Fix-and-flip investing is still a key part of the housing industry. In 2025, more than 78,000 homes were flipped in just one quarter, which was around 7% of all home sales for the period. Investors are still active, but profits are getting tighter.
ATTOM's Q2 2025 report says that median gross earnings fell to about $66,000 and average returns fell to 25.1%, the lowest level since 2008. With project timescales usually lasting five to six months, the costs of financing and the format of loans now have a bigger effect on overall profits.
This change makes it even more vital for mortgage brokers and lending partners to understand the fix-and-flip loan options they have available when helping investors set up these projects.
Fix-and flip loans are different from standard mortgages since they focus more on speed, flexibility, and asset-based underwriting.
Most lenders evaluate projects using several key metrics:
These numbers set restrictions on how much leverage lenders can give borrowers and help them decide how to arrange the fix-and-flip loan structure.
Typical fix-and-flip loan terms include:
Brokers who know how these structures work can help investors meet their goals while still meeting the requirements of lenders.
Private lenders offer financing that base qualification on the value of the property rather than the borrower's income.
Typical features include:
Experienced investors often use these loans to buy distressed properties or compete in marketplaces where quick closings are important.
Bridge loans are short-term loans that help a borrower acquire a property until more permanent financing can be obtained, or a sale is completed.
These loans are quite helpful when investors need to act swiftly on a project while they look for longer-term capital.
Common characteristics include:
Experienced investors sometimes employ lines of credit to pay for more than one project at a time.
These structures are flexible because borrowers can take out money only when they need it.
Advantages include:
Some investors use the equity they already have in real estate to pay for new ventures. This could include:
These choices may have cheaper financing costs, but they also require you to use your current assets as collateral. Brokers should help their clients carefully weigh the hazards of using primary or investment properties as collateral.
Seller financing is when the person selling the property gives the buyer the money instead of a bank or other lender. This approach can let investors buy properties when traditional financing isn't available, even though the terms can vary widely.
This method requires a lot of legal paperwork to avoid confusion, and it can end up costing more than institutional financing, which compensates sellers for taking a risk.
Some investors will use 401(k) loans to access their retirement funds. These loans let you borrow up to $50,000 or half of your account value. This option doesn't require a credit check, and the interest is transferred back to the borrower's own account, but it does come with its own risks, like having to pay back the loan if the borrower's job changes.
Choosing an appropriate financing structure will depend heavily on investor experience, project characteristics, and available resources.
Conservative financing helps new flippers by lowering the dangers of overleveraging. Cash-out refinancing or home equity products with lower rates are key for protecting margins when projects take longer than expected.
Personal loans may also help pay for modest renovations or down payments, but they are preferable for people who only require a small amount of money because they have higher interest rates.
Position conservative finance as a way to protect against cost overruns or timetable extensions caused by inexperience that would make more aggressive hard money structures unprofitable.
Investors who have done five or more flips can get hard money and bridge loans based on their experience, which gives them access to better terms. Their past work shows that they can finish projects in 6 to 12 months, which keeps risk low and interest from building up.
Light Cosmetic Work: Properties that only need a few simple changes (less than $30,000) may be able to use personal funds or personal loans instead of hard money, which can save on closing costs.
Substantial Rehabilitation: Properties that need repairs of more than $75,000 should consider rehab loans or hard money, which provide both acquisition and improvement financing through regulated draw schedules.
Distressed Acquisitions: Properties that are in poor shape and can't qualify for traditional financing will need hard money or bridge loans that are based on the property's value following repairs instead of its current state.
As the market changes, investors are relying more and more on lending partners that understand the intricacies of financing real estate investments.
Brokers who offer a variety fix-and-flip financing options can provide clients with several benefits:
RCN Capital works with mortgage brokers and correspondent lenders to offer real estate investors financing options that are tailored to their specific scenario.
The RCN Capital broker partner program gives you access to flexible loans that are perfect for investment plans that involve renovated and selling properties.
Our loan programs offer:
Reach out to learn how our specialized loan programs and dedicated broker support can help you close more deals.