Fix & Flip Financing — What Are Investors Running Into Right Now?

Question

Curious what other investors and rehabbers are seeing in today’s fix & flip market.

Are the biggest challenges currently:

• acquisition costs?
• rehab budgets?
• contractor delays?
• holding costs?
• financing leverage?
• insurance/taxes?

We’ve been seeing more investors needing creative financing structures as margins tighten and timelines extend on certain projects.

Recently worked through scenarios involving:

• heavy rehab projects
• cosmetic flips
• delayed refinances
• investors scaling from 1–2 flips into larger volume

It also seems lenders are paying much closer attention to:

• liquidity
• experience
• realistic ARVs
• exit strategy strength

What trends are other investors seeing right now with fix & flip projects?

Peter Mckernan · Answer

To be honest it is days on market that is from not judging the out price correctly! This is the big issue with everyone, and the increase in inventory the last 1.5 years really. This has pushed down on prices which has put the investor in a bad situation on hold the house for a longer time that expected. This increases holding costs and makes the investor not next anything or very little, so their focus becomes just this project to get it offloaded and they cannot focus any resources on other projects. This slows down the movement of money and everything in between. You need to make sure your numbers and comps are solid before getting something into escrow.

Bo Smith · Answer

The financing piece has become the floor that kills deals now, not the ceiling. We've moved from "how much can I borrow" to "can I even borrow at the cost I assumed." Hard money used to be the backstop at 12-14%. Now it's 16-18% depending on loan type and experience level.

What's shifted most for us: we're underwriting to a 7-month hold instead of 4-5 months, which means 3 extra months of carrying costs. That changes the math significantly. On a 00k deal with 0k in carrying costs, that's 10% of your profit just vaporizing in timeline creep.

The lenders checking experience and liquidity aren't being paranoid -- they've seen too many operators hit month 6 with 0k left in their account and no exit. You need real reserves. We're asking ourselves before every deal: "Does this still work if the rehab takes 8 weeks instead of 6, and the sale takes 60 days instead of 30?" If the answer's no, we pass.

What financing terms are you actually seeing from hard money lenders right now on typical flip projects?

Mike Klarman · Answer

I see 80% - 85% leverage most times and I see 10.5% - 12% on the rate.  Most bridge loans fall into those markers.

Bo Smith · Answer

The biggest challenge I'm seeing right now is the cash flow timing on extended holds. A deal that used to close in 5-6 months is now taking 8-9 months to move. That extra 2-3 months of interest, taxes, insurance, and utilities compounds fast. On a $100k bridge loan at 10%, an extra 3 months is $2,500 in additional carry costs.

I've been shifting my strategy toward lighter cosmetic flips and quicker turns. The heavy rehabs that used to make the biggest profits now require almost perfect execution to pencil. Too much margin for error. On the financing side, I'm also working with lenders who understand portfolio deals -- not every flip needs to be a standalone loan package.

Contractor delays are also a real wildcard. Labor is spotty in a lot of markets right now. I'm now building 4-6 weeks of buffer into my timeline just for sub scheduling issues alone.

On your end, are you seeing margins tighten more from the carry costs or from softer ARVs on the exit?

Matthew Bernal · Answer

We're seeing a lot of the same trends. Acquisition costs are still important, but lately the biggest challenges seem to be holding costs, insurance, and investors being overly optimistic on ARV and timelines.

The deals that continue to work tend to be the ones with multiple exit strategies and enough reserves to absorb delays if the market softens or a refinance takes longer than expected.

Curious—are you seeing more pressure coming from financing and liquidity requirements, or are rehab and holding costs creating the bigger challenge for investors in your market?

Steve Garthe · Answer

Matthew, we're seeing pressure from both sides, but liquidity and timeline risk seem to be getting the most attention from lenders right now.

Many investors can still find deals that work on paper, but the margin for error has narrowed considerably. A project that was profitable with a 4-5 month hold can look very different after an additional 90 days of interest carry, insurance, taxes, and utilities.

We're also seeing lenders place more emphasis on reserves and realistic exit strategies than they did a few years ago. Strong deals are still getting done, but assumptions around ARV, absorption, and refinance timing are being scrutinized much more closely.

The investors who seem to be performing best are the ones underwriting conservatively and building multiple exit options into the business plan from day one.

Bo Smith · Answer

Margins and financing terms are squeezing hard right now, especially for investors trying to scale. You're right that lenders are scrutinizing everything more closely now. The days of getting financing with thin margins and weak ARV assumptions are gone. Now they want to see your cash reserves, your experience doing the specific type of project, realistic comps, and a clear exit strategy.

What I'm seeing is that acquisition costs and financing leverage are the real battles. If you're buying a property at 85% of ARV and financing at reasonable terms, you're still in the game. But if you're at 90-95% of ARV or needing to carry high equity out of pocket, the margins collapse fast. I've walked away from deals that "looked good" on paper because the leverage just didn't work. I'd rather do fewer deals with strong margins than more deals where I'm betting everything on execution being perfect.

On the holding cost side, timing really matters now. A deal that was profitable with a 4-month hold in 2023 might not work at a 6-month hold today, depending on the market and the property type. I'm being way more conservative on timelines and realistic about absorption rates in secondary markets.

What's your current lending situation -- are you working with fix-and-flip lenders or are you doing conventional financing? And what's pushing your timelines right now -- market absorption, contractor delays, or something else?

Mick Wadley · Answer

The holding cost creep Bo and Steve described is exactly what makes the capital structure choice so important in 2026. Most investors are focused on the hard money rate — but the real cost exposure is the carry during a timeline extension. A deal modelled for 5 months running to 8 months at 12% interest is $3,000 in extra carry on a $150,000 loan. Manageable. But if you also have rehab draw floats sitting on a personal credit card at 22% during that same extension — those 3 extra months cost significantly more. One thing worth considering: using 0% introductory APR business credit specifically for rehab costs and holding costs rather than personal credit keeps the in-deal capital cost near zero for the first 12 to 15 months regardless of how the timeline shifts. The hard money interest is the fixed cost you cannot control. The in-deal float cost is the variable you can.

Steve Garthe · Answer

Bo, I think you're spot on regarding leverage. We're seeing many lenders shift away from the "maximize proceeds" mindset and focus more on borrower liquidity, experience, and exit viability.

From our side, we primarily work with fix-and-flip, bridge, DSCR, and construction lenders nationwide. The biggest challenge we're seeing isn't necessarily getting deals approved—it's making sure the numbers still work after accounting for longer hold times and more conservative disposition assumptions.

In some markets, absorption has definitely slowed, but contractor availability and municipal timelines are still creating delays as well. What used to be a comfortable 4–6 month timeline often requires additional buffer today.

Your point about walking away from deals is an important one. It seems many successful investors right now are becoming more selective and prioritizing margin preservation over transaction volume.

Have you noticed lenders in your market adjusting leverage more aggressively over the past 12 months, or are they primarily tightening through reserve and liquidity requirements?

Fix & Flip Financing — What Are Investors Running Into Right Now?

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