Fix-to-Rent Loans: A Guide for Real Estate Investors
In real estate investing, choosing the right financing strategy is key to maximizing returns. One option that’s gaining traction is the fix-to-rent loan. Unlike fix-and-flip loans, which focus on quick resale, fix-to-rent loans allow investors to buy distressed properties, renovate them, and convert them into long-term rental assets.
What Are Fix-to-Rent Loans?
Fix-to-rent loans provide the funding necessary to purchase and renovate properties, turning them into stable rental investments. This financing method typically involves a two-step loan process:
Acquisition Loan: Initially, investors use a hard money loan or private money loan to purchase the property and fund renovations.
Refinance into Permanent Financing: Once the property is repaired and rented out, investors transition into a long-term loan, such as a Debt Service Coverage Ratio (DSCR) loan or conventional mortgage.
How the Fix-to-Rent Loan Process Works
With our funding we simplify the fix-to-rent process for real estate investors. Here’s how it works:
✅ Step 1: Purchase the Property
Secure financing to buy a distressed property, covering both the purchase price and estimated repair costs.
✅ Step 2: Renovate the Property
Use the loan’s repair holdback to complete necessary structural and cosmetic improvements, making the home attractive to renters.
✅ Step 3: Transition to Permanent Financing
Once renovations are complete, choose from long-term financing options:
DSCR Loan: Uses the property’s rental income for qualification, making it a great option for investors who don’t meet standard income documentation requirements.
Conventional Refinance: Ideal for borrowers with documentable income, qualifying for a traditional mortgage.