket loan?

A blanket loan covers more than one property under a single loan. It can simplify things for an investor with several homes. A portfolio loan is kept by the lender instead of being sold, so the lender sets its own rules. Both can be flexible, but release rules and what happens if you sell one property are important. Ask about those first.

Can I finance a short-term rental?

Yes, in many cases. DSCR loans qualify a property based on the income it earns instead of the borrower's job income. For a short-term rental, the lender may look at rental history, a market rent study or an appraiser's opinion of rent. The method varies by lender. Visit our DSCR investor loans page to learn more.

What is delayed financing?

Delayed financing is for an investor who bought a property with cash and then wants to take a loan out against it soon after. Normally lenders ask you to own a property for a while before they allow a cash-out refinance. Delayed financing is an exception, with proof of how the cash purchase was paid. The amount is limited, and rules vary by investor. See our Refinance page for refinance basics.

What documents do investors usually need?

• Photo ID and proof of funds
• The purchase contract
• A repair budget and scope of work
• Entity papers, if you buy through an LLC
• Proof of insurance
• A list of past projects, if you have them

The list varies by lender. Ask early so the closing date stays on track.

What risks should investors weigh?

Short loans leave little room for delay. Repairs can cost more than planned. A sale can take longer than expected. Each of these can force an investor to pay extra or refinance on short notice. Build a cushion into the plan and know your backup before you close.

Which one fits my plan?

It depends on how long you will hold the property. A quick flip is a short-term loan. A rental to keep is a longer-term loan. A group of rentals might use a blanket loan. Plan your exit before you buy. Realtors who work with investors can help by sharing the numbers early. Learn more on our Buy a Home page and see HELOC if you own a home with equity.

This is not a quote, a commitment to lend or an offer of credit. Stephen Chakerian, NMLS #2193331 | Stewardship Capital, a team of Barrett Financial Group, L.L.C., NMLS #181106 | Equal Housing Opportunity.