Power DealsSign in

Investing Strategy · 10 min read

The Fix and Flip Financing Playbook

How to structure, finance, and close a profitable flip — from acquisition through resale, with numbers you can run today.

Flipping is a manufacturing business. Every day the property sits, you're burning carry. Every dollar over budget comes out of profit. This playbook covers the financing and underwriting that separate profitable flippers from expensive hobbyists.

The 70% rule (updated)

Traditional wisdom: Max Offer = (ARV × 0.70) − Rehab.

In 2026 markets, most experienced flippers use 65–70% depending on the market:

  • Hot suburbs, quick sale (<60 days): 70%.
  • Slower markets, higher DOM: 65% or lower.

Financing structure

Standard bridge loan for flips:

  • Up to 90% LTC on purchase.
  • 100% of rehab funded through draws.
  • 65–75% max loan-to-ARV — the hard ceiling.
  • 12-month term, interest-only.
  • 2 points origination, 9.5–11.5% rate.

Underwriting a flip in 15 minutes

  1. ARV — pull 3 renovated comps within ½ mile, sold in last 6 months.
  2. Rehab — walk with a contractor or use a $/sqft benchmark ($25–75 depending on scope).
  3. Purchase cap = ARV × 0.70 − Rehab.
  4. Carrying costs — 6 months of interest, taxes, insurance, utilities.
  5. Selling costs — 8% of ARV (agent + closing + concessions).
  6. Target profit — 12–20% of ARV, minimum $30k on a residential flip.

Example:

  • ARV: $400k
  • Rehab: $60k
  • Max offer: $220k
  • Bridge financing: $198k (90% LTC) + $60k rehab = $258k total loan.
  • Your cash in: $22k down + $10k closing + $12k carry = $44k.
  • Sell at $400k, subtract $32k selling + $258k payoff + $12k more carry = $98k profit.

The draw process

Rehab funds don't come at closing — they're released as you complete work.

  1. Complete work.
  2. Submit draw request with invoices and photos.
  3. Lender orders inspection ($150–350).
  4. Funds wire in 3–7 business days.

Have $10–30k in working capital to bridge draws. Slow draws are the #1 cause of flip failures.

Exit — resale

  • List within 7 days of C/O. Photos before staging deliver.
  • Price aggressively. A quick $395k sale beats a 90-day $410k listing.
  • Screen offers. Cash buyers close in 10 days; financed buyers in 30–45. Time-value matters.

Common mistakes

  • Optimistic ARV — anchoring on unrenovated comps.
  • Rehab creep — every "while we're at it" adds a week and $2k.
  • Wrong lender — a slow-to-fund bridge lender kills flips.
  • Ignoring days on market — carry costs compound.