Fix and Flip Loan Structures That Optimize Investor Cash Flow

Your client is driving along one day and spots a run-down 3-bedroom house on a hot property block that’s priced at $200,000. He/she knows that they can flip it for $300,000 and walk away with a nice profit. But their bank takes one look at their personal income and says “no”.

What if there were a type of loan that would not only let your clients lock in the deal but fund the rehab, control cash flow and protect their upside, all while someone else carries the cost on paper? That’s what happens when your clients optimize fix-and-flip financing. Here’s how they can do it.

A Focus on Property, Not Personal Documentation

At Constructive Capital, our fix and flip loans aren’t tied to your client’s income or job history. Instead, they’re underwritten on property value and after-repair projections. That means faster approvals and with less paperwork. This is a must when dealing with highly-competitive real estate markets where investors with inside tracks can snap up lucrative fixer upper properties at a moment’s notice.

Maximum Leverage that Protects Your Capital

At Constructive Capital we offer up to 95% Total Loan To Cost (TLTC) or up to 90% Inital Loan to Cost (ILTC) with terms up to 18 months, and financing of up to $2 million per project. That means your clients only have to bring a small piece of equity to the table, with renovation draws covering the rest.

Interest-Only Disbursements Keep Monthly Carry Low

Thanks to interest-only payments, your clients only pay interest on the funds they’ve drawn – not the full loan amount. This preserves their cash flow throughout the renovation months, precisely when holding costs could eat away at their margins.

Structured Draw Schedule Means Smarter Cash Flow

Fix and flip loan funds are released in phases that are tied to renovation milestones, for example:

1. Initial draw after purchase closing

2. Mid-project draws after rough-in electrical and/or plumbing

3. Final draw once the changes pass inspection

This helps prevent upfront interest on unused funds so your clients are not stuck paying for cash that’s sitting there not doing anything.

Terms Aligned With Your Exit Strategy

With up to 18 month terms, repayment schedules align with flip timelines. Once the property sells, the principal is repaid, which keeps the financing flexible and accountable. It’s possible to grant your client an extension, but it’s far better for them to have a firm, short-term exit that’s backed by a timeline.

How Do These Structures Optimize Cash Flow?

We’re glad you asked! Here’s what to know to help your clients optimize cash flow with fix and flip loans.

Lower Monthly Carry

Thanks to interest-only draws and staged funding, your clients have minimal monthly payments until the project is essentially done. Less cash out-of-pocket gives you more runway and less stress. It’s a win-win.

Funds for Rehab, Not Just Purchase

A Constructive Capital Fix and Flip loan covers both acquisition and rehab expenses, so clients are not fronting the costs for the renovation. Their capital stays liquid until it is actually needed.

Scalable Repeatability

Because financial metrics are all about the project’s performance and not borrower income, your investor clients can run multiple flips through an LLC or even a single-asset structure, keeping cash flow and profit consistent deal after deal.

So What Might a Fix and Flip Loan Structure Look Like?

Here’s an illustrative example. Let’s say your client acquires a property at $200K; plan $50K worth of renovation expenses; and expect an ARV (After-Repair Value) of $300K. With Constructive Capital’s fix-and-flip loan structure, the loan can cover up to 90% of Initial Loan To Cost which could be up to $225K for purchase and rehab, if approaved.

You client would only pay interest on monthly draw payments. The rehab disbursement in the draw schedule is tied to milestones. That means a low down payment of cash up-front for your client, and it still keep cost overhead low while the job proceeds. After the sale, the loan is repaid in full, and your client collects the profit without holding a large debt in the interim.

To leverage this type of loan structure for the most cash flow possible, your client will want to:

1. Run the ARV, rehab budget and hold time to model returns

2. Write up a detailed renovation scope and timeline that matches the draw schedule

3. Prepare liquidity/an exit plan - keeping in mind that even interest-only payments still require reserves for timeline hiccups (and there are often timeline hiccups!)

4. Submit the application docs through a your broker portal to access Constructive Capital’s underwriting with minimal income verification

5. Have your client time the closing and rehab draws in such a way to minimize interest on unused funds

Why Choose Constructive Capital?

First and foremost, our speed and flexibility. We’re focused on deals, not documents. Our Account Executives respond quickly with deep knowledge and recommendations on fix and flip loan structures. Add to that our terms of up to $2 million per project, for SFRs, 2-4 units, or Condos;  and you have a lucrative option that lets your client leverage the full potential of a fix and flip loan.

For loans based on rental or DSCR, be sure to check out our DSCR Rental options, which could be useful if your client happens to switch to BRRRR or rental conversion.

Optimizing cash flow with a fix and flip loan structure isn’t just about lowering interest rates, it’s about keeping the financing in step with renovation timing and focusing on the strength of the deal, not personal finances. We help your clients lock in the structure that mimizes the capital they’ll need up front, so they can focus on flipping. And when moving fast counts – as it does in the fix and flip world – they’ll want a partner by their side who can offer the right kind of financing at the right moment. Contact us today to learn more.