Margins plummet to 2008-levels as investor costs hit new highs
Home flipping profits in the U.S. dropped to their lowest level in nearly two decades during the second quarter of 2025, as rising acquisition costs and fierce competition squeezed returns for investors.
According to ATTOM’s latest US Home Flipping Report, the typical gross return on investment for a flipped home fell to 25.1%, down from 62.9% in 2012 and the lowest margin since 2008.
“The initial buy-in for properties that are ideal for flipping, often lower priced homes that may need some work, keeps going up,” Rob Barber, CEO at ATTOM, said.
Barber added, “As prospective homeowners get priced out of the middle and high end of the market, they’re more likely to be competing with flippers over the same homes.”
Flipping activity and regional standouts
A total of 78,621 single-family homes and condos were flipped in Q2 2025, representing 7.4% of all home sales. This was down from 8.3% in the first quarter and slightly below last year’s 7.5%. The seasonal dip followed historical patterns, with flipping activity typically peaking in the first quarter when overall sales volumes are lower.
Georgia emerged as a hotbed for flipping, with Warner Robins (18.5% of sales), Macon (15.5%), and Atlanta (13.6%) leading the nation in flip rates. Thirteen of the top 20 counties for flipping activity were in Georgia.
Profit margins erode across markets
The median investor purchase price hit a record $259,700, while the median resale price held at $325,000. Gross profits dropped to $65,300, down 4% quarter-over-quarter and 13.6% year-over-year.
Margins fell in 58% of metro areas compared to the previous quarter, and in 70% year-over-year. Notably, Fort Smith, AR, and Green Bay, WI, saw the steepest quarterly declines.
Among larger metros, Virginia Beach, Orlando, and Grand Rapids posted the biggest margin drops. In contrast, Pittsburgh, Shreveport, and Scranton delivered the highest returns, with typical profits exceeding 100% in some cases. However, these outliers were exceptions in a market where most investors faced tightening spreads.
Meanwhile, cash remained the dominant financing method, with 62.6% of flips purchased without a mortgage. The time to flip lengthened slightly to 165 days, reflecting ongoing challenges in both acquisition and resale.
Fix-and-flippers shift toward ground-up construction
With traditional flipping profits under pressure, some investors are pivoting to ground-up construction—a trend gaining traction as mortgage rates fall and lumber prices remain low.
Max Chera, managing partner at Express Capital Financing, notes that while refinancing activity has surged with declining rates, there’s also an uptick in ground-up construction applications.
“We’re seeing more applications on the ground-up construction,” Chera told Mortgage Professional America. “It’s something that we actually want to push as a product. Outside of the cost, there’s a demand for it already due to our housing shortage.”
Chera observes that large homebuilders, who can absorb higher costs and develop at scale, are leading this resurgence. However, even smaller investors and former fix-and-flippers are exploring new builds as competition and squeezed margins make traditional flips less attractive.
“A lot of flippers are even trying to transition and get into the ground-up construction space,” he said. “I think also the influx of investors that got into fixing and flipping over the last 10 years has increased, which also makes the demand higher. Sellers get a little bit more, which means that the profits go down."
In some overheated markets, the influx of flippers over the past decade has driven up acquisition prices and cut into profits, prompting a strategic shift.
The BRRRR strategy gains ground
For those staying in the renovation space, many are turning to the buy, rehab, rent, refinance, and repeat (BRRRR) model—holding properties for rental income rather than selling immediately for a profit.
“A lot of investors are going the BRRRR route. Instead of selling the property for a profit, they’re holding on to it for the rental income, because that’s where they see the biggest value in their property,” Chera explained.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
