What brokers need to know about finding the right RTL deals
Limited housing inventory has been one of the factors that has made homebuyers struggle early in the year to find a decent deal on a new home.
Later in the year, inventory started to increase in some areas, giving buyers a little more leverage at the bargaining table. However, other markets continue to struggle to keep up with even reduced housing demand.
There are efforts to increase the number of homes on the market. Legislation currently before Congress would help builders replenish dwindling new-home supply. However, another option could help boost housing supply.
Fix-and-flip loans, also known as residential transition loans (RTL), can help builders make necessary improvements to deteriorating homes and get them back on the market.
Marcia Kaufman (pictured top), CEO of Bayport Funding, believes these loans will be a valuable tool for investors in 2026.
“Much of America's housing stock is aging and in need of tremendous updating,” Kaufman told Mortgage Professional America. “The fix-and-flip investor is meaningful in bringing old housing stock to meet today's standards. In most cases, electric, plumbing, window, and siding are all outdated or in need of major replacement.”
Helping first-time buyers
When first-time homebuyers finally get into their new home, they might not have the additional room in their monthly budget for major repairs. A property that has recently been fixed up gives them a chance to settle into their new home without worrying about major issues right out of the gate.
“The average first-time homebuyer may not have the funds available for renovations following their down payment and closing costs,” Kaufman said. “Having the opportunity for a homebuyer to purchase a newly renovated property, including, in most cases, all new appliances, is a great savings option to the ultimate end buyer.”
Fix-and-flip loans experienced a resurgence in popularity due to reality television shows that spotlighted the practice. Kaufman said that flippers have been around long before reality TV discovered them. However, those shows flooded the market with investors, which took its toll on profitability.
“The fix-and-flip space has been around for decades, with popular TV shows spotlighting this specific real estate investment opportunity,” she said. “It drove more investors to the sector and created unrealistic expectations both from a profitability perspective and execution. With the influx of investors and a shortage of housing inventory, these opportunities have declined. The increased cost of acquisition and construction costs are also causing margin compression on profitability.”
A look ahead to 2026
Kaufman sees an expansion in the fix-and-flip space in 2026. Bayport Funding just introduced an adjustable fix-and-flip product that locks rates for six months and then can be reset based on the index and margin for the remaining six months.
She said the biggest challenge for investors is understanding the types of deals on the market. It’s also important for mortgage brokers advising these investors to help them work through the numbers and make sure the profit numbers make sense.
“Regardless of the market, an experienced investor who is active in the fix-and-flip sector should be prudent enough to understand the risks and rewards,” she said. “The anticipated profit should be at least 25% more than the acquisition price, including closing, rehab budget, and the overall cost to carry out the project.
“As with any real estate investment, the market conditions 12 months later remain unknown. However, there should be enough data that provides trending sales prices, supply, and demand to assist in making any decision prior to investing.”
In addition to the fix-and-flip space, Kaufman said there is also interest in helping the multifamily sector. And there are signs of life in homebuilder sentiment. The recently released National Association of Home Builders/Wells Fargo Housing Market Index (HMI) showed that builder confidence in newly constructed single-family homes increased by one point.
While most measures of that index were below average, the component for expected sales rose by one point to 52, which is two points above neutral and reflected guarded optimism among builders.
Zack Simkins, Managing Director at Vaster, predicts that repricing and competition will reshape Miami’s condo market in 2026, creating opportunities for brokers and investors amid unfinished projects and shifting valuations. https://t.co/AV47uqFSdf
— Mortgage Professional America Magazine (@MPAMagazineUS) December 12, 2025
The hope is that, across fix-and-flip, single-family construction, and multifamily construction, conditions will start to improve and help increase housing inventory. Kaufman said her company will do what it can to support both the RTL and multifamily space.
“While we are strongly committed to providing capital for the fix-and-flip investor, Bayport Funding is expanding our support in providing capital to the entire multifamily sector,” she said. “It is imperative to add housing density, specifically for workforce housing and affordable housing.”
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