Rehab loans for investment property fund the purchase and renovation of non-owner-occupied assets — the same product family investors call fix-and-flip, hard money, or bridge-to-sell financing. If you are buying distressed inventory, gutting a kitchen, or repositioning a small multifamily before resale or DSCR refi, a rehab loan is the short-term capital that closes before the bank’s 45-day clock starts.
Jaken Finance Group structures rehab holdbacks with draw inspections, interest-only payments during the project, and leverage tied to after-repair value (ARV) — not your W-2. Rates run 8.99%–13.5% on 6–18 month terms nationwide.
How rehab loans for investment property work
| Component | Typical structure |
|---|---|
| Acquisition advance | Up to ~90% of purchase on qualified files |
| Rehab holdback | 100% of documented scope held in escrow; released on draw |
| Term | 6–18 months interest-only |
| Underwriting | ARV comps, LTC/LTV, scope, liquidity, exit |
| Entity | LLC vesting standard |
| Rate | 8.99%–13.5% IO |
Run deal economics on the fix and flip calculator then pre-qualify.
Rehab loan vs. fix-and-flip loan — same product
Google surfaces both terms under the same intent. Jaken Finance Group treats them as one program:
- Rehab loan — emphasizes renovation draw component
- Fix and flip loan — emphasizes resale exit
- Hard money loan — emphasizes asset-based underwriting speed
Primary program hub: What is a hard money loan? · Beginner path: Fix and flip loans for beginners · High leverage: 100% financing
Types of rehab projects investors finance
Not every rehab looks like a TV flip. Lenders categorize by scope intensity:
| Rehab tier | Scope examples | Typical hold | LTC impact |
|---|---|---|---|
| Cosmetic | Paint, flooring, fixtures, landscaping | 3–5 months | Highest leverage |
| Moderate | Kitchen/bath, HVAC, windows | 5–8 months | Standard tiers |
| Heavy | Structural, layout change, addition | 8–14 months | Lower LTC · longer term |
| Gut / fire | Full mechanical replacement | 10–18 months | Experience required |
Cost benchmarks: average fix-and-flip rehab costs 2026 · Chicago rehab costs per SF · tariffs and rehab budget impact
Rehab draw schedules and inspections
Rehab holdbacks are not a single check at closing. Jaken Finance Group releases capital in draw milestones tied to completed work:
| Draw phase | Typical release trigger |
|---|---|
| Initial advance | Acquisition funding at closing |
| Rough-in / mechanical | Plumbing, electrical, HVAC rough complete |
| Drywall / finishes | Kitchen, bath, flooring progress verified |
| Final draw | Punch list complete; photos match scope |
Each draw requires inspector or lender verification that spend aligns with the approved scope. Sponsors who front-load cosmetic work while neglecting mechanicals see draws rejected — and projects stall with unpaid contractors.
Draw submission checklist
| Item | Format |
|---|---|
| Draw request form | Lender template |
| Progress photos | Date-stamped · room labeled |
| Paid invoices | Matching scope line items |
| Inspection report | Third-party or lender inspector |
| Change orders | Pre-approved before billing |
Full process: fix and flip draw process guide
Budget 10% contingency inside the line-item scope, not as a vague add-on. Overruns without reserves force out-of-pocket mid-project or extension fees at maturity.
Worked example: moderate rehab in South Carolina
Columbia SFR — 1978 ranch, outdated mechanicals:
| Line | Amount |
|---|---|
| Purchase | $142,000 |
| Rehab scope | $58,000 (HVAC, kitchen, bath, roof patch) |
| Total cost | $200,000 |
| ARV | $268,000 |
| Loan at 87% LTC | $174,000 |
| Sponsor cash | $26,000 + reserves |
| Rate | 10.75% IO · 6-month hold |
| Draw schedule | 4 draws · 25/30/30/15 split |
| Sale at $262K | Net ~$38K after carry and costs |
Historic rehab timelines differ: Charleston historic rehab hard money
Worked example: heavy rehab on 2-unit BRRRR
Milwaukee duplex — vacant upper unit, code violations:
| Phase | Detail |
|---|---|
| Acquire + rehab | $310K all-in · hard money 85% LTC |
| Rehab scope | $95K — electrical panel, 2 kitchens, 2 baths |
| Stabilize | $2,400/mo combined rent |
| DSCR refi | 75% LTV at 5.75%–10.5% band · DSCR 1.18 |
| Hold | Cash-flowing duplex · equity for next deal |
BRRRR guide: mastering BRRRR for DSCR success · hard money for buy-and-hold strategy
When NOT to use a rehab loan
Rehab debt is for value-add with a defined exit — pass when:
| Scenario | Problem | Alternative |
|---|---|---|
| Property needs no work | Paying rehab pricing for acquisition-only | Bridge loan or DSCR |
| 30-year hold, no resale plan | IO carry destroys returns | DSCR at 5.75%–10.5% |
| Scope exceeds 40% of purchase | Timeline and budget risk | JV equity partner |
| Unpermitted work required | Code enforcement blocks draw | Legalize first or walk |
| Environmental remediation | Outside standard scope | Specialist lender or cash |
| Owner-occupant renovation | Wrong product category | FHA 203(k) or conventional — see CFPB rehab loan resources for consumer options |
Rehab on specialty property types
| Property type | Program | Notes |
|---|---|---|
| SFR / 2–4 unit | Standard rehab | Primary volume |
| Manufactured on land | MH flip program | Foundation and title requirements |
| Condo / townhome | Case-by-case | HOA hard money rules |
| Small commercial mixed-use | Commercial bridge | Business plan required |
| Probate / estate | Probate collateral guide | Title timeline matters |
Contractor and permit requirements
Lenders tie draw releases to permitted work in most municipalities:
- Pull building permits before rough-in draw
- Schedule inspections aligned with draw milestones
- Use licensed trades for electrical, plumbing, HVAC
- Document change orders before incurring cost
- Maintain builder’s risk insurance throughout project
Requirements reference: fix and flip loan requirements · Scope templates: scope of work for hard money borrowers
Geo rehab loan hubs
- Fix and flip loans Chicago · Fix and flip loans Illinois
- Fix and flip loans Florida · Fix and flip loans Texas
- Fix and flip loans Indiana · Fix and flip loans Georgia
- Miami vs Tampa flip comparison
Full state matrix: real estate financing by state
BRRRR exit: rehab loan to DSCR refi
Many investors use a rehab loan for the acquire-and-renovate leg, then refinance into a DSCR loan for investment property when the unit is leased. Jaken Finance Group funds both legs — including no-seasoning cash-out on select stabilized files.
| Rehab leg | Permanent leg |
|---|---|
| 8.99%–13.5% IO · 6–12 mo | 5.75%–10.5% · 30-year |
| ARV-driven leverage | DSCR-driven leverage |
| Draw-based funding | Single close refi |
Extension and maturity management
If rehab runs past the initial term:
| Option | Cost | When to use |
|---|---|---|
| Extension | 0.5–1 point · 3-month increment | Project 80%+ complete |
| Partial payoff from sale deposit | None if sale contracted | Buyer under contract |
| DSCR refi early | Permanent closing costs | Lease in place · DSCR clears |
Rehab loan FAQ
What is a rehab loan for investment property?
A rehab loan funds acquisition plus renovation of a non-owner-occupied property — typically short-term hard money with interest-only payments and draw-based rehab holdbacks.
How much of the rehab will a hard money lender fund?
Qualified sponsors often access up to 90% of purchase plus 100% of documented rehab on fix-and-flip files. Leverage depends on ARV, LTC, experience, and liquidity.
Are rehab loans the same as fix and flip loans?
Yes — investors use the terms interchangeably. Both describe asset-based financing for buy-renovate-sell or BRRRR acquisitions on investment property.
How fast can rehab loans close?
Jaken Finance Group typically closes in 7–14 business days with complete diligence — appraisal, title, scope, and entity docs aligned.
Submit your rehab loan scenario
Under contract on a property that needs work? Pre-qualify for fix and flip / rehab with address, ARV, and scope of work.
Related: using hard money to invest in real estate · advantages of hard money loans · private money lenders · fix and flip loan rates · how to get a fix and flip loan · how long to close · calculator walkthrough · foreign national flip · 203(k) vs hard money
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