Real estate fix-and-flip loans and hard money lending

Fix-and-flip loans serve as short-term financing solutions, typically lasting between 6 and 18 months, designed to cover both the acquisition and renovation of distressed properties. Unlike traditional mortgages, these loans are provided by private or hard money lenders who prioritize the value of the underlying asset and the projected after-repair value (ARV) over the borrower's personal financial history.

These financing products generally carry higher interest rates, often ranging from 10% to 13%, along with origination fees between 1.5% and 3%. Lenders typically distribute renovation funds through a series of draws as work is completed and verified. While traditional banks are often too slow for the fast-paced real estate market, hard money lenders offer speed and flexibility, though investors must carefully model carrying costs to ensure profitability.