Buying a distressed property, fixing it, and reselling it for a higher price — fixing and flipping, in other words — is one of the most effective ways for commercial real estate investors to earn a fast return.

While fixing and flipping requires a lot of work and can certainly be risky, many investors find it to be an incredibly rewarding process.

At Commercial Real Estate Loans we support investors with individual fix-and-flip loans up to $2.5 million. We also handle fix-and-flip lines of credit up to $10 million, designed for experienced investors who are renovating multiple properties at the same time. 

Fix and Flip Loan Terms in 2023

Our fix and flip loans offer terms including: 

• Loan Size: $50,000 to $2.5 million

• Leverage: 90% of purchase price, 95% of rehab, 75% LTV/ARV

• Loan Purpose: Loan can be used for renovation/rehab of commercial properties

• Loan Term: 12 months, with optional extensions

• Interest Rate: Varies

• Recourse: Recourse and non-recourse options (if non-recourse, standard carve-outs apply)

• Credit Requirement: 620+

Want to learn more about fix and flip loans? Fill out the form below and a fix-and-flip loan specialist will get in touch.

5 Best Practices for Fixing and Flipping Commercial Real Estate

Learn five best practices for your first (or next) fix and flip.

1. Evaluate Properties

The first step is to find the right property to flip.

When evaluating a commercial property, you should consider factors such as location, market demand, and the potential for renovation. You may want to focus on properties that are in need of cosmetic updates, as these tend to be less expensive to renovate than those that require significant structural changes.

Most importantly, you should take care before straying outside of an asset type you have a wealth of experience with. If you are an experienced office investor, for example, don't assume you will be successful with a multifamily fix and flip. If you wish to go outside your preferred property type, partner with an experienced investor.

2. Comprehensively Plan Your Renovations

When it comes to the actual renovation process, you must have a solid plan in place. A well-executed renovation can significantly increase the value of a commercial property, but a poorly executed one can lead to significant losses.

Before starting any work, you should conduct a thorough inspection of the property to identify any issues that need to be addressed. Note that a fix-and-flip investment doesn't need to correct every single one of a property's flaws. However, be realistic about what you'll need to address: Make sure to take a close look at any potentially large issues (for example, investigate the status of the building's roof, HVAC systems, etc.) so you aren't surprised by biting off more than you can chew.

3. Secure the Best Financing

As discussed earlier, getting the right fix-and-flip loan can be essential to your investment strategy's success. Ensure you are looking at the right kind of loan, detailed at the top of this page, and that you are able to get the financing you need for the costs of your project. Get a free fix-and-flip loan quote by filling in the form below.

4. Select Experienced Contractors

It's also important to work with a team of experienced contractors and designers to ensure that the renovation is done correctly. If you have used a team in the past that you found reliable, you're ahead of the game.

Remember that time is money in the fix-and-flip game, so you'll want to work quickly without sacrificing quality.

5. Market Your Property

Finally, you'll need to prepare to sell your property — likely even before all the work has concluded. This may involve working with a commercial real estate agent or using online listing services to get the word out. Try and generate as much interest as possible to find a buyer who is willing to pay top dollar for your renovated property.

Along with this, understand what an ideal sale price is for your property before listing. While it's simple to stick to your guns back when you planned the project, the market may have changed in the meantime — for the better or for the worse. Understanding your market is essential in determining your property's sale price.