The Fix and Flip Market Outlook: Trends to Watch in 2025 and Beyond

Fix and flip investing remains an incredibly popular strategy for investors, as it offers the ability to provide much needed homes to undersupplied markets. Taking an older or dilapidated property and turning it into a desirable home can also lead to a tidy profit for investors. If you’re planning a fix and flip for your next investment, it helps to have a good idea of the overall market outlook for this asset class. Understanding market trends can help you make better decisions, or even capitalize on them to maximize your investment returns. Continue reading as we cover the biggest trends affecting the fix and flip market today, along with how you can expect them to play out in 2025 and beyond.

1. Shift in Buyer Preferences: Demand for Functional and Eco-Friendly Spaces

One of the most important trends to watch going forward is the rising demand for eco-friendly features in a home. Today, it’s common to find smart features such as thermostats, lighting, and smart locks in a property, and these are relatively inexpensive upgrades to make to a fix and flip home. Buyers have also been shown to prioritize eco-friendly features like energy efficient appliances, windows, and insulation. The benefits of adding these features to a home are two-fold: not only do they reduce monthly costs for homeowners, but they can also become a key selling point in your listing, leading to a higher final sale price.

2. Shifting Demographics: Catering to Millennial and Gen Z Buyers

Another key trend is the shift in demographics to younger homebuyers, particularly from the Millennial and Gen Z generations. These buyers have a particular preference for homes that are move-in ready and require minimal repairs, i.e. renovated properties, which is a great opportunity for home flippers. Fix and flip investors can maximize their returns by focusing on marketing to this audience, and incorporating features that appeal to them. It may be worth looking into current styling trends for properties, as well as ways to incorporate functional but affordable features which you can highlight in your listing.

3. Rising Material and Labor Costs: Preparing for Budget Adjustments

The post-pandemic trend of difficulty securing building materials, and a shortage of labor in the contractor space, will continue to be a factor in home flipping. Inflation combined with supply chain disruptions mean that getting work done on a property has an elevated cost when compared to pre-pandemic levels. This can eat into profit margins for home flippers, making it harder to generate a return worth your investment. It’s important to get accurate estimates for your budget and your final sale price with a fix and project for these reasons.

If you’re looking to reduce costs, there are still a few ways you can do this. First, consider locally sourcing your building materials to save on shipping costs. Next, you can negotiate with contractors to secure better rates, or in some cases get free upgrades (like better countertops or appliances for examples) at no extra cost.

4. Tightening Credit Markets: The Rise of Private Lending Solutions

Securing financing for a fix and flip deal can be difficult, as traditional lenders often view these investments as too risky for their lending criteria. Instead, investors have been turning to private lenders to fund their home flips. These loans are offered by entities that operate in the real estate space, and can offer beneficial terms to investors such as shorter loan periods, and repayment options like interest-only loans to help maximize your cash on hand. Plus, since they are asset-based loans, they are often easier to qualify for and can be approved faster. If you’re thinking about partnering with a private lender for your next investment, consider finding one that specializes in fix and flips.

5. Increased Focus on Technology: Digital Tools and Virtual Property Tours

As technology continues to evolve, investors have been increasingly using digital tools to assist in their real estate efforts. These tools can help them analyze properties and real estate markets to make better decisions, for project management, and also in the marketing and selling stage. Project management tools are great because they help investors stay on track with work and budget renovations appropriately. And if you want to create a stellar listing, you can make use of virtual tours, or virtual staging software to give browsing buyers a better idea of the home’s potential. Local real estate groups on social media are also becoming an increasingly popular method for getting the word out about a property listing, at no extra cost to investors.

6. Regional Market Variations: How to Target the Right Markets

Certain markets are expected to grow faster than others in the coming year, so it’s worth conducting research before making your next investment. Key indicators like population growth, housing prices, and the job market can tell you what demand in area looks like. You can also use data aggregator services such as ATTOM Data and reidealmaster.com to obtain accurate information on various markets.

It’s also worth identifying up-and-coming neighborhoods within a real estate market. Homes located in neighborhoods with access to amenities, good schools, and transportation options are sure to be in higher demand, and can fetch you a better return on investment.

7. Regulatory Changes: Staying Compliant in a Changing Landscape

The other major trend to keep an eye on are any regulatory changes expected to hit the market in 2025. With the outcome of the national election and various questions regarding housing on state ballots, policies are expected to change at both the local and national levels. It’s important to stay up to date on these to avoid any costly delays and ensure that your fix and flip project is compliant. Ensure that permits are secured before starting projects to avoid fines, and stay knowledgeable with regards to zoning laws and building codes in your local jurisdiction. Finally, work with a real estate attorney or a compliance expert to help you navigate these regulations effectively.

RCN Capital

The easiest way to save on your next investment is to obtain financing from a real estate lender that can get you the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. If you are looking to finance a fix and flip project, RCN Capital has competitive loan options available.