Flipping houses in current market - worth the risk?

Question

High interest rates, high taxes, and prices that have gone thru the roof since pre pandemic times.  How can you make home flipping still profitable?   For example, maybe look primarily withing the foreclosed and fir auction houses?  Lost primary home (which we also flipped) in the 2008 housing crisis when homes were also highly priced and interest rates just as high, want to avoid same mistake. Any advice appreciated!

Ben Fernandez · Answer

Flipping is a case-by-case scenario that is not non qualified based upon current interest rates.

Current market conditions should always be incorporated into your evaluation criteria. This way you underwrite the deal accurately.

Unless the banks stop lending and only liquid buyers are active, the market’s conditions will never dictate when the strategy will work or not. It only dictates marginal costs.

The deal dictates your success potential.

Richard Golding · Answer

Sheyla, having lived through 2008 is actually your biggest asset right now it means you respect the downside. The main difference today is that back then, everyone was a "genius" until the music stopped. Today, you have to be a professional before you even start the music.

In a high-interest market like this, the profit isn't made in the appreciation; it’s made in the efficiency of the rehab. You can't just buy a house and wait for it to go up in value. You have to force the equity through a tight, surgical renovation.

Don't chase deals at auction or foreclosures just because they look cheap. Those are often the ones with the hidden structural or title issues that kill your timeline. Instead, look for the "Ugly Duckling" the house that just needs a cosmetic overhaul but has a solid foundation.

Focus on your Holding Costs. In 2008, people got stuck because they couldn't sell. In 2026, people get stuck because their hard money interest eats their profit while they wait six months for a permit. If your numbers can't survive a 4-month delay and a 5% price drop at resale, it is not a deal. It's a gamble.

G. Brian Davis · Answer

Hi @Sheyla Cruz, Flipping can still work today, even with higher rates and tighter margins. A lot of successful flippers are finding opportunity through distressed properties, estate sales, foreclosures, tired landlords, or homes needing more work than most buyers want to take on.

We’ve had a few flip projects in our co investing club over the last couple years, and they did okay, but the common thread was careful buying, conservative numbers, and strong operators managing the rehab closely. Having lived through 2008 gives you the knowledge  advantage because you already understand the importance of risk management and not assuming the market will always bail you out.

Dominic Mazzarella · Answer

Brian, I agree with this. Flipping can still work, but the margin for sloppy buying is a lot smaller now.I think the harder part is finding the kind of distress that is real but not already obvious to everyone else. Estate sales, tired landlords, foreclosures, heavy repairs, code issues, etc. can all work, but if everyone is pulling from the same lists, it gets picked over fast.The operators who still seem to do well are the ones who have a tighter acquisition process and a slightly different way of finding the lead before it becomes obvious.

Russell Brazil · Answer

Easier to flip today than a few years ago when the market was hot. Flipping is all about margins. When the market is hot, margins squeeze making flipping harder. When the market is cooler, margins expand, making flipping easier.

Henry Lazerow · Answer

Just buy something you can also rent out if the flip does not sell. My main job is as a realtor but the last flip i did was a 2 unit and it was set up so i could just hold it as a rental if market fell or any issues. The flip worked out for a nice six figure net. The area went up $50k or so though since I sold, so I kind of regret selling and not just brrring it lol but was still a great project.

Ryan Thomson · Answer

Hard money is running 11-12% in most markets right now, and that changes the math pretty significantly.

If you're running a $350K project and it takes 9 months instead of 5, you've burned an extra $11-13K just in interest before you touch any cost overruns on labor. And labor is still elevated from the supply chain years. Stack that on top of softer buyer demand in a lot of zip codes and you're fighting three headwinds at once.

Flipping still works, but the deals that actually pencil look different than 2021. Deep discount buys at 40-50 cents on the dollar, not the 75% ARV stuff that used to work. Fast cosmetic flips where you're in and out in 90 days. Anything where timeline creep kills you is harder to recover from right now.

Where I'm seeing people get burned: buying at a price that only works if comps hold perfectly, gut rehabs in markets with soft demand, and anything requiring top-of-market comps to close the spread.

Colorado Springs has stayed active but even here I'm watching flips sit longer than projected. The deals closing profitably are the ones where someone bought right, not where they needed the market to cooperate.

What's your target market? Price point and local inventory levels change this answer a lot.

Christian Grosskopf · Answer

I believe flipping is still a sound strategy in most markets as long as you have a good team around you and as long as you have put in the time and effort to research every detail on costs you expect to incur. Have you accounted for hidden costs? Do you have an exit strategy if things don't go to plan? Will you hire a GC or self manage the project? What if the renovation goes longer than expected? Have you ran the numbers to determine your max asking price for the purchase? What will you need the property to sell for to make the deal worth it?

There's a lot of questions to be answered before committing to this strategy but it's more than worth it in most circumstances.

Iliya Muzychuk · Answer

It is tough to pencil things out right now especially when cost of materials is going up.

G. Brian Davis · Answer

Agreed!!

Flipping houses in current market - worth the risk?

Most Popular Reply