What a 6-Month Flip Loan Actually Costs

Flippers compare rates. The rate is rarely what decides the deal. What decides it is total cost of capital over the actual hold, and the two biggest swing factors are points and how long you take.

The pieces

• Points — paid at closing, fixed, and unaffected by how fast you exit.
• Interest — accrues while the loan is outstanding. On a rehab facility it typically accrues on drawn funds, not the full commitment.
• Third-party closing costs — appraisal, title, escrow, recording. See points and origination fees for which are whose.
• Carry — taxes, insurance, utilities, and the loan payment, every month you own it.
• Exit costs — agent commission and seller-side closing, paid out of the sale.

Why the rehab draw structure matters

On our fix and flip program we fund up to 90% of purchase and up to 100% of rehab. The rehab portion is drawn as work completes, so you are not paying interest on the full rehab budget from day one. A borrower who assumes interest runs on the whole facility from closing will overstate the cost badly.

Run your own numbers in the hard money cost calculator or the fix and flip calculator.

The month that costs the most

It is the one after your term ends. A 6-month term that runs to 8 months means extension fees on top of continued carry, and it lands exactly when your margin is thinnest. Most flips that lose money do not lose it on the purchase price; they lose it on time.

Build the number before you offer

Take purchase, add rehab, add total finance cost over your realistic hold, add carry, add exit costs. Subtract that from a defensible ARV. What is left is the deal. If the answer only works at your best-case timeline, it is not a deal, it is a bet on the timeline.

Estimating a rehab budget and ARV cover the two inputs people get wrong most often.

Typical terms, subject to underwriting. Not a commitment to lend.