Fix and Flip in 2027: Margins, Money, Materials and the Exit

Margins

In the second quarter of 2026:

• Volume: 77,991 single-family homes and condos were flipped, 6.2 percent of all sales.
• Profit: the typical gross profit was $60,526, down from $71,000 a year earlier, and the typical gross margin was 21.5 percent, down from 27.6 percent. ATTOM's margin is gross profit over the purchase price, which it calls gross ROI. Margins fell quarter over quarter in 126 of 186 metros.
• Time and buyers: the typical flip took 161 days, and 10.7 percent of flips sold to FHA-financed buyers (ATTOM Q2 2026 U.S. Home Flipping Report, October 1, 2026).

ATTOM's gross figures leave out rehab and other costs, which experienced flippers put at 20 to 33 percent of the property's after-repair value. For all of 2025, ATTOM counted 297,045 flips, 7.4 percent of sales, with a typical margin of 25.5 percent, the lowest since 2008, and 37.7 percent of flips financed (ATTOM year-end report, March 19, 2026).

Margins by purchase price in the second quarter of 2026 (ATTOM, October 1, 2026):

• $50,000 or less: a typical 38 percent loss
• $100,000 to $200,000: 28 percent
• $200,000 to $300,000: 26 percent
• $300,000 to $400,000: 20 percent

ATTOM doesn't publish a forecast. These are the latest numbers going into 2027.

Where it worked and where it didn't

Among metros with more than a million people (ATTOM, October 1, 2026):

• Best margins: Pittsburgh 81.5 percent, Buffalo 76.6, New Orleans 75.0, Virginia Beach 63.4, Philadelphia 62.8.
• Worst margins: San Antonio a 0.3 percent loss, Dallas 1.8, Austin 2.8, Houston 3.7, Salt Lake City 4.7.
• Highest flipping rates: Cleveland 10.4 percent of sales, Columbus 9.5, Memphis 9.5, Dallas 9.4, Phoenix 8.9.

The biggest year-over-year gains in gross ROI, among metros with more than 200,000 people and at least 50 flips, were Spartanburg (up 53.0 points to 73.2 percent), Evansville (up 47.3 to 72.2), Macon (up 22.3 to 47.2), Flint (up 21.4 to 108.1) and Tuscaloosa (up 19.9 to 52.1). Across ATTOM's ten biggest gainers, median purchase prices ran from $71,000 to $270,384 (ATTOM Figures Friday, October 16, 2026).

Texas had a 2.8 percent state margin on $8,083 of gross profit across 8,389 flips, among the lowest in the country. Mississippi was the only state with a typical loss (1.7 percent). Pennsylvania led at 65.6 percent, and Ohio had the highest flip rate at 9.6 percent (ATTOM state table, October 2, 2026).

Source: ATTOM Q2 2026 U.S. Home Flipping Report state table (ATTOM, October 2, 2026). Data through June 2026, for states with a Pinnacle Funding Network market page. Gross profit and gross ROI are ATTOM's typical figures. Gross ROI is gross profit divided by the flipper's purchase price, before rehab and carrying costs, and a minus sign is a loss. Fix and flip ceilings vary by state and market, and each market page has its own terms. Massachusetts isn't in ATTOM's state table.

What the money costs

Residential transition loans ran 9.5 to 11.5 percent in recent quarters, about 10.5 percent on average and roughly two points above bank construction loans. They're interest-only, on terms of 9 to 36 months (Urban Institute, April 2026).

Lightning Docs, a platform that documents a large share of these loans, put the national average bridge rate at 9.99 percent in July 2026, the first reading under 10 percent since June 2022. It was 10.03 percent in September and 10.07 percent in October, and 60.5 percent of September loans were priced between 9 and 10.99 percent. That bridge average includes fix and flip and ground-up loans (Lightning Docs, August 12 and October 6, 2026, and its rate ticker, November 4, 2026).

The National Private Lenders Association's June 2026 report put the median rate at 9.99 percent (NPLA, July 9, 2026). Its July market pulse reported "RTL rates declined while points increased," and a lender on its panel described more extension requests and borrowers "struggling to exit projects" (NPLA, August 7, 2026).

KBRA projects about $4.8 billion of securitizations of these loans for 2026, about $3.5 billion of it rated. At the 22-month mark, rated deals had about 5.9 percent in 60-plus-day delinquency, foreclosure, bankruptcy or bank-owned status, and cumulative net losses were under 0.1 percent (KBRA, July 30, 2026).

Pinnacle Funding Network's published terms:

• Leverage: up to 100 percent of total project cost (purchase plus rehab) for experienced flippers, and up to 100 percent of rehab funded, with the loan up to 75 percent of after-repair value. First-time flippers welcome.
• Rate: fix and flip rates start at 8 percent (as of November 2026), for the strongest files.
• Loan size and speed: loans from $100,000 to $5 million, closing in as few as 7 days. Standard files run 14 to 21 days, expedited 7 to 10.
• Credit: a floor of 660 for most fix and flip and ground-up programs, lower by exception.
• Who qualifies: first-time investors are eligible. On fix and flip and ground-up loans, foreign nationals are eligible with a U.S. credit score, a U.S. entity, a U.S. bank account and a visa or green card valid through the loan term.
• New construction: up to 90 percent of total cost, with 100 percent of construction funded through draws. First-time builders considered.

These are published ceilings and a published starting rate, not a quote, and they don't all stack on one file. Fix and flip ceilings vary by state and market, and each market page has its own terms.

The fix and flip guide works through a full underwrite with both limits, total cost and after-repair value. The 2027 rate outlook puts these starting rates next to the market.

What the rehab costs

In September 2026, inputs to new residential construction were up 10.3 percent year over year. Building materials excluding energy were up 5.5 percent, the most since December 2022. Energy inputs were up 64.1 percent, with No. 2 diesel up 115.2 percent, and softwood veneer and plywood were up 15.9 percent (Bureau of Labor Statistics Producer Price Index via NAHB, October 15, 2026). Framing lumber was actually cheaper than a year earlier, at $459.10 per thousand board feet on October 30, 2026, down 4.4 percent year over year (Madison's Lumber Price Index via NAHB, November 2, 2026).

Small builders, those with five or fewer starts, are the closest match to a flipper's buying power. They reported a 9.1 percent median increase in material costs over the prior twelve months, compared with 1.8 percent for builders with 100 or more starts (NAHB Housing Market Index special questions via HousingWire, August 26, 2026).

Labor is tight. In September 2026, builders reported an average shortage rate of 47 percent across nine trades, higher than at any point in the 2004 to 2006 boom. Framing crews were at 57 percent and finished carpentry at 58 percent, and the median labor cost increase was 4.2 percent (NAHB, October 14, 2026). Construction job openings were 298,000 in September 2026, up from 206,000 a year earlier (BLS JOLTS via NAHB, November 3, 2026).

In a national investor survey, more than 62 percent of investors said tariffs had raised material and product prices, 28 percent reported lower net margins, and more than 70 percent named financing cost as their top challenge (investor sentiment survey conducted by CJ Patrick Company, Fall 2026, October 22, 2026). Looking ahead, NAHB expects remodeling activity to stay stable in 2026 and grow slightly in 2027 (NAHB Remodeling Market Index, October 8, 2026). That's the only 2027 call on the cost side so far.

Budget a 10 to 15 percent contingency, closer to 20 for a first flip, and get a fixed-price contract. The budget template has the line items.

The exit

Existing home sales ran at a 3.99 million annual rate in September 2026. Inventory was 1.60 million homes, 4.8 months of supply and the most since November 2019. The median price was $417,500, up 1.3 percent year over year, the median home spent 33 days on market, and first-time buyers made up 31 percent of sales (National Association of Realtors, October 13, 2026; October data due November 12).

In the week ending October 23, 2026, 43.1 percent of active listings carried a price cut, and new pending sales were down 22.5 percent year over year (HousingWire Data, October 28, 2026). Redfin's median sale price fell year over year in the four weeks to October 25, the first drop in more than three years, and pending sales hit the lowest level in Redfin's weekly records, which go back to 2021 (Redfin, October 29, 2026).

Builders are competing with you for the entry-level buyer. The new-home median was $400,400 in September, down 3.9 percent year over year, and one in five new homes sold for under $300,000. In October, 43 percent of builders cut prices, by 6 percent on average, and 65 percent used incentives (NAHB, October 19 and 27, 2026).

On the buy side, distressed supply is rising from a low base. Foreclosure filings were up 13 percent year over year in August 2026, and bank repossessions were up 42 percent, led by Texas (ATTOM, September 17, 2026). Completed foreclosure auctions rose 25 percent year over year in the third quarter, the highest total since early 2020. FHA loans made up 43 percent of that volume and Texas 15 percent (Auction.com via HousingWire, October 23, 2026).

If the sale is slow, your second exit is a refinance into a 30-year DSCR loan, and you hold the house as a rental. Two guides cover it: when a flip won't sell and DSCR loans for fix and flip.

The large-investor ban and flippers

Starting January 7, 2027, an entity in the business of holding single-family homes that, counted with its affiliates, has investment control of 350 or more of them generally can't buy more without an exception. The statute also makes exceptions for homes "newly constructed, renovated, or a rental conversion for sale" that aren't rented while the sale is pending, and for purchases from an investor that isn't itself covered, through January 7, 2029. The penalty is up to the greater of $1 million or three times the purchase price per violation (21st Century ROAD to Housing Act, Public Law 119-101, Section 1001; Treasury's proposed rule, 91 FR 66799, October 23, 2026).

Treasury's proposed rule, published October 23, defines the renovate-to-rent exception: improvements of at least 15 percent of the purchase price net of land value. Spending at least 10 percent of that on structural or core-system work counts as substantial rehab under a safe harbor, but the 15 percent total still applies. It hasn't interpreted the for-sale exception yet. Comments are due November 23, 2026 (U.S. Treasury; Gibson Dunn, November 3, 2026).

For an independent flipper, the ban matters mostly for who can buy from you. A flipper whose group controls fewer than 350 homes isn't covered, and through January 7, 2029, a covered investor can still buy from an investor that isn't covered. The counting rules reach affiliates, funds and joint ventures, and Treasury is still writing them. If you invest through a fund or joint venture, check with counsel.

What changes on January 1, 2027

• The large-investor purchase ban (January 7, above).
• Bonus depreciation, unchanged: 100 percent bonus depreciation is already permanent for property acquired after January 19, 2025, so a flip you keep as a rental keeps full cost segregation value in 2027 (Public Law 119-21; IRS Notice 2026-11). Check with your CPA on how it applies to your property.
• Contractor reporting: the 1099-NEC and 1099-MISC threshold is $2,000 for payments made in 2026. That's the threshold on the 1099s you file for contractors in January and February 2027 (26 U.S.C. 6041, as amended by Public Law 119-21).
• Property tax: the Texas 20 percent appraisal cap on non-homestead property expires December 31, 2026, and reviving it would take a voter-approved constitutional amendment. Florida's non-homestead cap drops from 10 to 5 percent for non-school levies from the 2027 roll. Both matter if a flip becomes a rental.

The full calendar is on the January 1, 2027 page.

The rest of the 2027 outlook

• DSCR and fix and flip rates in 2027What the forecasters expect, and what moves the rate.
• Best markets for real estate investors in 2027Where capital is going, where flips paid and where rents grew, with 37 metros side by side.
• Short-term rental and Airbnb financing in 2027Demand, rules and how the loan qualifies.
• The January 1, 2027 calendarFederal, state and local rules, date by date.

When you have a deal, start with fix and flip loans or new construction loans.