Fix and Flip Strategies: Protecting Your Margin From the Unexpected
Flipping is still a great strategy, but it isn’t “easy money” anymore.
According to ATTOM’s Q3 2025 Home Flipping Report, the typical gross return on investment (ROI) for flipped homes dropped to 23.1%, down from 26.5% in the previous quarter and nearly 30% a year earlier — the lowest level seen since before the 2008 housing downturn.
Source: ATTOM Data Solutions Q3 2025 Home Flipping Report.
This data reinforces something experienced investors already know: carry costs and budget overruns matter more now than they did a few years ago.
When margins are tighter, surprises cost a lot more than they used to. This means that investors need to have strong contingency plans to mitigate the margin impact of surprises.
Big Impact Expenses Don’t Pause
Even before anything goes wrong, a significant portion of a flip’s potential profit is already committed to core expenses.
Industry guidance consistently shows that rehab and carrying costs can account for 20–33% of ARV, depending on the scope and timeline of the work.
The totals typically include:
Labor and materials
Permits and inspections
Insurance and utilities
Property taxes
Loan interest
The important thing to note is that these costs don’t stop accruing just because something takes longer or costs more than expected.
A single delay in permits or a change order in the middle of a project can erode profits due to the extra carrying costs that pile up while the project sits.
The Surprises That Hurt the Most
Most cost overruns aren’t dramatic. Moreover, they’re predictable, and predictable problems are preventable. Protect your margins by building the costs of addressing these common issues into your rehab budget.
Aging Systems and Deferred Maintenance
Homes in Milwaukee, Waukesha, and Kenosha often have plumbing, electrical, or mechanical systems that don’t show their true condition until demolition begins.
Permit and Inspection Timing
City permit and inspection processes vary by municipality. Waiting on an inspection slot doesn’t generate value — but it does generate holding costs.
Contractor and Material Lag
Trades work in sequence. If one trade delays, the next one waits. Even a three-day gap can push timelines out a week or more.
Every utility system surprise, inspection delay, or sequencing gap does more than increase cost. It stretches the timeline. And when timelines stretch, the real impact on profit begins to show.
Why Timeline Discipline Protects Margin
ATTOM’s Q3 2025 report also noted that average flip hold times remain elevated compared with peak conditions in prior years.
This finding underscored what experienced fix-and-flip investors already know:
Time is expensive.
Every extra week in your timeline adds:
More interest
More utilities
More insurance
More taxes
When profit margins are already compressed, an extra 30 days of carry can cost thousands. The difference between a 90-day project and a 120-day project isn’t just 30 days. It’s 30 days of cost accumulation layered on top of tighter margins.
In this market, speed doesn’t mean cutting corners. It means controlling what you can control — and building a process that keeps the project moving from acquisition to resale without unnecessary pauses.
That discipline is what protects margin when everything else feels tight.
How Flexible Financing Helps Protect Margin
This is where your choice of capital partner matters.
Rigid lending structures can hesitate when timelines shift or contingencies kick in. Flexible capital helps steady the project when real-world conditions don’t match your initial plan.
Here’s how:
Faster closings help you secure properties before competitors do
Clear underwriting expectations upfront reduce last-minute hurdles
Predictable draw schedules keep crews moving instead of waiting for approvals
Communication and responsiveness help solve issues early — before they escalate
As financial markets tighten and deals become more competitive, a slightly lower interest rate means little if closing timelines slip and carrying costs increase.
Flexible financing that moves with your project often protects more profit than a fraction of a point in rate.
What Disciplined Investors Do Differently
The investors who continue to perform well in tighter markets rely on structure.
They:
Build real contingency into every rehab budget
Plan on ARV’s conservatively, not optimistically
Stress-test timelines before committing
Align financing with execution pace
The fix-and-flip projects that perform best are those where the investor anticipated and planned for surprises, making them less surprising after all!
If you’re analyzing a flip and want to pressure-test your numbers before you commit, I’m always happy to look at them with you. A short conversation up front can preserve both your timeline and your margin down the road.
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Legal Disclaimer:
This article is provided for informational and educational purposes only and is not intended to constitute legal advice. Real estate regulations can be complex and situation-specific. Readers should consult with qualified legal counsel or a licensed attorney for guidance regarding their particular transaction or compliance obligations.
At MGM Private Capital, we actively support real estate investors across Southeastern Wisconsin with trusted capital options and offer opportunities for capital partners to grow alongside us.