Rehab Financing for Your Fix and Flip

Comparison: Financing Options

1. Construction Loans

What: Bank-issued loan with draw schedule. You pay for work as it's completed.

Cost: 7-8% interest, 1% origination fee

Approval: 2-3 weeks (slow)

Best for: Major renovations, new construction, when you have time to wait for approval

2. Hard Money Loans

What: Private lender loans. Fast approval, flexible terms. Interest-only during project.

Cost: 10-15% interest, 2-3 points origination fee

Approval: 3-7 days (fast)

Best for: Competitive markets, tight timelines, when you need approval fast

3. Cash

What: Pay out of pocket. No debt.

Cost: $0 interest, but capital is tied up

Approval: Immediate

Best for: Small projects, if you have surplus capital, or as proof of funds to negotiate better purchase price

4. HELOC (Home Equity Line of Credit)

What: Borrow against your home's equity. Flexible, revolving.

Cost: 7-9% variable, minimal fees

Approval: 1-2 weeks

Best for: If you own a home with equity, need flexible access to funds, lower rates than hard money

Which One Costs Less?

Construction loan: $100K project, 7 months = ~$4,000 interest + fees

Hard money: $100K project, 6 months = ~$7,500 interest + $3,000 fees = $10,500

HELOC: $100K project, 6 months = ~$3,500 interest (if you have home equity)

Winner: HELOC (if available), then construction loan

How to Choose

Time pressured deal? → Hard Money

Major renovation, no rush? → Construction Loan

Own a home with equity? → HELOC (cheapest)

Small flip, have capital? → Cash (simplest)

Need Rehab Financing?

Sean Bailey can get you funded fast. Hard money, construction loans, HELOCs—he has relationships with all the major lenders.