Transforming Properties: The Ultimate Fix and Flip Potential Guide

Jul 18

Written By Asher

Fix and flip projects are one of the most popular strategies for building wealth. Investors buy undervalued properties, renovate them, and resell them at a profit. Sounds simple, right? But there’s one major piece of the puzzle that can make or break your success: financing.

At Darkhorse Capital Group, we help investors of all experience levels secure strategic financing for their projects. Whether you’re a seasoned flipper or just starting out, understanding the basics of fix and flip lending is key to achieving strong returns—and avoiding costly mistakes.

What Is Fix and Flip?

A fix and flip investment involves three major steps:

Purchasing a distressed or undervalued property
Renovating or improving it to boost its market value
Selling the upgraded property for a profit

The goal is to complete the entire process in a short timeframe—often within 6 to 12 months. To make that happen, investors need quick and reliable access to capital for both the acquisition and renovation phases of the project.

How Does Fix and Flip Lending Work?

Fix and flip loans are short-term, asset-based financing solutions. They’re designed to help real estate investors move quickly on deals and fund necessary improvements before listing the property for resale.

These loans are typically evaluated based on:

1. Loan-to-Cost (LTC) Ratio

The Loan-to-Cost ratio is one of the most important metrics in fix and flip financing. It represents the percentage of the total project cost that the lender is willing to finance.

Experienced Investors:
Investors with a proven track record often qualify for up to 90% of the purchase price and 100% of the renovation costs. Their experience lowers the perceived risk for lenders, allowing for more aggressive funding.
New Investors:
First-time flippers may be approved for approximately 60% to 75% of the purchase price, but still potentially 100% of renovation costs. In general, lenders will cap the aggregate LTC at around 85% for new investors.

2. Real-World Example: Investor Scenarios

Experienced Investor: John

John has successfully completed five flips. He’s buying a property for $200,000 and needs $50,000 in renovations.

Loan covers 90% of the purchase = $180,000
Loan covers 100% of renovations = $50,000
Total Loan Amount: $230,000
John invests $20,000 of his own capital (excluding closing costs)

New Investor: Sarah

Sarah is starting her first flip with the same numbers.

Loan covers 70% of purchase = $140,000
Loan covers 100% of renovations = $50,000
Total Loan Amount: $190,000
Sarah needs to contribute $60,000 upfront (excluding closing costs)

As you can see, your experience level directly impacts the loan terms you receive. That’s why it’s important to partner with a lending expert who understands how to structure deals that work for your stage of investment.

3. Project Size and Asset Type

The type and size of your project also influence lending terms:

Single-Family Homes:
These are the most common and straightforward for fix and flip lending. Most loans will focus solely on the purchase price and renovation budget.
Larger Projects (Multifamily or Commercial):
These deals often require more complex financing that includes soft costs such as architectural design, permit fees, infrastructure upgrades, and more. The underwriting process is typically more detailed.

The Darkhorse Capital Group Advantage

At Darkhorse Capital Group, we specialize in matching investors with the right lending partners for their specific deals. Our competitive edge comes from a deep understanding of the industry and a network of 70+ trusted lenders.

Here’s what makes us different:

1. Diverse Lending Network

Whether you’re working on a $100,000 cosmetic flip or a $5 million gut rehab, we can connect you with lenders that provide:

Fix and flip loans
Bridge loans
Construction financing
Hard money options
Loans up to $500 million and beyond

2. Customized Lending Solutions

No two fix and flip deals are the same. That’s why we take a tailored approach to every loan:

Evaluate your experience
Review your project’s financials
Match you with lenders that offer the best LTC ratios, interest rates, and terms

Whether you're a novice flipper or a seasoned developer, we help structure deals that maximize profitability and minimize risk.

3. Competitive Terms and Fast Closings

We know how important speed is in real estate. Our lenders can offer:

Pre-approvals in 24 hours
Closings in 5–10 business days
Flexible draw schedules for rehab costs
Interest-only payments during the loan term

Simplifying Your Fix and Flip Journey

Embarking on a fix and flip project doesn’t have to be overwhelming. With the right financial partner, you can navigate the process with clarity and confidence. Here’s how to get started:

1. Assess Your Experience Level

Are you a first-time flipper or a seasoned pro? Knowing your track record will help determine the types of financing available to you and what kind of leverage you can expect.

2. Determine Your Total Budget

Calculate all project-related costs:

Purchase price
Estimated renovation budget
Closing costs
Holding costs (insurance, taxes, utilities)
Sales costs (agent commissions, staging, etc.)

Understanding your true costs helps you borrow the right amount—and avoid cash flow surprises.

3. Connect with Darkhorse Capital Group

Once you’re ready, reach out to our team. We’ll:

Review your deal
Help you prepare a loan package
Match you with the most suitable lender
Support you through every step of the financing process

Partner with a Team That Invests in Your Success

Fix and flip investing is a powerful way to grow your real estate portfolio, but it requires speed, capital, and expert support. With Darkhorse Capital Group, you get access to a nationwide network of high-quality lenders, strategic loan structuring, and personalized service that puts your success first.

Whether you’re working on your first project or your fiftieth, we’re here to help you unlock your full investment potential.