Knowledge Base

Fix and Flip Commercial Loans

A fix and flip commercial loan is typically used by a speculator to buy a foreclosed commercial property, also known as an REO, from a bank.  REO's can frequently be purchased for just 60% of their fair market value.  The speculator then fixes up the commercial property, leases it, and flips it (sells it) for a profit.

Banks are very reluctant to make fix and flip commercial loans today.  They are trying to reduce, rather than increase, the number of commercial loans in their portfolio.  Now if you are a very wealthy investor, and you keep large deposits in your bank, you can probably twist the arm of your banker until the bank makes you a fix and flip commercial loan.  Absent this kind of economic power, it is unlikely that you will be able to convince a strange bank to make you a commercial fix and flip loan.

The lenders who are actually closing commercial fix and flip loans today are the private money lenders (hard money lenders).  Most hard money lenders will loan you around 60% of the purchase price of the REO.  It is then up to you  to fix up and the property and then sell it (flip it).  This means you might be required to put down 40% of the purchase price, pay all of the renovation costs (fix up costs), and cover the loan payments out of your pocket until you finally lease the property.  Ouch!

A better way to approach a commercial fix and flip loan is to view it as a form of construction loan.  The total cost of the project will include the purchase price of the REO plus the cost to fix up the property plus the leasing commission plus the loan payments for nine to twelve months.  The fix and flip lender will then loan you a certain percentage of the total project cost; say, 60% to 65%.  The proceeds will then be controlled by the lender, similar to a construction loan, in order to be sure the proceeds are actually used to fix up the property.  Using such a structure, the speculator will be able to borrow far more. is owned by the Blackburne family, which also owns the commercial hard money lender, Blackburne & Sons.  If you are looking for a fix and flip loan on a commercial property located anywhere in the country, and the loan amount is less than $1.5 million, we can make the loan ourselves.  Simply complete this mini-app.  (We are also getting licensed to make fix and flip loans on residential properties in California, Arizona, and Florida.  This new licensing should be in place after September 1, 2011.)

If your fix and flip loan is larger than $1.5 million, you should submit it to the 150+ hard money lenders on  It's free!  We do not have a special menu item just for fix and flip loans, but virtually every hard money lender in the country will make a fix and flip loan.  When you apply using, simply ask for a regular first mortgage.  In the comments section, you should explain that you are seeking a fix and flip loan to buy the REO and sell it.

Or you can write to me, George Blackburne III (the old man and head of Loan Committee), directly at  In the subject line, please insert "Fix and Flip Loan".


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