For years, homebuyers have been chasing turnkey properties, paying top dollar for homes that needed little more than unpacking. But as record-high prices and stubborn mortgage rates push these houses out of many buyers’ budgets, an unlikely hero may be emerging: the fixer-upper.
America’s housing stock has never been older—nearly half of all owner-occupied homes were built before 1980, and the median age has climbed to 41 years, according to the National Association of Home Builders. That aging supply means more homes are hitting the market in need of repairs and updates, just as affordability pressures are pushing buyers to rethink their priorities.
And the numbers suggest they’re doing just that: Homes marketed as fixer-uppers receive 52% more views than comparable listings, and searches for the term have tripled since 2021, according to the Realtor.com® Fixer-Upper Report. It’s easy to see why: The typical fixer-upper lists for about $200,000, a deep 54% discount from the national median single-family price of $436,000.
With such significant savings, the question now is how to make the most of these investments. The experts we spoke to say that renting out your fixer-upper generally provides steadier, safer returns, while flipping requires precise execution and a higher risk tolerance.
But for buyers weighing what to do with their fixer-upper, the decision will come down to whether you want the potential of quick gains or the reliability of long-term income.
The case for flipping a fixer-upper
Flipping a home comes with plenty of risk, between carrying costs, renovation expenses, and the demands of the project itself. Current uncertainty about tariffs and interest rates is only adding to the challenge. However, for buyers who can take the heat, experts say flipping a fixer-upper can still deliver meaningful upside.
“Flipping can be profitable in a hot market with limited inventory, where homes sell quickly and buyers pay a premium for updated properties,” explains Realtor.com economist Jiayi Xu.
By purchasing below market value and making the improvements that buyers look for in homes, investors can boost the home’s after-repair value (ARV) and pocket the difference. In the right conditions, that means faster returns than holding the property long term.
But those conditions are harder to find, according to Realtor.com data. While most major metros have been in a seller’s market for years—offering the kind of limited inventory and fast turnaround that Xu mentions—the scales are rebalancing. Only 20 of the 50 largest metros remain seller’s markets, while seven have entered buyer’s markets, and the rest are equal.
The risks of flipping right now
The shifting market may be the biggest risk of flipping a property right now. Nationwide, flip profits are at their lowest point in nearly two decades, leaving investors little room for mistakes, says Ante Perkov of Realion Real Estate.
“With mortgage rates remaining above 6% and nationwide flip profits at 17-year lows, the cushion for error on fix-and-flip projects has all but vanished,” he explains. He also points to Los Angeles—which is a balanced market according to Realtor.com data—as an example.
“In Los Angeles, where discounts for fixer-uppers are few and far between, one construction overrun could erase all of your upside,” he says.
Rising material costs from inflation, labor shortages, and tariffs on essentials like kitchen cabinets are only adding to the diminishing returns for flippers by squeezing margins further.
And even when a flip does succeed, Xu notes that profits may be reduced further if they’re taxed at short-term capital gains rates. These rates are applied to properties held for a year or less and taxed at the same rate as ordinary income, which is typically higher than long-term gains.
The case for renting out a fixer-upper
With strong headwinds to flipping a property, renting out a fixer-upper can be the more reliable play, especially for buyers who are wary of risk. Instead of chasing quick gains, landlords can count on steady income streams, even in expensive markets where high overhead costs can translate to thin resale profits.
“If you prefer steady income, long-term wealth building, and lower risk, renting is generally the wiser choice,” explains Xu.
Over time, owners also benefit from long-term appreciation and tax advantages (like avoiding the short-term capital gains hit), making the rental path more attractive for those focused on building wealth.
What the numbers say
That case is only getting stronger as the rental market shifts. August 2025 marked the 25th straight month of year-over-year rent declines, with the U.S. median asking rent at $1,713. Even after two years of easing, rents remain 17% higher than before the COVID-19 pandemic
Strong demand for rentals in urban centers—where proximity to jobs, schools, and amenities keeps vacancy rates low—helps keep rents high.
National gross rental yields sit at about 7.45%, according to Ian Hart, a seasoned housing investor and founder of Barndominium.org. That’s down slightly from last year but still strong by historical standards. Rents also continue to climb, with effective rents up 2.1% year over year in the second quarter of 2025, underscoring steady demand despite affordability challenges in the for-sale market.
For individual buyers, a simple benchmark helps gauge whether a rental deal makes sense: the “1% Rule,” which suggests that monthly rent should equal roughly 1% of the purchase price. When properties meet or exceed that threshold, they often provide sustainable long-term cash flow.
Rules of thumb every homebuyer should know
When it comes to fixer-uppers, seasoned investors rely on a few guiding principles to keep deals on track. One of the most common is the “70% Rule,” which says you should never pay more than 70% of a property’s after-repair value once renovation costs are subtracted.
Ignoring this benchmark can quickly erode profits, especially in today’s market where flip margins are already thin, warns Hart. And it’s an especially important touchstone as renovation costs rise.
For rentals, the “50% Rule” provides a similar safeguard. It assumes that roughly half of your rental income will go toward expenses such as maintenance, taxes, insurance, and vacancy periods. By building that cushion into your projections, you’re less likely to overestimate cash flow or be surprised by hidden costs.
Perhaps most importantly, though, buyers should look for exit flexibility. The best fixer-upper deals are those that work in more than one scenario—whether as a flip in a hot resale market, a rental in an area with strong tenant demand, or as your own primary residence. Having the option to pivot protects you if market conditions shift, giving you a built-in safety net.
Where the numbers work best
Not every market offers the same opportunity, and where you buy will make all the difference in whether a fixer-upper works better as a flip or a rental.
The so-called Fixer-Upper Five—Toledo, OH, Detroit, Jackson, MI, Dayton, OH, and St. Louis—stand out for offering both plentiful inventory of fixer-uppers and some of the largest discounts in the country. In these metros, buyers have room to renovate and resell closer to market value without overextending themselves.
By contrast, in high-demand, high-cost cities such as New York, Los Angeles, and San Jose, CA, the math tends to favor renting out. Limited discounts on fixer-uppers mean there’s little room for flipping profits, but strong rental demand and high rent-to-price ratios create steady, long-term income potential.
That doesn’t mean flipping is off the table everywhere. In more affordable markets across the Midwest and South, where home values are climbing and entry costs are lower, a well-priced fixer-upper can still be turned around for a solid short-term gain—if buyers stick to the basics and control renovation costs.
Expert verdict: Flip or rent out in today’s market?
So, which path makes more sense in 2025? The experts largely agree that there’s no one-size-fits-all answer. The right choice depends on your market, time horizon, and tolerance for risk.
If you’re chasing quick returns and can manage the risks of construction, timelines, and taxes, flipping may still deliver rewards. But if you’re aiming for steady income and long-term growth, renting out a fixer-upper is often the more resilient play.