Introduction: flipping in a split‑market year

If 2024 felt like trying to flip a house while the market kept moving the furniture, 2025 feels more like someone finally turned the lights on. We can see the room again—prices, demand, and costs are no longer sprinting in opposite directions—but there are still a few Legos on the floor. Mortgage rates have eased from their peak, buyers are back in open houses, and well‑scoped projects are finding their audience. At the same time, inventory is patchy, affordability is tight, and the deals with real spread are being chased by more sophisticated capital. In other words: this is an operator’s market.

For SFR and small multifamily investors, that means the fundamentals do the heavy lifting. You don’t need exotic strategies so much as clean acquisition math, disciplined scopes, and timing that respects local MLS behavior. What changed from the “anything sells” era is that the market now insists you prove it: why this purchase price, why this scope, why this list price, and why now? The good news is that the answers are available if you’re willing to build a simple model and read your micro‑market like a weekly weather report.

And yes, you can still make very good money. But the path to profit runs through boring excellence—planning, sequencing, documentation, and ruthless respect for your exit. Think of the following pages as your field manual: we’ll translate the national stats into street‑level tactics, so your next flip isn’t just pretty—it’s profitable.

Executive summary

• Flipping activity and gross returns rebounded slightly in 2024, but margins remain compressed by historical standards. In Q1 2025, typical flips netted a $65k gross profit and ~25% ROI (before rehab and carrying costs), with Midwest & Northeast metros leading ROI rankings.
• High‑ROI ≠ high‑dollar: Rust Belt/Northeast metros often deliver the largest percentage returns, while high‑cost coastal markets still lead in absolute dollar profits.
• Time‑to‑flip averages ~164 days nationally (Q1 2025), with tight supply + rising inventory pockets creating a split market: quick absorption for well‑priced, turn‑key listings; longer DOM for mis‑scoped or mis‑priced rehabs.
• Cash is king (again). Roughly 6 in 10 flips are bought with cash, but financing remains material—especially for pro operators who scale.
• For SFR & small MF investors, metro selection and micromarket discipline matter more than ever. Profitability hinges on acquisition discount, scope control, and selling into the right demand segment (FHA‑friendly price bands, family‑sized units, or low‑maintenance rentals for mom‑and‑pop landlords).

How we define and measure profitability (apples to apples)

Gross profit: resale price minus acquisition price. Gross ROI: gross profit ÷ acquisition price. Neither include rehab costs, interest, taxes, insurance, utilities, staging, concessions, broker fees, or opportunity cost. Veteran flippers commonly peg all‑in rehab + carry + transaction costs at ~20%–33% of ARV (after‑repair value). Your true net ROI depends on scope discipline and local frictions (permits, inspections, weather, labor availability).

Rule of thumb: Start from gross ROI, subtract your all‑in cost stack (materials/labor, holding, selling) to underwrite net profit. Stress‑test exit price ±3%–5% and timeline ±30–45 days.

National trendline (late‑2024 → mid‑2025)

The past eighteen months reset expectations. Flipping activity drifted to its lowest quarterly count since 2018, not because investors lost interest, but because finding a true discount has gotten harder. As overall transaction volume shrank, flips rose to roughly 8.3% of sales on paper—yet the absolute number of flips was muted. That’s the headline paradox: the share looks large because the market itself was small.

Margins told a similar story. The median gross profit climbed to about $72,000 in 2024, then eased to roughly $65,000 in Q1 2025 as under‑market inventory thinned. On a percentage basis, gross ROI hovered near 30% in 2024 and slipped toward ~25% in early 2025. Remember, those are gross measures—your net depends on how tightly you control rehab, carry, and selling costs. When spreads compress, operator discipline—not optimism—pays the bills.

Timing improved at the margins. The average flip went from purchase to resale in about 162 days in 2024 and roughly 164 days in Q1 2025. That five‑to‑six‑month cadence reflects lingering frictions (permits, inspections, scheduling) more than labor scarcity. It also underscores a key lesson from this cycle: calendar risk is profit risk. If your model assumes 120 days, budget for 180 and surprise yourself in a good way.

Capital remains plentiful but choosier. About six in ten flips were cash purchases; the rest used financing. The cash share helps winning bids land quickly, but it doesn’t replace underwriting. Professional operators are still levering smartly for scale; the difference in 2025 is that lenders and buyers alike want to see the receipts: documented scopes, clean permits, and comps that read like an appraiser wrote them.

On the demand side, slightly lower mortgage rates reopened some doors—especially at FHA‑friendly price bands and for practical, family‑oriented SFR. Buyers are picky again, which is healthy. Renovations that solve real problems (functional layouts, aged systems, safety items) move first; “lipstick and list it” projects sit.

Bottom line: flips work when the business plan is specific. Your market doesn’t owe you appreciation; it rewards execution.

Metro ROI leaders vs. laggards (Q1 2025 + 2024 context)

Below: a concise map of where percentage returns look healthiest (Q1 2025) and where big dollar profits still live (2024 full‑year). These patterns hold best for bread‑and‑butter SFR and small MF (2–10 units) in workforce neighborhoods.

Top ROI metros (Q1 2025)

ROI leaders (Q1 2025, typical gross ROI, before expenses):

• Buffalo, NY — ~102%
• Pittsburgh, PA — ~100%
• Scranton, PA — ~90%
• Peoria, IL — ~89%
• Rockford, IL — ~88%

Why these markets work: Affordable entry prices, deep pools of value‑add housing stock, and end‑user demand (often FHA/first‑time buyers) that rewards clean, code‑tight rehabs. In many neighborhoods you can still hit the 70% rule (purchase + rehab ≤ 70% of ARV) on select deals—with discipline.

Large‑metro standouts (Q1 2025): New Orleans, Memphis, Philadelphia also post above‑average ROIs despite bigger‑city frictions. Operators with tight permitting playbooks and contractor benches can scale here.

ROI laggards (Q1 2025)

Among large metros (1M+), the lowest percentage margins clustered in parts of Texas and the Mountain West:

• Austin, TX — ~1%
• Dallas, TX — ~3.7%
• Houston, TX — ~5%
• Salt Lake City, UT — ~6.5%
• San Antonio, TX — ~6.9%

Why it’s tough: Pandemic‑era price spikes left less room for acquisition discounts; normalization in some submarkets squeezed resale spreads; holding costs aren’t forgiving at high price points and longer DOM.

Highest dollar profits (2024 full‑year)

If you care about gross profit dollars (not just % ROI), coastal giants still dominate:

• San Jose, CA — ~$283k
• San Francisco, CA — ~$218k
• New York, NY — ~$175k
• San Diego, CA — ~$175k
• Washington, DC — ~$170k

Translation: High entry costs + high resale support = fat dollars (but often thinner % margins and higher execution risk). Not a first‑flip market without a great GC and faster‑than‑average permit pulls.

The MLS lens: absorption, DOM, and sale‑to‑list dynamics

Look past the national headlines and your local MLS will tell you a very practical story. In many Sun Belt metros and parts of Florida, days on market have stretched, punishing over‑pricing and cosmetic‑only rehabs that ignore functional issues. By contrast, several Midwest and Northeast metros are still absorbing turn‑key, correctly priced SFR with impressive speed. The takeaway isn’t that one region is “good” and the other “bad”—it’s that your list strategy must match your zip code’s reality.

Sale‑to‑list ratios hovering near 100% mask a lot of nuance. In price bands with fresh supply, that ratio can fall quickly, and your first two weeks on market matter disproportionally. Price into the comp band buyers are actually closing in—not the one your ARV spreadsheet fell in love with—and you’ll keep DOM in check without chasing reductions later.

Inventory mix does the rest. Entry‑level SFR (think 3/1 or 3/2 with a workable yard) and rentable small‑MF units continue to see steady traffic from first‑time buyers and mom‑and‑pop landlords. Condos in buildings with high HOAs or looming assessments require sharper pricing and disclosure to overcome DTI drag. If you’re deciding between two exit strategies, read pendings as heavily as solds; they’re tomorrow’s comps.

Cost climate: materials, labor, and carrying costs

After the whiplash of 2021–2022, materials costs have largely stabilized, but volatility hasn’t disappeared. Metals and certain finish categories can still swing month to month, and regional shortages crop up without warning. Smart operators keep a standard SKU list and buy in modest bulk to smooth the bumps.

Labor is a tale of two markets. In fast‑growing metros, trades are booked out and loyalty is earned by on‑time payment and predictable scopes. In ROI‑leader metros with more balanced pipelines, you can still find excellent crews—but you’ll keep them by feeding them a steady rhythm of work and avoiding the “scope today, change tomorrow” dance that kills productivity.

Carrying cost is where many pro formas go to meet their maker. Even with rates off their highs, calendar slippage compounds quickly: extra interest, taxes, utilities, insurance, and the occasional vandalism repair. Underwrite a six‑month hold as a base case, insure properly (builder’s risk, vacancy endorsements), and treat time as a line item you can manage—because it is

The profitability anatomy (SFR & small MF)

Every winning flip is a small stack of good decisions made in the right order. The first is buying at a true discount—not a wishful one. Focus on unrenovated but livable homes where your scope can fix obvious functional and safety issues without wandering into structural adventures. Estate situations, tired landlord portfolios, and small MF with under‑market rents are fertile because the value story is easy to tell.

Next comes scope control. Kitchens and baths sell houses, but systems pass appraisals. Your job is to cure the things that would make a buyer hesitate—old roofs, risky electrical panels, questionable plumbing—while delivering a clean, durable aesthetic that photographs well. In small multifamily, standardization is its own profit center: one flooring, one cabinet, one lighting package. Consistency speeds turns and keeps crews out of decision purgatory.

Then there’s timeline discipline. Projects don’t drift toward done; they drift toward delays. Pre‑order long‑lead items, slot inspections early, and build a schedule that leaves no idle days between trades. Reward crews for beating milestones and require ROI sign‑off for any scope changes after rough‑in. You’re not being difficult—you’re protecting margin.

Finally, match the exit to the asset. Retail flips in FHA price bands crave certainty and shine. Wholesale exits work when you bought a clean house at a great price and the market doesn’t pay you back for heavy renovations. In landlord‑dense neighborhoods, the best exit is sometimes a BRRRR‑style hold into DSCR debt. Your spreadsheet should show all three paths; let the comps and calendar pick the winner.

Metro playbooks (how to operate where the margins live)

Below: actionable tactics by market style. Use these as templates, then tune to your zip codes.

Midwest/Northeast ROI metros (Buffalo, Pittsburgh, Scranton, Peoria, Rockford)

Demand profile: First‑time buyers, workforce move‑ups, and small landlords.

Game plan:

• Focus on 3/1 or 3/2 SFR with solid bones and detached garage/yard. In small MF, 2‑bed units with in‑unit laundry win.
• Rehab for code compliance + clean design: shaker cabs, quartz/solid‑surface, LVP floors, warm LED lighting (3000K), modern bath fixtures. Don’t over‑spend on luxe packages; let craftsmanship and functionality shine.
• Push speed to market. These buyers are rate‑sensitive; your days‑to‑market matters more than the last 1% of design flourish.
• Price at the heart of the comp band and offer seller credits in lieu of bigger list reductions if DOM creeps.

Watch‑outs: Freeze/thaw rooflines, dated electrical, galvanized supply lines. Pre‑inspect to avoid “surprise” addenda.

High‑dollar coastal metros (San Jose, San Francisco, New York, San Diego, DC)

Demand profile: Dual‑income professionals, relocation buyers, and seasoned investors.

Game plan:

• Acquisition is everything; target functionally obsolescent homes (bad layouts, tired finishes) where permitted layout fixes unlock comps.
• Elevate to turn‑key: permits, plans, and a close‑to‑new experience. Premiums accrue to perceived newness.
• Timing matters: aim for peak listing windows (late spring through early summer), weather‑proof your schedule, and pre‑clear permits.

Watch‑outs: Permit queues, HOA/architectural reviews, historical districts, and neighbor objections. Carry costs dwarf minor materials swings—guard your calendar like treasure.

Sun Belt “normalized” metros (Austin, Dallas, Houston, San Antonio)

Demand profile: Mixed—post‑pandemic cohort fatigue; buyers have options and power in several submarkets.

Game plan:

• Be ruthlessly selective on acquisition (probate, off‑market, dated rentals). Avoid chasing “comped” deals with recent retail‑level ARVs.
• Scope light and smart: neutral paint, fixtures, curb appeal, and mechanicals only as needed. Over‑scoping kills margin.
• Price at or slightly below the 30‑day comp medians; be ready with seller concessions for rate buydowns.

Watch‑outs: HOA litigations, insurance premiums, new‑build competition nearby. Your flip competes with builder incentives in many suburbs.

Small multifamily (2–10 units): flipping and value‑add angles

While most “flip” datasets focus on SFR and condos, small MF can deliver hybrid exits: flip to a landlord buyer at a premium once in‑place rents reflect upgraded units.

Value‑add sequencing:

1. Address life‑safety + code (electrical panels, smoke/CO, handrails).
2. Unit turns to a standardized finish level (LVP, shaker, matte black or brushed nickel, LED).
3. Common‑area shine (paint, lighting, signage, mailboxes, landscaping).
4. Water savings (toilets, aerators, leak sensors) → cut owner‑paid bills or justify RUBS.
5. Marketing assets (pro photos, floorplans) to demonstrate rent step‑ups and stabilized NOI.

Exit math: If you raise NOI by $4,000/yr at a 6.25% cap, you’ve created ~$64k in value—often for <$15k in capex on a 6–8 unit. That’s a clean buyer story.

Who buys: Local physicians, small funds, 1031 exchangers, and “first‑time” apartment owners. Make their lender’s job easy: rent roll, T‑12, scopes, warranties.

Compliance notes (FHA 90‑day rule & friends)

• FHA 90‑day anti‑flipping rule: If your buyer uses FHA financing, the property must be seasoned >90 days from your deed date to the buyer’s contract date. Additional appraisal scrutiny may apply for >20% price increases within 6 months.
• Renovation permits & disclosures: Respect local permitting; unpermitted work can kill loans. Proactively disclose major items (roof, sewer, electrical) if replaced—buyers and underwriters reward transparency.

Pro tip: Align your scope and listing calendar with FHA’s 90‑day timeline to avoid dead time. If you’re turning in ~75–90 days, you’ll want pre‑marketing prep ready on day 91.

Deal‑sourcing patterns that still work in 2025

• Probate & inheritance: Less bidding war; empathy + speed wins.
• Tired landlord portfolios: Small MF with deferred maintenance; structure as‑is and post‑closing access for trash‑outs.
• Code compliance lists: Target properties with outstanding violations (roof, fencing, paint). Solve a headache, earn a discount.
• Auction/trustee sales: Win with precise rehab budgets; avoid overbidding on “mystery houses.”
• Direct‑to‑owner: Mail/text to 20‑year owners in specific tract years (1960s–1980s SFR). Offer as‑is + quick close.

“Red flags” that erode margins

• Thin entry discount because you fell in love with a kitchen island on Pinterest.
• Scope creep (you replaced things that weren’t broken).
• Permit delays (start paperwork Day 1).
• Over‑pricing (DOM drag → price reductions → concessions).
• Insurance surprises (roofs, pools, flood zones).
• HOA special assessments (condos/townhomes).

Regional & metro snapshots (operator’s field guide)

The following profiles synthesize recent flipping data, MLS dynamics, and on‑the‑ground operator patterns. Numbers under “Data notes” are typical signals to watch; they are illustrative at the zip‑code level and should be validated with your local MLS pull before offers.

Buffalo, NY (ROI leader)

Thesis: Affordable stock + strong end‑user demand for renovated SFR create room for spreads even after a conservative scope.
Playbook: 3/1 and 3/2 bungalows/capes; emphasize systems (roof/electrical) and light‑bright interiors. Aim for FHA‑ready condition.
Risk notes: Winter logistics; sewer/septic surprises in older tracts.
Data notes: Among the top U.S. ROIs in Q1 2025; cash purchases common in lower‑priced flips; FHA buyers active at exit.

Pittsburgh, PA (ROI leader)

Thesis: Deep pool of early‑20th‑century housing + tech/eds/meds economy.
Playbook: Correct functional obsolescence (tiny kitchens, chopped layouts). Target close‑in suburbs with good schools.
Risk notes: Hillside foundations, retaining walls; knob‑and‑tube.
Data notes: Near‑triple‑digit median ROI (gross, before expenses) in Q1 2025 on typical flips.

Scranton, PA (ROI leader)

Thesis: Value‑priced entry housing with steady FHA/USDA buyers.
Playbook: Keep scopes defensive; buyers reward new roofs, HVAC, and clean finishes.
Risk notes: Older mechanicals; appraiser overlays.
Data notes: Upper‑tier ROI nationally in Q1 2025.

Peoria & Rockford, IL (ROI leaders)

Thesis: Midwest affordability + return‑seeking local buyers.
Playbook: Standardize finish packages; push fast listing cycles.
Risk notes: Pop‑up permit quirks; winterization.
Data notes: Upper‑80s % gross ROI range in Q1 2025 on typical flips; high cash‑purchase share.

New Orleans, LA (large‑metro standout)

Thesis: Character housing sells when turnkey; craft requires permitting finesse.
Playbook: Value exteriors (paint/porches/ironwork), flood‑smart mechanical placement.
Risk notes: Flood plains, insurance cost.
Data notes: Among highest large‑metro ROIs in Q1 2025; DOM sensitive to price band and neighborhood.

Memphis, TN (large‑metro standout)

Thesis: Landlord and first‑time‑buyer demand supports clean rehabs.
Playbook: Focus on 3/2 SFR near employment corridors; manage appraisal/repair addenda.
Risk notes: Insurance pricing; mid‑scope creep.
Data notes: Above‑average large‑metro ROI in Q1 2025.

Philadelphia, PA (large‑metro standout)

Thesis: Rowhouse rehabs with code‑tight systems and tasteful kitchens; buyers prize move‑in certainty.
Playbook: Tight scopes; pre‑inspection; block‑by‑block comping.
Risk notes: Historic overlays; sidewalk/curb repairs.
Data notes: Among higher large‑metro ROI markets in Q1 2025.

Austin, Dallas, Houston, San Antonio (ROI laggards)

Thesis: Pandemic run‑ups + normalization compress spreads; builders compete with incentives.
Playbook: Only pursue deep‑discount AS‑IS opportunities; be ready to sell with credits/rate buydowns.
Risk notes: HOA, insurance, and appraisal gaps; suburban new‑build competition.
Data notes: Q1 2025 large‑metro ROI readings in the low single‑digits to high‑single‑digits; Austin at ~1% gross ROI.

Salt Lake City, UT (ROI laggard)

Thesis: Tightened spreads post‑boom; demand resilient but price‑band selective.
Playbook: Look for functional‑layout opportunities; wholetail when possible.
Risk notes: Permitting and winter scheduling.
Data notes: Low‑single‑digit gross ROI in Q1 2025 for the median flip; DOM modestly longer above mid‑tier price bands.

Conclusion: turn the data into an edge

The national figures—~$65k gross profit, ~25% gross ROI, ~164 days door‑to‑door—aren’t a destiny; they’re guardrails. 2025 is an operator’s market, and operators win by stacking small, correct decisions in the right order. Buy in the right price band, write scopes that fix function first, run a clock you can actually keep, and list into the comp set that’s clearing now, not the one your vision board prefers.

In ROI‑leader metros, below‑median purchases and FHA‑ready finishes convert spreads into cash. On the coasts, permits and calendar discipline unlock big‑dollar profits—but punish drift. In normalized Sun Belt markets, ruthless entry discipline and wholesale optionality protect the downside when buyers have choices.

Small multifamily gives you a second engine: you’re not just selling finishes—you’re selling NOI. Every $1,000 of durable annual rent lift or OpEx savings is ~$15–$16k of value at common cap rates—if you can prove it. Keep rent rolls, a clean T‑12, scopes, before/after photos, and warranties in a tidy flip packet so buyers, appraisers, and lenders can say “yes” faster.

The playbook isn’t heroic; it’s repeatable. Use the MLS diagnostics before every offer. Pay trades promptly and expect the same professionalism back. Model a six‑month hold even if your gut says four. Treat rate buydowns and small price refreshes as tools, not defeat. And if a deal flunks your decision gates, move on—the best flips you’ll ever do are the ones you don’t buy.

If you want help turning this checklist into capital, AHL can underwrite the acquisition + rehab, structure draws around your milestones, and pre‑size a DSCR takeout if you decide to hold. Bring us a deal, a scope, and a target calendar—we’ll bring speed, certainty, and a second set of eyes.

Bottom line: In 2025, math beats mood. Buy right, fix what matters, respect the calendar, and price to the market you have. Do that consistently and your flips won’t just close—they’ll compound.