2026 Flippers: Tariff Material Costs + Inventory Surge—How's It Hitting Your Numbers

[Victoria OHare]

Hello Everyone, 

US flippers averaged $72k gross profit in Q4 2025 (down 7% YoY), with rehab costs up 12% from tariffs/labor—lumber +15%, appliances +9%. Inventory at 4.2 mo supply means faster sales but tighter margins.​

News highlights: NAR reports 28% of flips now "light rehab" (under $50k) vs full guts; 65% targeting 20%+ ROI pre-holding costs.​

Discussion:

• Adjusting MAO formulas for $10k+ tariff bumps?
• Cosmetic-only flips dominating your market?
• Days on market dropping—price higher or faster turns?

[Bo Smith]

The 2k gross profit average is probably skewed toward experienced flippers who got deals locked in before tariffs hit. New deals pricing in these costs are looking at 15-18% ROI instead of 25-30%, and that's assuming your contractor stays on timeline and doesn't find surprise issues in the walls.

Light rehab dominance makes sense when margins are tighter. You can't afford 10 weeks of holding costs and contractor delays when you're only making 5-20k anyway. The math forces you to either flip cosmetic units fast or don't flip at all. Full gut rehabs are becoming the domain of BRRRR investors who can absorb the longer timeline.

What's interesting is how this is reshaping acquisition strategy. You're not stretching on purchase price anymore because there's no upside to absorb the timeline stretch. Days on market dropping is good news, but if you're competing on price, that eats margin. Are you finding deals where you can actually win on acquisition price without bidding against cash buyers, or has competition forced you to recalculate your target hold periods?