How a flip loan is structured
A fix-and-flip loan is short-term, asset-based financing. The lender looks at three numbers: what you're paying, what the work will cost, and what an appraiser thinks the home will be worth afterwards. The purchase portion funds at closing. Renovation money sits in a holdback and is paid out after each phase is inspected, so you'll want enough cash to front the first stage of work.
Your exit is usually a sale on the open market. Some investors refinance into a DSCR rental loan instead if the numbers favor holding.
Seattle scopes that catch people out
The draw schedule only works if the budget is realistic, and Seattle housing has a few habits worth pricing in from day one:
- Side sewers. Many older lines are clay or concrete and cracked by tree roots. A camera scope before closing is cheap compared with replacing a line to the street.
- Heating oil tanks. Plenty of pre-1960s homes still have a buried tank. Decommissioning, and sometimes soil cleanup, needs to happen before resale.
- Wiring and seismic. Knob-and-tube circuits and unbolted foundations come up often in early-1900s homes and affect both insurance and buyer inspections.
- Moisture. Long wet seasons mean rot in sills, decks and crawlspaces. Budget contingency for what you can't see yet.
Permits
Cosmetic refreshes rarely need much. Moving walls, adding a bathroom, or finishing a basement usually means a permit from the Seattle Department of Construction and Inspections, and review time belongs in your holding-cost math. Outside the city, check the relevant county or municipal building department.
What to send us
The purchase contract (or target price), a line-item scope with your contractor's figures, comparable sales that support the after-repair value, and a short note on similar projects you've completed. If you're still deciding between a quick purchase and a longer plan, a bridge loan may be worth comparing.