Here's the short version: a fix and flip loan is short-term money sized around what the house will be worth after the work, not just what it costs today. You buy, you renovate, you sell (or refinance), and the loan gets paid off. The details are where flips in Show Low and Pinetop-Lakeside either make money or quietly lose it.
The one number everything hangs on: ARV
ARV means after-repair value, the price the finished home should sell for. Fix and flip lenders look at the purchase price, your rehab budget, and the ARV, and they size the loan so there's room between what they lend and what the house should bring when it's done.
That's why these loans feel different from a normal mortgage. A standard purchase loan cares a lot about your income and the home as it stands. A flip loan cares about the project: is the deal sound, is the budget realistic, and does the exit make sense?
How the money usually flows
- Purchase funds. The lender funds a portion of the purchase, and you bring the rest plus closing costs.
- Rehab funds. Renovation money is often held back and released in stages (draws) as work is completed and inspected. Plan your own cash flow around that, because you may front some costs before a draw comes back.
- Short-term by design. These loans are meant to be paid off when you sell or refinance, so the clock matters. Every week the house sits unfinished costs you money.
- Exit plan. Sell it, or hold it as a rental. If you keep it, a DSCR rental loan can take the place of the flip loan.
Rates move, and costs vary a lot from one lender to the next. That's the whole reason to compare instead of taking the first quote.
Pencil the deal first (an example, not a promise)
Say a dated home in Show Low is listed at $250,000. You estimate $50,000 in work, and recent nearby sales of finished homes suggest it could sell for around $380,000. That looks like plenty of room, until you list everything:
- Purchase and rehab: $300,000
- Loan costs, insurance, utilities and taxes while you hold it
- Selling costs: agent commission, title and closing
- A cushion for the surprise every old house has (budget for it, don't hope)
These numbers are illustrative only. The exercise is what matters: run it with conservative values, and if the deal only works when everything goes perfectly, it isn't a deal. I'm an investor myself with 50+ properties, so I'd rather tell you that before you buy than after.
What's different about flipping in the White Mountains
This isn't Phoenix, and the math shouldn't pretend it is.
- Thin comps. In a smaller market, there may be only a handful of sales close to your house. A cabin in Pinetop-Lakeside and a home in Show Low can be completely different markets. Use the right comparison, and be honest about it.
- Weather. Snow and cold can slow roofing, paint, and exterior work. A project that finishes in a clean stretch of summer is a different animal than one that stalls in January.
- Contractors. Good ones in the White Mountains are booked. Line up your crew before you close, not after.
- Insurance. Coverage on a vacant, in-progress home can be tricky, and wildfire exposure matters here. See our guide to home insurance and wildfire risk.
Where a broker helps
Flip lenders are not all alike. Some want experienced investors only. Some are more flexible on a first project. Some price rehab draws cleanly, and others bury costs in the fine print. As a broker who shops 100+ lenders, I can line up the options for your specific project and show you the full cost side by side, so you pick on the whole picture and not just one headline number.
If you'd live in the house yourself, a different tool may fit better. Take a look at renovation loans. And you can see how the programs fit together on our fix and flip page.
One more thing: how a flip's profit is taxed is a question for your CPA, and it's worth asking before you buy, not after you sell.
Know someone in Show Low or Pinetop-Lakeside who keeps talking about flipping a house? Send them this one. And if you have a project in mind, I'm happy to pencil it with you. All loans are subject to credit approval, program guidelines, and property qualification. Equal Housing Opportunity.