How Do Fix and Flip Loans Work? A Guide for Brokers and Lending Partners

For private lenders, mortgage brokers, and referral partners, fix and flip loans are a huge business opportunity to grow business and make money while assisting investors to take advantage of short-term real estate transactions. These loans are quick, convenient financing for real estate investors to buy, rehabilitate, and resell property for profit.

As an originator, knowing how a fix and flip loan work can set you apart. Whether you're dealing with seasoned real estate investors or first-time flippers, these loans can allow your clients to get funding fast—and therefore aid you in increasing your business by closing more deals.

What Is Loan Flipping and How Do Fix and Flip Loans Work?

A fix and flip loan is a short-term, asset-based loan that real estate investors utilize to purchase, rehab, and resell a property for a profit. Unlike the traditional 15- or 30-year mortgage, fix and flip loans usually have a term of 6 to 18 months.

Due to their short lifespan and more risky profile, these loans carry higher interest rates, usually 8-16%, than typical home loans, which tend to be 2-4%. However, their convenience and quickness make them an appealing option for investors who want to act fast on a potential deal.

For wholesale lending partners and brokers, these loans offer a great way to service investors seeking alternative funding. If your clients require capital without the slow approval time of traditional financing, fix and flip loans are ideal.

Why Mortgage Brokers and Private Lenders Should Offer Fix and Flip Loans

If you are a commercial lender, mortgage broker, or affiliate partner, providing fix and flip loans can benefit you:

Expand Your Client Base – Real estate investors are always on the lookout for financing options. Positioning yourself as a go-to source for fix and flip loans attracts a steady stream of borrowers.

Generate More Revenue – These loans typically come with higher interest rates and fees, which means greater commissions and profits for you.

Close Deals Faster – Unlike traditional mortgages that take weeks or months to process, fix and flip loans are approved in days, allowing you to complete more transactions in less time.

Build Stronger Investor Relationships – Investors who succeed in one flip will likely return for future financing. Becoming a reliable funding source means repeat business and long-term partnerships.

How Does a Fix and Flip Loan Work for Brokers?

As a third-party originator, your role in the fix and flip loan process is crucial. Here's a breakdown of how it works from your perspective:

1. Identifying the Right Borrowers

Not all real estate investors are the same. The best candidates for fix and flip loans typically:

• Have prior experience flipping properties
• Understand renovation costs and timelines
• Have a clear exit strategy to repay the loan
• Are working in markets with strong demand for renovated homes

Even if an investor is inexperienced in house flipping, fix and flip loans can still be an excellent choice—provided that they have good credit, a solidly researched business plan, and a well-defined plan of action for their investment.

2. Loan Application & Approval

After you've found a prospective borrower, the process starts. Unlike traditional mortgages that emphasize income and credit history, fix and flip loans are asset-based. That is, the biggest issue for approval is the property, not the individual's personal finances.

At RCN Capital, we consider:

• The After-Repair Value (ARV) – How much the property will be worth after renovations
• The investor's experience level – More experience can lead to better loan terms
• The cost of renovations – Ensuring they align with market expectations
• The exit strategy – Whether the investor plans to sell or refinance

A high ARV-to-loan ratio is essential. Borrowers can usually finance 70-75% of the ARV, so if a property is $180,000 in value after renovation, they might borrow as much as $135,000 to pay for both the purchase and renovations.

3. Fast Funding & Project Execution

Funds are released promptly after approval—usually within a week. This urgency is important for real estate investors who must secure good deals before another buyer does.

In contrast to conventional loans, where money is provided in advance, fix and flip loans tend to disburse capital in phases (referred to as "draws") depending on renovation stages. This guarantees that money is utilized appropriately and keeps the project on course. 

4. Loan Repayment & Exit Strategy

Since these are short-term loans, the exit strategy is key. Investors usually repay their fix and flip loan by:

• Selling the renovated property for a profit
• Refinancing into a long-term rental loan
• Using proceeds from another investment

As a broker, you can guide your clients toward the best exit strategy to maximize their returns and ensure a smooth loan repayment.

How Fix and Flip Loans Compare to Other Financing Options

Many investors initially consider traditional financing, but fix and flip loans offer distinct advantages:

For brokers and private lenders, positioning fix and flip loans as the go-to option for real estate investors ensures you remain competitive while meeting the unique needs of property flippers.

Why Partner with RCN Capital for Fix and Flip Loans?

Choosing the right lender makes all the difference. At RCN Capital, we specialize in fix and flip loans, helping brokers and private lenders close more deals with:

Competitive Loan Terms – We offer up to 75% ARV financing, giving investors more flexibility
Fast Closings – Get deals funded in as little as 5-10 days.
Flexible Loan Structures – Tailored to investor needs, whether they’re flipping or refinancing
Dedicated Broker Support – Work directly with an experienced lending team that understands your business

By partnering with RCN Capital, you can offer your clients the best fix and flip financing options while growing your own business.

Get Started with Fix and Flip Loans Today

As a mortgage broker, private lender, or referral partner who would like to incorporate fix and flip loans into your products, RCN Capital is here to assist you. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate professionals. Become a wholesale lending partner with us and close more deals quicker.

Connect with us today to discover how we can partner together to deliver fix and flip loans to your customers.