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Fix and Flip Rehab & Acquisition Loans in Florida
Fix & Flip 4-Stage Rehab Holdback Draw Lifecycle
Fix & Flip Loans vs Traditional Bank Underwriting Matrix
| Dimension | Fix & Flip Loans (Wholesale) | Traditional Bank | Investor Advantage |
|---|---|---|---|
| Rehab Funding Mechanism | 100% of approved rehab budget held in draw escrow | Borrower must self-fund all renovations out of pocket | Preserves working capital across multiple active projects |
| Experience Tiering | Higher LTC for 3+ and 5+ completed deals; 0-deal shelves available | No recognition of flip track record | Rewards experienced operators with lower down payments |
| Draw Verification | Desktop mobile app or rapid field inspector sign-off | Slow bank AIA draw requisitions and title bring-downs | Keeps sub-contractors paid on schedule |
| Term Length | 12 to 18 months interest-only with extension options | Rigid 30-year consumer underwriting | Matches actual renovation and MLS marketing timeline |
Structuring Checklist & Underwriting Notes
- Keep a 10% to 15% liquid contingency reserve above your line-item Scope of Work to absorb hidden mechanical or municipal code upgrades.
- Group your draw schedule into 3 to 5 logical milestone batches rather than requesting micro-draws every week to minimize inspection fees.
- Order hazard and builder’s risk insurance binders early—lenders require full replacement-cost coverage matching the completed ARV.
Frequently Asked Questions: Fix & Flip Loans
How does the 70% ARV rule compare to modern wholesale fix-and-flip sizing?
The classic 70% rule (Maximum Offer = 70% of ARV minus Rehab) is an investor profit guardrail, whereas wholesale lenders size the loan up to 70%–75% of ARV and up to 90% of purchase plus 100% of rehab. Keeping your basis near 70% of ARV ensures minimum out-of-pocket cash at closing.
How do construction draw reimbursements work during a fix and flip?
Rehab funds are held in an escrow holdback account at closing. As your crew completes line items on the approved Scope of Work, you request a draw inspection. Once the inspector confirms completion percentages, the lender wires reimbursement funds directly to your entity account.
What happens if my flip does not sell before the 12-month note matures?
Investors have two standard options: request a 3-to-6-month note extension from the bridge servicer, or lease the renovated property and execute a rate/term or cash-out refinance into a 30-year DSCR rental loan.