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?

Blake A. Rivers · Answer

There are a handful of RTL ( residential transition loan) providers that fund first time flippers but they place a high value on your credit score and liquidity for approvals. The main lender for new borrowers has been LendingHome ( now Kiavi) but there are some other lenders that have become comfortable with first time flippers ( rescap & Anchor). Kiavi is a highly tech forward model and while they are a good lender on terms for new flippers they do not offer a high level of customer service after closing and for new investors having a company that you can communicate with post closing can be a major benefit.

• Did your financing cover both the purchase price and renovation costs, or did you need to bring additional cash?
• 
• - When you have completed enough deals in the same area ( generally 10 in 3 years) a handful of companies will offer 100% financing but as you are a new investor the best you can do is 85% of the purchase price and 100% of the rehab budget covered but most will do 80 or 75% of the purchase on your first deal

• Was renovation funding released upfront or through draws as work was completed?
• 
• All companies in the RTL space do draws on a reimbursement basis so you pay first or the work is completed first then payment from the lender is released after verification of said completed work

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

- Lenders do not determine the budget specifically but we do review your budget to determine feasibility as we want to be sure that your line items are accurate for the work you are doing. ARV is done via the sales comparison approach with an increase in the condition rating. So a house that needs repairs will be C5 or C4 on the 1004 ( sales comparison appraisal form) and a completely renovated house will be C2 ( can't achieve C1 unless the house is a new build). The difference between C5 and C2 can be 20% or greater in most markets but an appraiser or internal valuations team will review the comps and depict the value for underwriting purposes.

• What expenses did the lender exclude from the approved budget?
• 
• - Lenders generally exclude costs like insurance, taxes and other costs that are not adding value to the project. some lenders allow project manager fees or GC fees if the project requires that level of oversite.

• Were there specific experience requirements, down payments, or cash reserves you needed to meet?
• 
• -At Anchor we require 50k minimum after the down payment in liquidity and the more deals you have exited the lower your down payment will be on the next project

• What would you recommend to a first-time investor preparing to apply for this type of financing?
• 
• - I would run the numbers on the ARV yourself but focus on the immediate area near your property rather than hunting for a direct comp further away as that is a major issue I see with 1st time investors who will see a 3/2 1800sf 1.5miles away and think that shows the value of your specific property. A 4/2 2100sf property .5miles away would be a better indicator of buyer appetite and for you the ARV is directly correlated to the price a buyer is willing to pay not what an appraisal will say your value is. Additionally I would say include a contingency on your budget of at least 5% but 10% is a better option. First time flippers are not accustomed to the material & labor costs that can change during your flip and a contingency allows you to navigate that without fear.

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?

- Having an originator or rep at a private lender who has time to walk you through the process is invaluable as you will have questions and concerns about the project and scope of work that a patient originator at a RTL lender can walk you through and explain will help you execute much better and as a new investor having an ally at the lender is a massive win. Almost all RTL lenders are similar in how they operate and function so do not get caught up in the rate differences and ask what level of service am I being offered for this price as most lenders will have a 3rd party service their draws or post-closing which removes your ability to have full visibility and assistance after closing.

Bre Norris · Answer

Yes, a lot of private lenders do fund first-time flippers. Without a track record, here's what tends to help most:

1. A deal with a real margin, so the after-repair value is comfortably above purchase plus rehab plus costs.
2. Written contractor bids instead of your own estimate.
3. An experienced GC or partner on the team. Lenders weigh that heavily.
4. Some cash of your own in the deal, plus a reserve for surprises.
5. A backup exit, like renting or refinancing if the sale is slow.

Also ask every lender how their rehab draws work and how fast they pay them. That matters more than most first-timers expect.

I'm on the lending side in Massachusetts and happy to look at numbers if you want a second set of eyes. (Bre, Apex Capital)

Othmane Krari · Answer

Great question, Susan. It depends on how the lender sizes the loan. Some fix-and-flip lenders fund a % of purchase plus 100% of rehab via draws (LTC-based). Asset-based bridge lenders like us size off value instead, so on a typical deal you'd bring the down payment and fund part of the rehab yourself, but you get speed and fewer hoops. Ask any lender upfront: is it LTC or LTV, how are draws released, and what happens if the project runs long? Those three answers tell you how much cash you really need.

Flores Marcus · Answer

I had a great experience with a local lender whom we used previous and they had the best rate for our deals. Yes, it’s possible and doable that a lender provide 100% financing for both the purchase and rehab costs. Let’s connect I do have some recommendations locally.

Brian Bowman · Answer

@Susan Stoker yes, on the right deal the lender can fund both. Here's how it usually works from the lending side:

Purchase + rehab: Most hard money programs fund a large share of the purchase (up to 90% on approved deals) and up to 100% of the rehab budget. The whole loan is capped at a percentage of ARV, so the ARV ends up being the real limit, not the purchase price.

Draws: Rehab money is almost never released upfront. You fund the work, an inspector verifies it's done, and the lender reimburses that line item. Plan your cash flow for the first draw or two before money starts coming back.

Budget and ARV: The lender wants a line-item scope of work from you or your contractor, and an appraisal that values both as-is and ARV. A vague budget is the #1 reason a deal gets cut back.

Experience: First-timers can absolutely get done. Expect a little more cash in the deal or a lower leverage tier until you have a couple of flips or rentals under your belt.

Biggest advice for a first deal: build a 10-15% contingency into the budget, and know your exit before you close. If you might keep it as a rental, line up the DSCR refinance at the start. A no-seasoning DSCR lender can take you out of the hard money loan as soon as the rehab is done and it's leased.

Disclosure: I'm a DSCR/hard money broker (DSCR Kings, NMLS #2016766).

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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