Pros and Cons of Fix and Flip Loans

Learn more about the pros and cons associated with fix and flip loans before you invest!

Fix and flips are a common way for real estate investors to make money by purchasing a property and renovating it in order to sell it for a higher price. Costs associated with fix and flips can be costly, which is why many investors seek out fix and flip loans, often referred to as short-term bridge loans or rehab loans.

Fix and flip loans are used by investors to cover costs of renovation expenses. These loans are generally shorter term loans, ranging from 12 to 18 months. Before approving a loan, lenders will look at how much the property was purchased for and the after repair value (ARV).

There are a number of advantages of fix and flip loans that make them very attractive to real estate investors. The potential to see fast and big returns does, however, come with some possible pitfalls. Doing your research and ensuring you have a comprehensive understanding will equip you to take the right steps to help alleviate any issues that could be related to your fix and flip. In your research be sure to seek out and develop relationships with experienced lenders, who will surely have a constructive impact on the process overall.

Let's take a quick look at some of the pros and cons you can expect with fix and flip loans.


  • Quick financing

  • Flexible terms

  • Property serves as collateral, protecting your personal assets

  • No prepayment penalties

  • Interest only payments


  • High interest rates

  • No guarantee your investment property will sell

  • Unpredictable costs and time

In most cases, reward outweighs the risk with fix and flip loans. If you’re having difficulty getting your project funded, fix and flip loans are a good option.

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About CALCAP Lending

A division of CALCAP Advisors, CALCAP Lending benefits from the expertise of a seasoned team of professionals with extensive, successful track-records covering a variety of disciplines and leading large, nationally-recognized institutions. A private money direct lender, CALCAP Lending provides short to mid-term financing for property investors and businesses looking to purchase, refinance, renovate, and construct residential or commercial properties.

Lending FAQs

You've got questions, we've got answers.

What is private money lending?

Private money lending is a collateral-based lending strategy that is often associated with shorter terms and more attractive features. A private money loan offers more flexibility than a conventional mortgage or bank loan.

How does a private money loan work?

Private money lenders provide financing using money from private entities. Private money loans often work as bridges to help investors gather funds to achieve their short term real estate goals, but long term, permanent options may also provide.

Why would I choose a private money lender?

There are many advantages to using a private money lender for your real estate investments! Private money lenders can be more lenient when it comes to borrower credit issues, often there are no prepayment penalties, you can leverage your cash to buy multiple properties, and private money loans are quicker when compared with institutional loans.

Can I get prequalified for a loan?

CALCAP has a responsive loan team who are able to prequalify you. Contact a loan specialist at 833.816.5580 to get started.

How long does the lending process take?

Private money lending can be a quick and painless process. From start to finish, 30 days is common, however, turn around times can be as short as 10 business days.

Can I still be approved for a loan if I have bad credit?

Generally yes, we understand that people have temporary financial issues that come up, and we want to work with you to help you rise up financially to a better place. Offsets to credit concerns may include experience as a real estate investor, good cash reserves, and/or larger down payments.

I am a broker or investor, how can I work with CALCAP?

Business is built on relationships. Ours is no different. CALCAP Value and Preferred Partners receive exclusive rates and services. For more details and to submit your application, visit our partners page.

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