Can Private Money Finance Both the Purchase and Renovations on a Fix-and-Flip Deal?

Question

I'm interested in hearing from investors who have used private money financing to purchase and renovate investment properties.

For those who have completed fix-and-flip projects using private lenders:

• Did your financing cover both the purchase price and renovation costs, or did you need to bring additional cash?
• Was renovation funding released upfront or through draws as work was completed?
• How did the lender determine the renovation budget and after-repair value (ARV)?
• What expenses did the lender exclude from the approved budget?
• Were there specific experience requirements, down payments, or cash reserves you needed to meet?
• What would you recommend to a first-time investor preparing to apply for this type of financing?

Did your financing cover both the purchase price and renovation costs, or did you need to bring additional cash?

Was renovation funding released upfront or through draws as work was completed?

How did the lender determine the renovation budget and after-repair value (ARV)?

What expenses did the lender exclude from the approved budget?

Were there specific experience requirements, down payments, or cash reserves you needed to meet?

What would you recommend to a first-time investor preparing to apply for this type of financing?

I'm especially interested in learning how investors structure these deals, manage renovation expenses, and avoid running short on capital midway through a project.

What has your experience been with private money financing for both acquisition and renovations?

Adam Summerer · Answer

Yes, a lot of private lenders fund both, typically 85-90% of the purchase and 100% of the rehab budget, capped somewhere around 70-75% of ARV, with the rehab held back and released in draws after an inspection. The ARV cap is usually the real limiter, not the LTC. First-timers often get a bit less leverage and a reserve requirement, and soft costs like permits, holding costs and your own labor usually aren't in the funded budget. Biggest prep tip is a line-item scope with contractor bids and three solid sold comps, it speeds up approval alot.

Hossein Sharifi · Answer

Yes, purchase plus rehab on one private or hard-money loan is common. The typical shape:

1. Loan sized to the lower of a max LTC (purchase plus approved rehab) or a max % of ARV

2. Rehab funds released on draws after inspection, not as a lump sum at closing

3. Soft costs and upgrades often excluded; contingency belongs in your cash, not the lender's goodwill

4. Newer borrowers put in more skin, get lower LTC, and see tighter draw scrutiny

For a first file, bring a line-item budget, a contractor bid, comps supporting ARV, and reserves for 2–3 delayed draws or extra holding months. Get the draw schedule and extension fees in writing before you close.

Matthew Morrow · Answer

@Susan Stoker Yes, private money regularly covers both the purchase and the renovations on the same deal. Most lenders fund the rehab on draws instead of handing it all over on day one, and they underwrite to ARV plus your experience and reserves. If you're newer, expect to put in more of your own money or get a lower loan-to-cost. What terms are you seeing so far?

Can Private Money Finance Both the Purchase and Renovations on a Fix-and-Flip Deal?

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