{"id":184632,"date":"2025-09-08T16:21:21","date_gmt":"2025-09-08T22:21:21","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=184632"},"modified":"2025-09-09T06:47:19","modified_gmt":"2025-09-09T12:47:19","slug":"flippers-pull-back-but-these-strategies-are-still-helping-investors-net-huge-profits","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/flippers-pull-back-but-these-strategies-are-still-helping-investors-net-huge-profits","title":{"rendered":"Home Flippers Are Saying the Market is Tough\u2014But These Strategies Can Still Net Huge Profits"},"content":{"rendered":"\n

There are likely to be more flops than <\/span>flips<\/span><\/a>\u2014that’s the conclusion flippers are coming to, according to data from<\/span> John Burns Research & Consulting and Kiavi<\/span><\/a>, a lender focused on real estate investing. Their numbers show that house flipping activity contracted sharply from the second quarter of 2025 compared to a year ago, and slightly compared to Q1 of this year.<\/span><\/p>\n\n\n\n

Rising expenses to buy, fix up, and sell a house for a profit, once the purchase price, interest rates, construction, and holding costs <\/span>are factored<\/span> in, are said to be to blame for the decline in activity.<\/span><\/p>\n\n\n\n

“Sentiment remains muted, as economic uncertainty, elevated mortgage rates, and rising resale inventory weigh on demand for flipped homes,” Alex Thomas of John Burns Research and Consulting, the primary author of the report, wrote.<\/span><\/p>\n\n\n\n

The index surveyed approximately 400 flippers and analyzed current sales, expected sales, and flipper activity. There was a decline in all categories, while the number of days on market increased as new and existing housing inventory rose.<\/span><\/p>\n\n\n\n

Only 30% of flippers reported “good” sales, down from 38% the previous year. “I think what our customers are really experiencing<\/span>, it really<\/span> comes down to housing velocity and turnover timelines,” Arvind Mohan, CEO of Kiavi, told <\/span>CNBC<\/span><\/a>. “They are definitely in the velocity business, and so if it takes them an extra month to complete a transaction, that’s capital that’s tied up in that property that <\/span>can’t necessarily be freed up<\/span> for the next investment.” <\/span><\/p>\n\n\n\n

The Sunbelt’s Booming Construction Has Hurt Flippers<\/span><\/h2>\n\n\n\n

Real estate analytics and data research company <\/span>ATTOM’s Q1 report<\/span><\/a> showed a downward trend in flipping, which has continued throughout the year. The total number of single-family homes and condos flipped between January and March was the lowest quarterly volume since 2018. <\/span><\/p>\n\n\n\n

Regionally, John Burns and Kiavi’s report saw flippers in Florida, Northern California, and other parts of the Southwest experiencing a more pronounced sales decline compared to flippers elsewhere, indicating that the Sunbelt construction boom had an impact. At the same time, the cost and availability of housing, as well as labor shortages, have been issues in Northern California.<\/span><\/p>\n\n\n\n

“Flippers in these regions face increasing resale supply, significant competition from homebuilders, and rising costs (particularly <\/span>insurance<\/span><\/a>),” Thomas wrote in the JBREC + Kiavi report.<\/span><\/p>\n\n\n\n

Landlord Numbers Are Down, a Bellwether for Flippers<\/span><\/h2>\n\n\n\n

Other factors are also affecting house flipping numbers. In April, Redfin found that there were 500,000 more sellers than buyers nationwide, the <\/span>largest<\/span> imbalance in over a decade, which increased competition among flippers. A more <\/span>recent Redfin report<\/span><\/a> showed that investor landlords in the second quarter fell to their lowest springtime level since 2020, down 6% from the same quarter a year earlier. <\/span><\/p>\n\n\n\n

Redfin senior economist Sheharyar Bokhari said in a press release:<\/span><\/p>\n\n\n\n

“For real estate investors, the numbers just don’t pencil out the way they did a few years ago, whether they’re looking to flip a home or rent it out. It costs a lot to buy a home, and potential returns are simultaneously softening. That doesn’t mean investors are disappearing\u2014they’re still <\/span>buying nearly one in five homes in the country<\/span><\/a>\u2014but they’re being choosier about their home purchases, just like individual homebuyers.”<\/span><\/em><\/p>\n\n\n\n

Condo Sales Have Tanked<\/span><\/h2>\n\n\n\n

The issue of rising insurance costs cannot <\/span>be overstated<\/span>. It’s a compelling reason for potential buyers of flipped homes to consider renting instead.<\/span><\/p>\n\n\n\n

Investor condo sales are down 13% year over year in the second quarter, according to Redfin data, which is triple the decline for any other property type. Condominiums, which come with high HOA fees and special assessments for maintenance, are emblematic of the headwinds facing potential buyers, particularly in the Sunbelt states.<\/span><\/p>\n\n\n\n

John Tomlinson, a Redfin Premier agent in Fort Lauderdale, Florida, said in Redfin\u2019s press release:<\/span><\/p>\n\n\n\n

“The condo market is the slowest I’ve seen in at least a decade. Buyers are wary of putting offers on condos\u2014and many are cancelling contracts after they’ve made offers\u2014because costs have increased so much and they’re nervous that they’ll continue rising in the future. <\/span>HOA fees are high, <\/span>a lot of<\/span> insurance companies <\/span>won’t<\/span> cover condo buildings on the coast, and some mortgage lenders are quoting higher rates for condos.<\/span> If you’re an investor, you can’t count on making money from a condo right now.”<\/span><\/em><\/p>\n\n\n\n

Redfin data shows that investor activity has declined by double digits in many Florida markets, but increased in many West Coast markets, possibly a bellwether for flipping activity as well.<\/span><\/p>\n\n\n\n

The Northeast Needs a Makeover<\/span><\/h2>\n\n\n\n

Just because flipping numbers are down in parts of the Sunbelt does not mean there are no opportunities anywhere. The median age of a U.S. home is 41 years as of 2023, up from 31 years in 2005, according to the <\/span>National Association of Home Builders<\/span><\/a>, which paints an optimistic future for flippers, contradicting recent reports from John Burns and Kiavi.<\/span><\/p>\n\n\n\n

The greatest concentration of older homes is in the Northeast, Mid-Atlantic states, and along the Appalachian Mountains. Repair costs are escalating, to the tune of $150 billion as of 2022, according to the<\/span> Federal Reserve Bank of Philadelphia<\/span><\/a>.<\/span><\/p>\n\n\n\n

Winter is approaching<\/span>, <\/span>so<\/span> more houses are likely to fall into disrepair, <\/span>with<\/span> cash-strapped homeowners increasingly unlikely to cover the costs.<\/span> <\/span><\/p>\n\n\n\n

Philly’s Housing Plight<\/span><\/h2>\n\n\n\n

“It’s the perfect chaos for a storm for upkeep” of properties, Angela D. Brooks, Philadelphia’s chief housing and urban development officer, told the<\/span> Washington Post<\/span><\/a><\/em> of the plight facing Philadelphia’s housing. “You have people who have the benefit of being able to afford a house, or maybe they inherited it, but they don’t quite have the money to do even basic systems repair.”<\/span><\/p>\n\n\n\n

In many cases, the homes are uninhabitable and ripe for flippers, should the current owners consider selling due to unaffordable repair costs. It raises questions about housing supply and <\/span>affordability<\/span> of newly constructed homes.<\/span><\/p>\n\n\n\n

“People have adjusted to living in conditions that other people would be appalled at,” Emily Schapira, president of The Philadelphia Energy Authority, told the <\/span>Post<\/span><\/em>. “Anyone can get into this situation, and we have seen that can be true across every neighborhood and income spectrum, because deferred maintenance is tough.”<\/span><\/p>\n\n\n\n

Final Thoughts: Strategies for Flippers in a Challenging Market<\/span><\/h2>\n\n\n\n

Several factors are currently contributing to the decline in flipping that may not be directly related to the need for housing, but rather to the cost of providing it. <\/span>Days on market are increasing, <\/span>which<\/span> not only <\/span>suggests that there might be<\/span> more competition from other flippers<\/span>, <\/span>but also that buyers are struggling or unwilling to take on the loan for a remodeled home.<\/span> <\/span><\/p>\n\n\n\n

There are several ways to tackle this.<\/span><\/p>\n\n\n\n

Avoid price drops by pricing realistically for today’s <\/span>market<\/span><\/h3>\n\n\n\n

Bidding wars are yesterday’s news. Price drops only delay the inevitable, keeping the property lingering on the market and losing its shine. Aggressive pricing will attract more offers and enable you to recoup your profits more quickly.<\/span><\/p>\n\n\n\n

Higher-end finishes bring more <\/span>offers<\/span><\/h3>\n\n\n\n

This<\/span> may seem obvious, but the JBREC + Kiavi survey found that homes with superior finishes received more offers. <\/span><\/p>\n\n\n\n

Go through your flip with a fine-tooth comb to repair rather than replace where necessary, so you can afford to add the wow factor to the finishes. <\/span><\/p>\n\n\n\n

Utilize a comprehensive marketing <\/span>campaign<\/span><\/h3>\n\n\n\n

Social media sells houses these days. Create snappy short videos on all platforms, and use a specialist to get your listing far and wide. A good agent should already be employing this in their sales arsenal. See which one has the most significant following and most sales.<\/span><\/p>\n\n\n\n

Account for increases in materials and a loss of labor<\/span><\/h3>\n\n\n\n

The JBREC + Kiavi survey showed that renovation costs have reached an all-time high. However, there are significant disparities across the country, with average renovation costs in Northern California, for example, costing $136,000 per flip, compared to a modest $39,000 in the Northeast. Additionally, the survey revealed a labor shortage. <\/span><\/p>\n\n\n\n

Serial flippers could reduce costs by buying in bulk and focusing on adding the razzle-dazzle to kitchens and bathrooms. The survey revealed that the <\/span>ROI<\/span><\/a> was better for flippers who concentrate on these areas, compared to those who focus on whole-house renovations. <\/span><\/p>\n\n\n\n

There’s no easy way to overcome the lack of quality, affordable, and dependable labor. <\/span>Finding a contractor<\/span><\/a> with a stable crew that isn’t under the threat of deportation is invaluable. Lock them in with the promise of ongoing work and good pay. <\/span><\/p>\n\n\n\n

Location matters<\/span><\/h3>\n\n\n\n

Flip in locations where houses are available and being sold. Data suggests that the Northeast, Midwest, and Southeast are the places to be for flips, while smaller, more affordable markets are attracting residents drawn to a better cost of living. <\/span><\/p>\n\n\n\n

If these are not available to you, be judicious in your homebuying selection. Choose quality over quantity and lower-cost homes to appeal to a higher number of buyers.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

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