In a housing market defined by high prices and rising rents, real estate investors are increasingly turning to a strategy known as “fix to rent.” It’s a hybrid of flipping and long-term holding: buy a distressed or undervalued property, renovate it, then hold it as a rental.

Unlike a traditional flip, where the profit is made at resale, fix to rent is about creating value through renovation, then earning steady income through rent over time. It’s a model that works especially well for 1–4 unit properties and smaller multifamily buildings, particularly in markets where rental demand outpaces homeownership.

Why Fix to Rent Works

The appeal is simple: investors get the upside of forced appreciation, adding value through upgrades, while holding onto a cash-flowing asset. That monthly income, combined with long-term appreciation, can steadily build equity over time.

There are also tax advantages. Mortgage interest and depreciation may offset rental income, and some investors use 1031 exchanges to defer capital gains when scaling their portfolios.

Another key benefit is leverage. Once the renovations are complete and the property is rented, many investors refinance into a long-term loan based on the new value, recovering part of their initial capital while keeping the asset.

The Risks to Watch

Of course, fix to rent isn’t without challenges. Renovation projects often go over budget or take longer than expected. During that period, investors carry holding costs, loan payments, taxes, insurance, with no rental income.

Once the unit is ready, there’s the work of finding tenants and managing the property. Vacancy and maintenance issues can erode returns, especially for those new to property management. And broader market shifts, interest rate changes, local rent trends, can impact refinance options and long-term profitability.

Financing the Right Way

A typical fix to rent project is funded in two phases:

First, a bridge loan covers the purchase and renovation. These short-term loans are based on the property’s after-repair value, giving investors access to more capital than a conventional loan would allow.

Second, once the property is stabilized, a refinance into a long-term rental loan, often a DSCR loan, lets the investor lock in more favorable terms based on the property’s rental income, rather than personal income.

The key is aligning your financing with the project’s timeline and end goal. That’s where working with a lender who understands the fix-to-rent model, like A&S Capital, can make all the difference.

The Bottom Line

Fix to rent isn’t just a trend, it’s a strategy. For investors willing to take on some upfront risk in exchange for long-term reward, it offers a sustainable path to building a rental portfolio and generating reliable cash flow.

The right deal, the right renovations, and the right financing, those are the pillars of success in fix to rent. The rest is execution.

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