These days, if you’ve been in a room with real estate investors-or even just scrolling through investor forums, you’ve likely heard someone talking about a property they’re rehabbing or dreaming about their first flip. Despite higher interest rates and tighter inventory, these projects are still very much alive.
In this article, we’ll walk through what fix and flip loans are, how they work, when they make the most sense, and what American Heritage Lending offers for investors looking to use them strategically.
According to ATTOM Data, nearly 298,000 homes were flipped in 2024. While that’s a decline from recent years, gross profits rose to $72,000 per flip, and average returns climbed slightly to 29.6%—marking the first year-over-year improvement since 2020.
So, while overall activity has cooled, experienced investors are still seeing opportunity. Getting there, though, takes more than just spotting a good deal. The financing must work. Traditional loans? Too slow. Too many hoops. That’s why more investors turn to fix and flip loans. These short-term loans are built for speed, simplicity, and flexibility; helping investors fund renovations, close fast, and move on to their next opportunity without all the usual friction.
What is a Fix & Flip Loan?
Fix and flip loans are short-term financing tools designed to help real estate investors purchase, renovate, and resell a property for profit; usually within 6-12 months. Unlike traditional mortgages, they’re based on the property’s After Repair Value (ARV) rather than based solely on traditional metrics like borrower income, credit score, or DTI.
Key features:
- Interest-only payments
- Short-term (Typically 12 months)
- Based on ARV and rehab scope
- Asset and investor experience focused approval
The forward-looking focus of the loan structure makes fix and flip loans ideal for distressed or outdated properties that wouldn’t otherwise qualify for conventional financing.
When Does it Make Sense to Use A Fix & Flip Loan?
You Need to Move Fast
In competitive markets, speed wins. Sellers often go with the buyer who can close the fastest, and traditional loans just don’t move quickly enough. Fix and flip loans can fund in as little as 5 to 10 business days; giving you the edge you need to beat out other offers and keep your project on track.
The Property Needs Work
Most traditional lenders won’t finance homes with major issues like missing plumbing, structural damage, or outdated electrical. But those are often the very properties with the most profit potential. Fix and flip loans are built for these situations; they’re designed to support properties that need significant work before they’re livable or market ready.
You Have a Clear Exit Strategy
Fix and flip loans aren’t meant to be held long-term. To use them effectively, you need a solid plan for what happens after the renovation; whether that’s selling the home for profit or refinancing into a rental loan. Going into the deal with a timeline and exit strategy already mapped out can help you avoid unnecessary costs or delays.
Example Scenario
Picture this: You come across a three-bedroom fixer-upper listed for $250,000 in a neighborhood where renovated homes are going for around $400,000. It needs a fair amount of work; about $80,000 in renovations to bring it up to market standards. We’re talking about a new roof, updated kitchen, refreshed flooring, and maybe some exterior curb appeal improvements.
You run the numbers and determine that the after-repair value (ARV) should land around $400,000. With that in mind, you line up financing through a fix and flip loan that covers part of the purchase and all the renovation costs. You bring in a contractor, set a realistic timeline, and get to work. Four or five months later, the renovations are done, the staging looks great, and the property goes back on the market. It sells for $405,000. After paying off the loan, covering your closing costs, and accounting for your rehab expenses, you walk away with a respectable profit.
That’s the power of a well-executed fix and flip project: it’s not just about the deal. You need the right plan, the right support team, and financing that fits the pace of your project.
AHL’s Fix & Flip Loan Programs: Built for Real Investors
American Heritage Lending offers multiple Fix & Flip loan structures tailored for real estate investors – from first timers to moguls.
Program Highlights
- Up to 93% Loan to Cost (LTC)
- Up to 75% After Repair Value (ARV)
- Loan amounts from $75K to $3M
- Interest-only terms up to 12 months
- Zero Point and Deferred Point pricing options
- Closings in as little as 10 business days for qualified borrowers
- No income documentation required
- Virtual draw inspections
- No appraisals required for loans under $750K
- Entity or individual borrower options
Renovation Options
Lender-Funded Renovation
- AHL finances 100% of hard costs
- Soft costs (permits, plans, entitlements) can be included
- Draws processed via mobile app rather than on-site inspection
Borrower-Funded Renovation
- Investor finances rehab budget out of pocket
- Still requires rehab plan, scope approval, and virtual inspections
- Ideal for smaller cosmetic rehabs or experienced operators
Exit Strategy Support
Sale Exit: AHL requires at least $15K profit post-repair or resale. If the deal does not hit that mark, the leverage may be reduced or additional documentation required. We take our jobs as your financing partner seriously, and sometimes that means leveraging our experience to help advise against potentially problematic deals.
Refi Exit: AHL supports refinance-to-hold strategies with DSCR loan options and underwriting flexibility.
Common Pitfalls to Avoid
Flipping houses can be rewarding, but it’s rarely smooth sailing from start to finish. Even seasoned investors run into snags that eat into profits or delay projects. If you’re planning a flip, here are a few real-world missteps to keep in mind:
Flipping Pitfalls
- Overestimating ARV (After Repair Value)
It’s tempting to assume your finished property will fetch top dollar—but relying on best-case comps can backfire. Stick to conservative estimates and let real data, not emotion, guide your numbers.
- Underestimating Renovation Costs
It’s almost guaranteed something will cost more than expected. Maybe it’s outdated wiring, hidden termite damage, or a roof that looked okay until demo day. Always build in a buffer.
- Paying Too Much Upfront
According to ATTOM Data, average flip margins dropped to 24.5% in 2023. Buying too high without enough spread between purchase price and ARV is one of the most common ways flips go sideways.
Financing & Process Pitfalls
- Not Preparing for the Draw Process
With most rehab loans, funds are released in stages. You’ll need to complete parts of the project before receiving reimbursement, which can catch some investors off guard if they’re not prepared. If you’re not planning for that, it can slow everything down.
- Stretching the Timeline Too Thin
Fix and flip loans usually come with a 6 to12 month window. If your project gets off track, you might face costly extensions or be forced to sell before you’re truly ready.
- Skipping the Basics on Due Diligence
It’s not exciting, but double-checking zoning, insurance, and title work can save you major headaches. Issues in any of these areas can stall your flip or blow up your exit strategy altogether. It’s wise to spend the extra time upfront to avoid major issues later.
Is a Fix & Flip Loan Right for You?
Best for:
- Experienced investors scaling operations
- First timers working with a general contractor
- Cash buyers who want to leverage equity
Not ideal for:
- Owner-occupied homes
- Long-term hold strategies without exit planning
- Investors who lack reserves or a clear renovation plan
Wrap Up
At the end of the day, fix and flip loans are about more than funding. They’re about giving investors the ability to move quickly, act on opportunity, and make real improvements to undervalued properties. Whether it’s your first flip or one of many, the right loan can make the process smoother, faster, and more predictable.
At American Heritage Lending, we’ve built our fix and flip loan programs to keep pace with real-world investors—people who need straightforward financing, fast closings, and a partner who understands the rhythm of the business.
If you’re ready to tackle your next project, we’re here to help. Let’s make it happen.