Fix and Flip Construction Loans in Texas: 2025 Guide for 1-4 Unit Rentals

As Texas real estate continues to surge into 2025, investors are seeking flexible, competitive financing options for renovating and building 1-4 unit rental properties. Whether you’re eyeing a classic fix and flip loan, pursuing a ground-up construction loan, or exploring DSCR rental loans and hard money financing, understanding the Texas market and current products is essential for successful investment. This comprehensive guide covers the latest trends, regional insights, the best lenders in Texas, and step-by-step strategies for funding your next single-family, duplex, triplex, or fourplex project.

2025 Texas Market Snapshot: Best Areas for Residential Investment

Texas remains a powerhouse for rental property investors, with strong demand in both major cities and fast-growing suburbs. Here are 7 of the top neighborhoods and regions where fix and flip or construction loans are fueling revitalization:

• Dallas – Bishop Arts District & East Dallas: Historic homes prime for flips, with buyer and tenant demand surged by local amenities.
• Houston – Heights & Eastwood: Established rental markets, robust for both ground-up and value-add rehabs.
• Austin – East Riverside & Windsor Park: Attracting new renters and homeowners, especially for duplex and triplex conversions.
• San Antonio – Alamo Heights & Monte Vista: Older stock, strong appreciation, and rental yields suitable for quick flips and long-term holding.
• Fort Worth – Fairmount/Southside: Eclectic, transitional area with bungalows ripe for rehab and rental upgrades.
• El Paso – Mission Valley: Growing demand for affordable single-family rentals and multifamily (<4 units) housing.
• Corpus Christi – Central City: Coastal market where investors buy distressed 1-4 unit properties for rehab and new rental inventory.

Types of Loans for Texas 1-4 Unit Rental Property Investors in 2025

Fix & Flip Loans

Short-term loans (often 12-18 months) designed to purchase, renovate, and resell or refinance residential properties. Used by investors buying distressed or outdated homes, duplexes, triplexes, and fourplexes.

Need capital? GHC Funding offers flexible funding solutions to support your business growth or real estate projects. Discover fast, reliable financing options today!

Test Your Expertise: The Complexities of the 1031 Exchange

As a sophisticated real estate investor, you understand that the 1031 Exchange is a cornerstone strategy for tax deferral and wealth accumulation. But beyond the basics, the intricacies of the 1031 Exchange rules can pose significant challenges. This quiz is designed to test your in-depth knowledge and highlight critical nuances that separate casual investors from true experts in 1031 Exchange transactions.

Instructions: Choose the best answer for each question.

Start Quiz

Page 1 of 5

Question 1: Understanding "Like-Kind" in a 1031 Exchange

Which of the following scenarios most likely qualifies as a like-kind property exchange under IRS Section 1031, allowing for 1031 Exchange tax deferral?

a) An investor exchanges a portfolio of publicly traded REIT stocks for a commercial retail building. b) An investor exchanges their primary residence, used for personal living for 15 years, for a duplex intended for rental income. c) An investor exchanges raw land held for appreciation in Texas for a stabilized apartment complex in Florida, both held for investment. d) An investor exchanges a classic car collection (personal property) for a single-family rental home (real property).

Page 2 of 5

Question 2: Navigating the 45-Day Identification Period for a 1031 Exchange

An investor sells a multi-family property on June 15th for a 1031 Exchange. According to the strict timelines, by what date must they identify their replacement properties to comply with the 1031 Exchange requirements?

a) July 30th of the same year, as the 45-day period includes weekends and holidays. b) August 29th of the same year, allowing for an extra 45 days if needed. c) December 12th of the same year, aligning with the 180-day completion period. d) January 1st of the following year, if they plan to file for an extension.

Page 3 of 5

Question 3: The Role of a Qualified Intermediary (QI) in a 1031 Exchange

Why is the engagement of a Qualified Intermediary (QI) absolutely critical for the validity of a 1031 Exchange?

a) The QI provides investment advice and helps the investor choose the best replacement property for their 1031 Exchange strategy. b) The QI acts as a liaison with the IRS, directly negotiating tax liabilities related to the 1031 Exchange process. c) The QI holds the proceeds from the relinquished property's sale, preventing the investor from having "constructive receipt" of funds, which would invalidate the 1031 Exchange. d) The QI provides legal and tax advice to ensure the 1031 Exchange is perfectly compliant

Page 4 of 5

Question 4: Understanding "Boot" and its Impact on a 1031 Exchange

An investor sells a commercial building with $500,000 in equity for a 1031 Exchange. They purchase a replacement property for $450,000, effectively reducing their debt by $50,000. What is the tax implication of this scenario within the 1031 Exchange framework?

a) The entire 1031 Exchange is disqualified because the investor "traded down" in value. b) The $50,000 in reduced debt is considered "boot" and will be immediately taxable as partial gain in this 1031 Exchange. c) There are no immediate tax implications, as the primary goal of the 1031 Exchange is only about the "like-kind" nature of the properties. d) The investor can defer the $50,000 as long as they pay off other personal debts with the funds, still qualifying for a full 1031 Exchange.

Page 5 of 5

Question 5: Advanced 1031 Exchange Strategies & Flexibility

An investor aims to sell a highly appreciated single-tenant retail property and replace it with multiple smaller, diversified multi-family units to spread risk. Which of the following 1031 Exchange identification rules best allows for this diversification strategy, maintaining eligibility for a 1031 Exchange?

a) The "Three Property Rule," where the investor can identify up to three properties of any value, regardless of the relinquished property's value, for their 1031 Exchange. b) The "200% Rule," allowing identification of any number of properties, provided their aggregate fair market value does not exceed 200% of the relinquished property's value for the 1031 Exchange. c) The "95% Rule," which states that if more than three properties are identified, the investor must acquire at least 95% of the aggregate value of all identified properties to qualify for the 1031 Exchange. d) All of the above are valid identification rules within a 1031 Exchange, offering flexibility for various investment strategies.

Ready to send

Please provide your contact information to proceed.

Email Address *

First Name *

Consent *

Yes, I agree with the privacy policy and terms and conditions.

Submit

The Ultimate DSCR Loan for Rental Property Quiz

Are you looking to expand your real estate investment portfolio? A DSCR loan might be the perfect tool to help you achieve your goals without relying on traditional income documentation. Test your knowledge with this quiz to see if you're ready to master the intricacies of a DSCR loan for rental property.

Start Quiz

Page 1 of 5

What is the primary factor a lender considers when approving a DSCR loan for rental property? A) The borrower's personal income and debt-to-income (DTI) ratio. B) The borrower's credit score and employment history. C) The property's potential rental income compared to its monthly expenses, known as the Debt Service Coverage Ratio. This is the key metric for a DSCR loan for rental property eligibility and approval. D) The total value of the borrower's existing investment properties and personal savings.

Page 2 of 5

How does a DSCR loan for a rental property differ from a conventional mortgage for a personal residence? A) A conventional mortgage requires a DSCR calculation, whereas a DSCR loan for a rental property does not. B) A DSCR loan for a rental property primarily focuses on the property's cash flow, allowing investors to qualify without traditional income verification, unlike a conventional mortgage which is based on personal income and liabilities. C) A conventional mortgage has a higher interest rate and stricter requirements than a DSCR loan for a rental property. D) A DSCR loan for a rental property is only available for commercial properties, not residential rental properties.

Page 3 of 5

What is an ideal Debt Service Coverage Ratio (DSCR) for a lender when evaluating a DSCR loan for a rental property? A) A DSCR of 0.75, indicating the property generates 75% of the income needed to cover its debt service. B) A DSCR of 1.00, meaning the property's income exactly equals its debt service. C) A DSCR of 1.25 or higher, as this indicates the property's income is greater than its expenses, making it a strong candidate for a DSCR loan for a rental property and providing a buffer for unexpected costs. D) A DSCR of 2.00, which is the standard minimum for all investment properties, regardless of location or market conditions.

Page 4 of 5

Which of the following expenses are typically included in the calculation of the Debt Service Coverage Ratio for a DSCR loan for a rental property? A) The property's mortgage payment (principal and interest), property taxes, and insurance, which are the core components used to determine if the property can support the debt. B) The property's mortgage payment, property taxes, insurance, and the borrower's personal credit card debt. C) The property's monthly rental income and all utility bills, regardless of who pays them. D) Only the principal and interest payment of the loan, as other expenses are not considered in a DSCR loan for a rental property calculation.

Page 5 of 5

Who would most benefit from using a DSCR loan for a rental property? A) A first-time homebuyer with a W-2 salary and a high debt-to-income ratio, who is looking to purchase a primary residence. B) A seasoned real estate investor with multiple properties who wants to expand their portfolio without using personal income to qualify, making a DSCR loan for a rental property the ideal financing solution for their needs. C) Someone looking to finance a primary residence with a low down payment and a government-backed loan. D) An individual with a very low credit score who cannot qualify for any other type of loan.

Ready to send

Please provide your contact information to proceed.

Email Address *

First Name *

Consent *

Yes, I agree with the privacy policy and terms and conditions.

Submit

• Loan amounts: $75K to $2M+ (most common for 1-4 unit: $100K-$450K)
• Leverage: Up to 85% LTC, 70% ARV in Texas, depending on lender
• Interest rates: 8.50%–11.99% (2025 market range); interest-only options dominate
• Renovation draws disbursed based on progress inspections

Construction Loans

Ground-up or major renovation financing for building new 1-4 unit investments. Often “construction-to-perm” with the ability to refinance into a long-term rental loan post-completion.

• Loan amounts: $100K–$1.5M+ for 1-4 units
• Leverage: Up to 90% LTC on construction, 75% ARV
• Terms: 12–24 months construction, then 30-year rental financing option

Hard Money Loans

Short-term, asset-backed loans with fast underwriting and streamlined documentation, used to acquire and improve Texas 1-4 unit properties. Ideal for investors needing a fast closing (as little as 7-10 days).

• Loan amounts: $75K–$1M for single-family, up to $2M for 4-units
• Typical rates: 9.50%–13.00%
• Points: 1.50–3.00%
• Flexible guidelines—credit and experience considered but not the sole factor

DSCR (Debt Service Coverage Ratio) Rental Loans

✅ Small Business Resources 

• SBA – Small Business Administration
  https://www.sba.gov

• SCORE Mentors (Free Mentoring & Workshops)
  https://www.score.org
• Small Business Development Centers (SBDC)
  https://americassbdc.org

Are You an SBA Real Estate Loan Expert?

Test your in-depth knowledge on using SBA Loans for owner-occupied commercial Real Estate acquisition. These questions delve into the critical details that can impact your business's growth and financial strategy.

Start Quiz

Page 1 of 5

For an existing commercial property, what is the minimum owner-occupancy percentage required for an SBA 7(a) real estate loan, and does this specific scenario qualify?

A manufacturing company plans to acquire a 30,000 sq ft industrial real estate facility using an SBA 7(a) Loan. The company initially needs 18,000 sq ft for its operations and intends to lease out the remaining 12,000 sq ft.

A) 60%; Yes, it qualifies. B) 51%; Yes, it qualifies. C) 75%; No, it does not qualify. D) 60%; No, it does not qualify, as they are leasing out a portion.

Page 2 of 5

Which of the following sets most accurately represents additional cost categories that can typically be financed within an SBA 504 Loan for a commercial real estate project?

Hint: Beyond the straightforward purchase of a commercial real estate property, an SBA 504 Loan is highly effective for comprehensive projects.

A) Business inventory, working capital, and employee salaries. B) Building renovations, long-term machinery essential to operations within the property, and soft costs like architectural fees. C) Advertising expenses, short-term equipment leases, and utility deposits. D) Personal real estate investments, vehicles for personal use, and stock market investments.

Page 3 of 5

Between an SBA 7(a) Loan and an SBA 504 Loan, which program generally offers the lowest typical borrower down payment for a commercial real estate acquisition, and what is that common minimum percentage for established businesses?

A highly profitable professional services firm in a competitive market wants to purchase its office real estate with minimal upfront capital. The firm's owners prioritize cash flow and liquidity.

A) SBA 7(a) Loan; 15% B) SBA 504 Loan; 10% C) SBA 7(a) Loan; 5% D) SBA 504 Loan; 20%

Page 4 of 5

For new construction, what is the initial minimum owner-occupancy percentage required, and what is the maximum timeframe to meet the full owner-occupancy threshold, for an SBA Real Estate Loan?

A fast-growing tech startup plans to construct a new 50,000 sq ft headquarters using an SBA Loan. They will immediately occupy 35,000 sq ft and have a definitive plan to occupy the remaining 15,000 sq ft within two years as their team expands.

A) Initial 51%, full 80% within 5 years. B) Initial 60%, full 80% within 3 years. C) Initial 75%, full 100% within 1 year. D) Initial 51%, full 100% within 2 years.

Page 5 of 5

What is this crucial requirement, and what fundamental principle does it underscore for the lender?

When securing an SBA Loan for a commercial real estate purchase, principal owners with a 20% or greater ownership stake are almost universally required to provide a specific type of assurance beyond the collateral of the real estate itself.

A) A fixed-rate interest payment commitment, demonstrating long-term stability. B) A first-lien position on all personal assets, ensuring full recovery. C) A personal guarantee, signifying the owners' personal commitment to loan repayment. D) A business plan with projected revenue growth of at least 15% annually, showing future viability.

Ready to send

Please provide your contact information to proceed.

Email Address *

First Name *

Consent *

Yes, I agree with the privacy policy and terms and conditions.

Submit

Long-term, cash-flow focused loans for stabilized 1-4 unit rental properties. Qualification is based on property income, not borrower tax returns—ideal for investors with multiple projects.

• Loan amounts: $75K–$2M per property
• Terms: 30-year fixed, sometimes with interest-only periods
• Interest rates (2025): 6.25%–8.00%
• DSCR: Minimum 1.00x (property rents must cover PITIA)

Top Texas Lenders for Fix & Flip, Construction, and Rental Loans (2025)

✅ Real Estate Investor Resources

• AirDNA (Short-Term Rental Data)
  https://www.airdna.co

• Rentometer (Rent Comps)
  https://www.rentometer.com
• Zillow Research & Data
  https://www.zillow.com/research

DSCR Loan IQ Quiz!

Test your knowledge of Debt Service Coverage Ratio (DSCR) loans!

Start Quiz

Page 1 of 3

What is the primary factor a lender focuses on when approving a DSCR loan for an investment property? a) The borrower's personal debt-to-income (DTI) ratio b) The property's ability to generate enough income to cover its mortgage payments c) The borrower's credit score history over the past 10 years d) The total number of investment properties the borrower already owns

Page 2 of 3

If a property has a Net Operating Income (NOI) of $5,000 per month and its total monthly debt service (PITI) is $4,000, what is its DSCR? a) 0.8x b) 1.0x c) 1.25x d) 5.0x

Page 3 of 3

Which type of borrower most commonly benefits from using a DSCR loan? a) First-time homebuyers purchasing a primary residence b) Investors with a strong W-2 income and minimal tax deductions c) Self-employed individuals or those with complex income who want to avoid traditional income verification d) Homeowners looking to refinance their primary residence for a lower interest rate

Ready to send

Please provide your contact information to proceed.

Email Address *

First Name *

Consent *

Yes, I agree with the privacy policy and terms and conditions.

Submit

These experienced lenders are active in Texas for 1-4 unit investment properties:

• Lima One Capital: National lender with robust Texas presence. Offers fix & flip, new construction, and rental DSCR loans for SFR and small multifamily.
• Kiavi (formerly LendingHome): Direct lender with streamlined process, competitive rates for flips and construction-loan-to-perm programs.
• RCN Capital: Flexible programs for flips and rentals, same-day pre-approvals, and up to 90% LTC on construction loans.
• Longhorn Investments: Dallas-based direct lender, Texas specialist. Hard money fix & flip and construction loans for SFR to fourplexes—very fast closings.
• Temple View Capital: Nationwide coverage, Texas-friendly, offers fix & flip, rental, and DSCR loan products with programs for first-time investors.
• DFW Hard Money: Locally based, expert in North Texas metropolitan area, quick closings for small multifamily and SFR projects up to $500K.

Step-by-Step: How to Get a Fix and Flip or Construction Loan on Texas 1-4 Unit Properties

1. Pre-Approval: Get pre-approved with your chosen lender—most offer fast online applications. Have a business plan, previous rehab/construction experience, and relevant financials ready.
2. Find & Analyze the Property: Identify a 1-4 unit property with value-add or new construction potential. Use Texas MLS comps and neighborhood rental rates for ARV projections.
3. Submit an Offer: Once you have loan terms and approval, make an offer that aligns with lender LTV requirements. Include a realistic scope of work or construction budget.
4. Order Appraisal & Due Diligence: The lender will order an appraisal based on completed value (ARV) for flips or construction. Title, insurance, and project feasibility will be reviewed.
5. Funding & Draw Schedule: You’ll close on the acquisition and the lender will set up renovation or construction draw schedules—with funds disbursed as you hit specific milestones.
6. Renovation or Construction: Complete work, submit inspection reports for draws, and stay in close contact with your lender for timely funds release.
7. Exit the Loan: Sell the property for a profit, or refinance into a DSCR/durable rental loan to hold long-term. Many Texas lenders provide seamless transition from bridge to permanent financing.

Success Stories: Texas Investors Using Fix & Flip and Construction Loans in 2025

• East Dallas Duplex Flip: Investor acquires a distressed duplex for $230,000 with a $120,000 renovation budget. Secures an 85% LTC fix & flip loan at 9.25%, completes the rehab in 5 months, sells for $475,000, netting $70,000 profit after costs.
• Austin Fourplex New Build: Land purchase & construction loan combined at 90% LTC. Total loan of $795,000 (projected ARV $1.1M). Refinanced to 30-year DSCR loan at 6.95%, renting each unit for $2,200/month, DSCR 1.38x.
• Houston Heights SFR Rehab: Quick close hard money loan for $165,000 purchase, $80,000 in renovations. Total loan at 75% ARV. Sold in 4 months post-rehab for $315,000. Investor repeats with flip-to-rent strategy next door.
• San Antonio Triplex Conversion: Borrower uses RCN Capital to convert historic SFR to a triplex, securing $390,000 for purchase and rehab. Refinances into permanent 30-year rental loan, cash flowing from month two post-stabilization.
• Fort Worth SFR Portfolio Build: Uses construction-to-perm program from Lima One Capital for a five-property, single-family rental portfolio, each averaging $240,000 all-in costs, stabilized with DSCR loans to maximize leverage and reduce refinancing costs.

2025: Why Texas Remains Ideal for 1-4 Unit Fix & Flip and Construction Loans

With robust population growth, landlord-friendly laws, low property taxes compared to many states, and diverse housing needs (from inner-city rehab to suburban new builds), Texas continues to offer superior opportunity for 1-4 unit residential investors. Competition has raised standards—lenders want clear exit strategies and market-supported numbers—but there’s more capital and options in the local market than ever before.

Key Takeaways

• Choose lenders with proven Texas track records, fast draws, and flexible options from bridge to permanent rental financing.
• Focus on neighborhoods and deal types where end-buyer/renter demand is highest in 2025.
• Prepare strong budgets, timelines, and rental projections—Texas lenders reward professionalism and local know-how.
• Combining renovation and construction expertise with DSCR/long-term rental strategies maximizes both short-term profits and long-term wealth building in the 1-4 unit segment.

Want more tailored recommendations or want to get pre-qualified for a Texas fix & flip or construction loan in 2025? Connect with a Texas-focused investment property lender for a custom quote and local insights.

GHC Funding DSCR LOAN, SBA LOAN, BRIDGE LOAN

Contact GHC Funding Today. Main: 833-572-4327 Email: sales@ghcfunding.com

See Full Bio

DSCR LOAN SBA LOAN BRIDGE LOAN