Should You Fix-and-Flip Properties in 2025?
If you’re wondering whether fix-and-flip investing is still worth pursuing in 2025, you’re not alone. Real estate investors (REIs) across the country are rethinking their strategies in light of shifting market conditions, rising costs, and evolving government policies. With demand for affordable housing and renovated properties remaining steady, the potential is certainly there—but ultimately, success may depend on how quickly you can adapt to sudden market changes.
Here’s a deep look at whether fix-and-flip investing still makes sense in 2025 and what you need to know to make informed decisions.
Fix-and-Flip Landscape in 2025
Data revealed in our recent webinar, Early 2025 Insights: Emerging Trends in Real Estate Investing This Year, highlighted that fix-and-flip investors are facing unique challenges in 2025. According to Alex Thomas, a webinar panel expert from John Burns Research and Consulting (JBREC), flippers may be feeling the squeeze on both ends of transactions. On the buying side, inventory shortages and rising acquisition costs could make it harder to find profitable deals. On the selling side, higher interest rates may limit affordability for some buyers, while increased competition from new home builders could add even more pressure.
But there’s a silver lining. Profitable fix-and-flip opportunities are still available, especially in specific geographic regions. Midwestern and Northeastern markets stand out, where in the recent JBREC Fix-and-Flip Survey, a higher percentage of flippers are reporting strong seasonal performance in comparison to Southern states such as Florida and Texas.
Why Fix-and-Flip Still Holds Potential
According to John Burns Research and Consulting, nearly 49% of U.S. homes are at least 44 years old, making them prime candidates for renovations. Additionally, many buyers are still drawn to upgraded homes with modern features, especially in markets with limited new construction inventory. While pricing power for flips has decreased in some areas, experienced investors who know their markets could still find success.
The key takeaway? Fix-and-flip remains viable, but profitability can hinge on refining your acquisition strategies, adapting to regional variances, and monitoring your specific market trends.
Key Challenges Fix-and-Flippers Face in 2025
To make educated decisions, it’s important to understand the main challenges that could shape the fix-and-flip space this year:
- Rising Acquisition Costs
With fluctuating rates and rising competition for real estate investment properties, securing deals at a discount may be more challenging for some REIs. However, utilizing strategic financing solutions and an adaptable market approach may help investors continue to find profitable opportunities. - Inventory Shortages
A national inventory crunch has created stiff competition for potential flipped properties. According to JBREC data, 88% of flippers report high competition for deals at the end of 2024, meaning lucrative opportunities could be harder to find. - Buyer Affordability Limitations
With mortgage rates hovering between 6.7% and 7%, some buyers—particularly entry-level homebuyers—may find purchasing more challenging, which could impact demand for flipped properties. - Competition from Builders
New home builders sometimes offer financial incentives that flippers may not typically be able to match, such as rate buy-downs. These incentives could make new builds attractive, particularly in regions with high new-build inventory.
Strategies for Navigating Fix-and-Flip in 2025
To overcome these challenges, consider these strategies to maximize your success:
- Diversify and Expand Your Investment Strategy
For long-term stability, you might explore diversifying into rental properties using a strategy like Buy, Rehab, Rent, Refinance, Repeat (BRRRR). With housing affordability challenges keeping demand for rentals high, this approach may help generate consistent cash flow while you continue flipping properties. - Explore Opportunities in Different Markets
The recent Q3’24 Fix-and-Flip Survey by JBREC showed markets in the Midwest and Northeast are increasing in fix-and-flip performance compared to Sunbelt states like Florida and Texas. Consider exploring emerging markets where inventory could be lower, competition from builders minimal, and resale conditions are more favorable. - Adjust Your Approach to Finding Properties
With inventory getting harder to find, creative property sourcing is needed more than ever. To expand your deal pipeline, consider combining off-market strategies like direct mail campaigns and cold calls with on-market options, such as MLS listings. Networking with wholesalers and joining local meetups or Masterminds may also open doors to more opportunities. - Keep an Eye on Potential Policy Changes
Government policies, such as tariffs on building materials and stricter immigration enforcement, could impact renovation costs and timelines. Staying informed on these potential impacts could help you anticipate challenges and develop proactive solutions. - Consider Working with Industry Professionals
Understanding your specific market and having access to financing options tailored to your needs is very helpful. Consider partnering with private lenders, like Kiavi, which offers fast, flexible financing solutions that prioritize your deal rather than your paperwork so you can act quickly when opportunities arise.
Final Thoughts on Fix-and-Flip in 2025
Fix-and-flip investing in 2025 comes with its fair share of challenges, but it’s far from impossible to succeed. By staying ahead of the curve, understanding regional nuances, and leveraging the right strategies, you could uncover valuable opportunities, even in today’s market.
Whether you’re an experienced investor or new to real estate, having the right partners in your corner makes all the difference. At Kiavi, we specialize in empowering real estate investors with the tools and resources they need to thrive. From comprehensive market insights to flexible financing options, we’re here to support your goals every step of the way.
Looking for more insights on trends that could influence real estate investing this year? Check out our on-demand webinar, Early 2025 Insights: Emerging Trends in Real Estate Investing This Year, to gain even more insights and strategies.