How Fix and Flip Loans Work in Miami

Miami has no shortage of dated houses, tired duplexes and condos that haven't been touched in decades. Turning one of them into a finished property takes two things: a solid renovation plan and short-term financing built for it. This guide explains how fix and flip loans in Miami work, from how the loan is sized to how rehab money is released, and the local permitting and flood issues that can make or break your schedule.

How a fix and flip loan is structured

A fix and flip loan is a short-term, interest-only, business-purpose loan. It typically funds part of the purchase price at closing and holds back a renovation budget that is released in stages as work is completed. You bring the rest of the purchase money, closing costs and enough cash to carry the project.

Through our fix and flip program, lender partner guidelines may go up to 85% of total cost (LTC) and up to 100% of the rehab budget, with 12- to 18-month interest-only terms. Those are guidelines that vary by lender partner and by deal; your experience, the property and the numbers all affect what is offered. If you are tearing down and building new, that is a different product: see ground-up construction.

LTC vs. ARV: the two numbers that size your loan

Loan-to-cost (LTC) compares the loan with your total project cost: purchase price plus renovation budget. After-repair value (ARV) is the appraiser's estimate of what the property will be worth once the work is finished. Most lenders apply both: a maximum percentage of cost and a maximum percentage of ARV. Whichever produces the lower loan amount is the one that counts.

Here is an illustrative example with round numbers, not an offer or a quote:

Example item	Amount
Purchase price	$400,000
Renovation budget	$100,000
Total project cost	$500,000
Loan at 85% of total cost	$425,000
Of which: rehab funded through draws	$100,000
Of which: funded toward the purchase at closing	$325,000
Your cash toward the purchase	$75,000, plus closing and carrying costs
Estimated ARV	$650,000 (loan is about 65% of ARV)

In this example, the ARV comfortably supports the loan, so LTC is the limit. If the appraiser came back with a much lower ARV, the ARV cap could become the limit and you would need to bring more cash. That is why strong comparable sales matter before you sign the contract, not after.

How rehab draws work

The renovation budget is usually held by the lender and paid out in draws:

1. You and your contractor complete a phase of work from the approved budget.
2. You submit a draw request for the line items finished.
3. The lender orders an inspection, in person or by photo and video, to confirm the work.
4. Once the inspection is approved, funds for the completed work are released.

Most draws reimburse work already done, so you need cash to start the first phase and to keep contractors paid between draws. A few practical tips:

• Build the budget line by line (demo, roof, windows, electrical, plumbing, kitchen, baths, flooring, paint) so draws match real milestones.
• Include a contingency. Older Miami homes often hide surprises behind walls and under floors.
• Collect lien releases from your contractor and subcontractors with each payment. Florida's construction lien law lets unpaid parties file liens against the property.
• Get written lender approval before changing the scope; unapproved changes can hold up a draw.

Permits in Miami-Dade: plan for them

Permits are where many Miami flips lose time. Who issues them depends on location: properties inside a city such as Miami, Hialeah, Miami Beach or Coral Gables go through that city's building department, while unincorporated areas go through Miami-Dade County. Each has its own process and review times.

• Know what needs a permit. Roofs, windows and doors, electrical, plumbing, HVAC, structural changes and many kitchen and bath remodels typically do. Lenders and future buyers will ask.
• Check for open or expired permits from prior owners before you close. They can delay your sale or refinance until they are closed out.
• Record a notice of commencement. Florida generally requires one to be recorded before improvement work begins and posted at the job site before the first inspection, and lenders typically require it before releasing construction funds.
• Watch the flood-zone 50% rule. Under the National Flood Insurance Program, if the property is in a special flood hazard area and improvement costs equal or exceed 50% of the structure's market value before the work, the building generally must be brought up to current flood standards, which can mean elevation. Some communities count improvements cumulatively over several years. Check the flood zone on the FEMA Flood Map Service Center and ask the building department how it applies the rule before you finalize your budget.
• Condos need association approval. Many associations require contractor insurance certificates, approved work hours and their own sign-off before any work starts.

Building a realistic timeline

Map the project in phases: closing, permitting, construction, final inspections and permit close-out, then listing and sale, or leasing and refinancing. Each phase in South Florida can take longer than you expect, and hurricane season (June through November) can delay crews and materials. Your loan term should cover the whole schedule plus a cushion. Ask up front whether extensions are available and what they require.

Budget your carrying costs for the full term: interest payments, property taxes, insurance for a property under renovation, utilities and any HOA dues. If the plan is to keep the property as a rental, line up the long-term loan early; our guide to DSCR loans in Florida explains how rentals qualify. If the property needs only light work, a bridge loan may fit better than a full rehab loan.

What to bring to your lender

• Property and contract: address, purchase contract and photos of the current condition.
• Scope of work: a line-item list of what will be done, room by room.
• Budget: costs per line item with a contingency, ideally from a licensed contractor's bid.
• Comps: recent sales of similar renovated properties nearby that support your ARV.
• Exit plan: target sale price and timeline, or expected rent and the refinance you plan to use.
• Experience: addresses and results of past projects, if you have them.
• Entity and funds: LLC documents if applicable, and proof of funds for your cash in the deal and reserves.

Next step

If you have a property under contract or in your sights anywhere in Miami or South Florida, send us the address, purchase price, rehab budget and your exit plan. We will review the numbers with you and tell you which lender partner guidelines may fit. Call (786) 723-5626 or use our contact page.