When Does a Fix and Flip Become a Construction Project?
The line between a major fix and flip and a new construction project can sometimes seem unclear. A property may need extensive work, and investors may wonder whether the scale of renovation means they need construction financing. The key distinction is straightforward: if the existing structure remains standing and is being renovated, the project generally remains a fix and flip. If the structure is demolished and rebuilt, the financing category changes to construction. A full gut renovation does not automatically make a project new construction. Investors can replace kitchens, bathrooms, electrical systems, plumbing, flooring, roofing, and other major components while retaining the original building. Even substantial rehabilitation can remain renovation financing when the underlying structure is still being used. By contrast, tearing down the existing property and constructing a completely new building creates a ground-up construction project. This distinction matters because ne...