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Fix and Flip Loans: Turning Properties to Profit
By Jason Taken · Principal, Jaken Finance Group
Fix-and-flip spread math for non-owner-occupied investors — worked examples, LTC/ARV sizing, carry costs, and 8.99%–13.5% IO bridge parameters.
Fix-and-flip profit is not a marketing slogan — it is an inequality you prove before LOI. Sale price − 8% sale costs − all-in basis − IO carry − loan fees ≥ target net. If that fails at conservative ARV, no lender relationship saves the deal.
Jaken Finance Group provides fix-and-flip bridge on non-owner-occupied investment property at 8.99%–13.5% interest-only — sized on LTC, ARV, and documented scope. This guide walks through spread math, binding leverage limits, carry modeling, and stress tests — not generic feature lists.
Fix and flip calculator · Master fix and flip financing guide · 100% LTC program details
Fix-and-flip spread formula
| Step | Calculation |
|---|---|
| 1. All-in basis | Purchase + rehab + permits + contingency |
| 2. Gross spread | ARV − all-in basis |
| 3. Gross spread % | Gross spread ÷ all-in basis |
| 4. IO carry | Loan balance × rate ÷ 12 × hold months |
| 5. Sale costs | Sale price × 8% (agent, title, transfer, staging) |
| 6. Loan fees | Points + origination + per-draw fees |
| 7. Net profit | Sale price − sale costs − all-in − carry − fees |
| 8. Net ROI | Net profit ÷ sponsor equity |
Pass threshold: Net ≥ 12% on all-in basis for cosmetic scopes; ≥ 15% for gut rehabs with longer hold and higher risk.
Hard money parameters — Jaken Finance Group 2026
| Parameter | Range |
|---|---|
| Rate | 8.99%–13.5% IO |
| LTC | 85%–90% acquisition + rehab |
| ARV cap | 65%–75% total debt |
| Close | 7–14 business days |
| Hold typical | 4–9 months |
| Draw release | 3–5 business days post-inspection |
| Collateral | Non-owner-occupied investment property only |
Hard money loan facts · Know about fix and flip loans
Worked example — cosmetic flip (passes)
| Line | Amount |
|---|---|
| Purchase (estate sale, dated kitchen/bath) | $158,000 |
| Rehab (kitchen, bath, LVP, paint, landscaping) | $34,000 |
| Contingency (12%) | $4,080 |
| All-in basis | $196,080 |
| ARV (sold comps, same submarket) | $265,000 |
Leverage sizing:
| Constraint | Calculation | Cap |
|---|---|---|
| 90% LTC | 90% × $196,080 | $176,472 |
| 75% ARV | 75% × $265,000 | $198,750 |
| Binding limit | Lower of above | $176,472 |
| Sponsor equity | $196,080 − $176,472 | $19,608 |
Carry and exit:
| Line | Amount |
|---|---|
| IO carry (10.25%, 5 months) | ~$7,550 |
| Sale price | $258,000 |
| Sale costs (8%) | ($20,640) |
| Origination (2 points on funded) | ($3,529) |
| Net profit | ~$29,203 |
| ROI on equity | ~149% annualized |
Gross spread: ($265,000 − $196,080) / $196,080 = 35%. Net after costs: ~15% on all-in — viable file.
Worked example — mid-rehab with mechanical (tighter margin)
| Line | Amount |
|---|---|
| Purchase | $172,000 |
| Rehab (HVAC, panel, full cosmetic) | $46,000 |
| Contingency (12%) | $5,520 |
| All-in basis | $223,520 |
| ARV | $295,000 |
| Hard money funded @ 88% LTC | $196,698 |
| Sponsor equity | $26,822 |
| IO carry (11%, 7 months) | ~$12,630 |
| Sale price | $288,000 |
| Sale costs (8%) | ($23,040) |
| Net profit | ~$12,808 |
| Net % on all-in | ~5.7% |
This file fails the 12% net threshold — mechanical scope extended hold, sale price came in below ARV, and binding LTC left more equity in the deal. Pass or renegotiate basis before binding.
Worked example — spread failure (do not close)
| Line | Amount |
|---|---|
| Purchase (MLS, multiple offers) | $198,000 |
| Rehab (cosmetic only) | $28,000 |
| All-in basis | $226,000 |
| ARV (optimistic — active listings used) | $268,000 |
| Hard money funded @ 90% LTC | $203,400 |
| IO carry (10.5%, 6 months) | ~$10,700 |
| Sale price (actual) | $249,000 |
| Sale costs (8%) | ($19,920) |
| Net profit | (~$8,020) loss |
Root causes: ARV anchored on active listings not sold comps, basis too high in competitive MLS, and carry ran 8 months when marketing stalled. Underwriters would flag ARV — but sponsors who skip the math pre-LOI still lose equity.
Red flags in hard money lenders · Average rehab costs 2026
LTC vs ARV — which binds?
Underwriters size to the lower practical limit. Sponsors often model 90% LTC and ignore ARV cap — then discover $20,000+ more equity required at term sheet.
| Scenario | LTC cap | ARV cap (75%) | Binding |
|---|---|---|---|
| High basis, moderate ARV | $198,000 | $213,750 | LTC |
| Low basis, high ARV | $175,500 | $225,000 | LTC |
| Low basis, low ARV | $162,000 | $157,500 | ARV |
When ARV binds, either increase down payment or renegotiate purchase price — do not inflate comps.
Carry modeling — IO at 8.99%–13.5%
Interest-only carry is predictable but compounds with timeline slippage:
| Loan balance | Rate | Monthly IO | 5 mo | 7 mo | 9 mo |
|---|---|---|---|---|---|
| $180,000 | 9.99% | $1,499 | $7,495 | $10,493 | $13,491 |
| $200,000 | 10.50% | $1,750 | $8,750 | $12,250 | $15,750 |
| $220,000 | 11.25% | $2,063 | $10,315 | $14,441 | $18,566 |
Budget +2 months beyond your optimistic rehab timeline. Winter markets and permit delays routinely push 5-month plans to 7.
Add loan fees at LOI:
| Fee type | Typical range |
|---|---|
| Origination points | 1–3% of funded amount |
| Per-draw inspection | $150–$350 per release |
| Appraisal | $500–$750 |
| Legal / doc prep | Varies by state |
Stress test before LOI
Run three scenarios on every candidate deal:
| Scenario | ARV assumption | Hold period | Action if net under 10% |
|---|---|---|---|
| Base | Sold comp median | Planned timeline | Proceed if net ≥12% |
| Downside | ARV −10% | +2 months carry | Pass if net under 8% |
| Upside | ARV +5% | On-time | Sanity check — do not underwrite to upside |
Also stress 90% of rent if modeling BRRRR exit instead of sale — see real estate strategies buy hold vs flip.
What underwriters need — complete file
Incomplete packages miss the 24–48 hour term sheet window:
| Document | Why it matters |
|---|---|
| Purchase contract | Price and close date |
| Sold comps (3+) | ARV anchor — same submarket |
| Scope + bids | LTC and draw schedule |
| Entity docs (LLC) | Business-purpose vesting |
| Liquidity proof | Down payment + 3-month carry |
| Exit pro forma | Sale timeline with spread math |
| Insurance quote | Investor / landlord policy |
Checklist for evaluating proposals · Hard money loan application process
Common spread killers
| Mistake | Impact on net |
|---|---|
| ARV from active listings | Overstates value 5%–15% |
| Scope without contingency | Overrun erodes 100% of overrun $ |
| Ignoring ARV cap binding | More equity than planned |
| 8% sale costs omitted | Overstates net by $15K–$25K |
| Owner-occ insurance quote | Wrong coverage class — re-quote delay |
| Comps from adjacent submarket | ARV unsupported at appraisal |
Chicago building violations due diligence · Double wide flip case study
Flip vs hold — when spread says pass but rent says go
When flip net fails but DSCR ≥1.0 at 5.75%–10.5% on post-rehab rent, run the BRRRR column before walking:
| Metric | Flip column | BRRRR column |
|---|---|---|
| Net at sale | under 10% — fail | N/A |
| Post-rehab rent | N/A | $1,750/mo |
| DSCR @ 75% LTV | N/A | 1.32 |
| Cash-out at refi | N/A | ~$28,000 |
Same hard money bridge at 8.99%–13.5% funds acquisition — exit changes from sale to DSCR refi. Dual-exit files survive 2026 carry pressure.
Related resources
- Power of fix-and-flip financing
- Real estate flipping with hard money
- Fix and flip loans no money down guide
- Fort Wayne fix-and-flip spreads 2026
- Submit flip pre-qual · Submit scenario · (833) 264-7776
Fix and Flip Loans: Turning Properties to Profit — next step (2026)
Bridge 8.99%–13.5% IO works when sold comps, scope contingency, and resale timeline are in the file at LOI — not ARV alone.
Submit scenario · Pre-qualify · (833) 264-7776.
Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. Closing times are in business days and commence upon receipt of appraisal payment and satisfaction of borrower conditions. Closing times may be delayed due to appraiser property access . All loans are subject to full underwriting for loan approvals. Jaken Finance Group only finances non-owner occupied investment properties.
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Jaken Finance Group, 2300 Barrington Road, Suite 400, Hoffman Estates, IL 60196