Fix-and-Flip Loans in California: How Rehab Financing Works
In California real estate, the flipper who can close fastest usually gets the deal. Fix-and-flip loans exist for exactly that: short-term, asset-based capital that funds the purchase and the renovation, underwritten on the property instead of your W-2.
How a Fix-and-Flip Loan Is Structured
- Purchase funds: a percentage of the purchase price, with the rest as your down payment.
- Rehab funds: often up to 100% of the renovation budget, held back and released in draws.
- ARV cap: the total loan is usually capped at a percentage of the after-repair value.
- Term: typically 6–18 months, often interest-only.
What Is ARV and Why It Matters
After-repair value is what the property will be worth once the work is done, supported by comparable sales. Lenders lean on ARV because it's their real protection: a realistic ARV and a tight scope of work make a file easy to approve.
How Rehab Draws Work
Rehab money isn't handed over at closing. You complete a stage of work, an inspector confirms it, and the lender reimburses that stage — this is called funding draws in arrears. Plan to have cash on hand to front each phase.
What Lenders Look For
- A clear purchase price, scope of work, and budget
- Comparable sales supporting the ARV
- Your experience — first-time flippers can qualify, but a track record improves leverage
- Liquidity for the down payment, closing costs, and a few months of payments
- A believable exit: sale, or refinance into a DSCR rental loan
California-Specific Things to Plan For
- Permits and timelines vary widely by city — build extra months into your hold.
- Insurance costs and availability can change the math, especially in fire zones.
- Transfer taxes in some cities add real cost at resale.
Hard Money or Private Money?
Both can fund a flip. Hard money lenders run standardized programs; private money can bend on unusual properties or timelines. We compare them in hard money vs. private money.
The Bottom Line
Good flip financing starts with a good deal: realistic ARV, a clean budget, and a clear exit. Send us the numbers and we'll show you how it structures.
California Business Capital | Fresno, California | info@cabizfunding.com | 559-549-4717