Flipping houses—buying distressed properties, renovating them, and reselling for a profit—can be a lucrative real estate investment strategy. But market conditions play a major role in determining success. Now may not be the most favorable time for flipping homes, especially in major Texas markets like Houston, Austin, Dallas-Fort Worth, and San Antonio. Here’s why.
High Interest Rates Are Squeezing Profit Margins
One of the biggest challenges for flippers today is the cost of financing. Most flippers rely on borrowed capital—either from hard money lenders, private investors, or traditional financing options. But with interest rates still elevated, the cost of buying, holding, and renovating properties has gone up significantly. This eats into profit margins and makes many deals less attractive. In short, higher borrowing costs mean tighter returns for flippers.
Stable Home Prices Don’t Favor Quick Turnarounds
Flippers thrive in a rapidly appreciating market, like the post-pandemic boom when home prices soared month over month. In that environment, even average renovations could yield strong profits. But today’s real estate market is more stable, with slower growth and fewer transactions overall. We’re seeing a shift toward a more balanced market—or even a buyer’s market in some areas—measured by increased months of inventory. Without the tailwind of rising prices, flipping becomes much riskier.
Exceptional Deals Are Harder to Find
While it’s still possible to succeed as a flipper if you land a deeply discounted property, those opportunities are becoming harder to find. With fewer foreclosures and more competition from other investors, flippers must work harder and smarter to find deals that make financial sense. Due diligence, accurate rehab budgeting, and conservative resale estimates are more important than ever.
Buy-and-Hold May Be a Better Strategy Right Now
Given the current market dynamics, many investors may find better long-term success in buy-and-hold strategies. This approach allows landlords to benefit from rental income, appreciation over time, and tax advantages, without being as exposed to short-term market fluctuations and high interest rates.