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Fix and Rent Loan
Last updated: January 16, 2025
Access remarkable savings when you bundle your Fix and Flip loan and DSCR loan refi with OfferMarket.
What is a Fix and Rent Loan?
A Fix and Rent loan is a bundle of Fix and Flip loan (aka "hard money") on the front-end to purchase (or refi a cash purchase) and rehab the property, and then a DSCR loan on the back-end once the property is rented.
When you bundle these two loans together, you receive remarkable benefits:
- Origination fee on DSCR loan: up to 50% OFF our already industry-low pricing
- No Seasoning refinance into DSCR loan: for rate and term refinance (rate and term = less than $2,000 cash out proceeds)
- 90 Day Seasoning refinance into DSCR loan: for cash out refinance into our DSCR loan (cash out = more than $2,000 cash out proceeds)
- Industry-low DSCR Loan Interest Rates: our DSCR loan interest rates are consistently among the lowest in the nation
Fix and Rent Loan Program Guidelines
| Fix and Rent Guidelines | |
|---|---|
| Experience | 0 |
| Credit score (min) | 680 |
| Borrowing entity | LLC or Corporation |
| Max LTC: purchase price | 90% |
| Max LTC: rehab budget | 100% |
| Max LTARV | 70% |
| Interest rate | get instant quote |
| Origination fee | 2 points |
| Term | 6 to 18 months |
| Structure | Interest-only |
| Guarantor | Yes |
| Refi test | 1.2 DSCR after repairs |
Initial Advance: Loan to Purchase Price
The "initial advance" component of your Fix and Flip loan is based on verifiable rehab experience among the members of your borrowing entity. The initial advance may be reduced if our profit analysis comes in low -- this is most common when underwriting ARV is lower than your estimate.
| Verifiable experience among members in borrowing entity | Initial advance (% of purchase price) |
|---|---|
| 0 | 70% |
| 1 | 72.5% |
| 2 | 75% |
| 3 | 77.5% |
| 4 | 80% |
| 5+ | 85% |
| 5+, high ROI | 90% |
| Licensed Realtor | +5% |
| Licensed GC | +10% |
| Licensed Professional Engineer | +10% |
Do I need to refi into a DSCR loan?
No! Your exit strategy can be to sell ("flip"). While this program is focused on serving our core customers -- 1-4 unit rental property investors -- we understand that, instead of holding in your rental portfolio, you may ultimately decide to sell. This is not uncommon and is completely fine!
Can I just use the Fix and Flip component of the loan?
Yes, absolutely. While our core focus is serving rental property investors who prefer to refinance after completing the Fix and Flip loan component of this Fix and Rent bundle, we fully understand you may decide that a sale of the property is a better exit strategy than a refinance based on your unique scenario and goals. We also understand you may decide to work with a different lender for the refinance into a long term loan.
How does the Fix and Flip loan get repaid?
The Fix and Flip loan is paid off when you refinance or sell the property. The Fix and Flip loan is interest-only, this means that your monthly payments only consist of interest and therefore do pay down the principal balance of the loan.
Fix and Rent Loan Example
Let's take a look at an example for a borrower with 720 middle score on their trimerge credit report.
Fix and Flip Loan
- Purchase price: $100,000
- As Is value: $100,000
- Scope of work (rehab budget): $25,000
- ARV (based on scope of work): $175,000
- Market rent (after rehab): $1,600
- Verifiable experience: 5
- Initial advance: $85,000 (85% of purchase price)
- Construction holdback: $25,000 (100% of rehab budget)
- Total loan amount: $110,000
- LTARV: 62.9%
- Interest rate: 10.75%
- Monthly payment: initial advance: $761.46
- Monthly payment: fully disbursed: $985.42
- Annual taxes: $2,000
- Annual insurance: $1,500
- Refi exit strategy test (pass/fail): Pass
- Sale exit strategy test (pass/fail): Pass
- Cash to close (estimated): $22,905
DSCR Loan
- As Is value (after rehab is completed): $200,000
- Market rent: $1,650
- Actual rent: $1,700
- LTV: 75%
- Loan amount: $150,000
- Interest rate: 7.5%
- Annual taxes: $2,000
- Annual insurance: $1,000
- Annual HOA: $0
- Monthly payment (PITIA): $1,298.82
- DSCR: 1.27 (minimum is 1.0)
- Cash out proceeds: $39,117.61
Summary of Example
- Cash to close (Fix and Flip loan): ($22,905)
- Holding costs (3 months interest + draw fees): ($3,196.88)
- Total capital invested into deal: ($26,101.88)
- Cash out proceeds (net of closing costs): $39,117.61
- Net change in cash: +$13,015.73
- Monthly rental cash flow: $351.18
How does draw processing work?
A draw is a reimbursement for progress against your scope of work rehab budget. Our app-based draw processing allows you to receive draw reimbursements fast by avoiding 3rd party inspection.
Step 1: indicate the completion % for each line item in your digital scope of work. Takes 1-2 minutes. Step 2: take photos of the property and submit for review. Takes 5-10 minutes. Step 3: funds are wired to you same day or next business day.
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