Key Takeaways
→ Michigan flip margins rose 82% over 12 months to $100K. Texas fell 62% to $13K over the same period, in the same interest rate environment
→ Florida is recovering - Jacksonville margins up 92% to $103K, hold times down 26% to 134 days
→ A $300K loan at current rates on a typical Houston hold time costs over $18,000 in financing before renovation. At $12K median margin, the carry cost has overtaken the return
→ Investors in pressured markets are tightening renovation scopes, underwriting flip-first with hold as a contingency, and building shorter hold times into the project before it starts
→ Three conditions visible in the data before margins compress: acquisition price relative to ARV, hold times rising alongside inventory growth, and carry cost at current rates
Table of Contents
Michigan flip margins rose 82% over the past 12 months. Texas fell 62% over the same period, with the Fed holding rates steady throughout and inventory rising in both states. The macro story was identical, yet the outcomes were not.
That divergence is what this report is about. The more useful question is why the same conditions are producing such different results, what investors are actually doing in response, and what conditions are visible in the data before things shift further.
Fix and flip activity grew in 2026, with ATTOM reporting that gross flip returns rose to 25.4% in Q1 2026, the first increase in nearly two years after seven consecutive quarters of declining margins. The national recovery is real. But within that broadly positive picture, the gap between markets performing well and markets under pressure has widened considerably in a way that national figures alone don’t capture.
Where margins are rising
We pulled 12 months of flip data across eight states to see where margins and hold times are moving and in what direction. The spread between the best and worst performing states is wider than at any point in recent memory. Michigan and Georgia both sit at $100K median gross margins. Texas is at $13K. The table below shows where each state sits and which direction it is heading.
| State | Flip margin | Margin trend (12mo) | Hold trend (12mo) | Direction |
|---|---|---|---|---|
| Michigan | $100K | +82% | -18% | Improving |
| Georgia | $100K | +78% | +14% | Mixed |
| Florida | $95K | +24% | -23% | Improving |
| North Carolina | $50K | Flat | -28% | Steady |
| Tennessee | $56K | -7% | -17% | Mixed |
| Ohio | $60K | -8% | -7% | Steady |
| Pennsylvania | $75K | -12% | +7% | Softening |
| Texas | $13K | -62% | -20% | Under pressure |
Why the same conditions are producing different results
The tempting explanation is that some markets are simply better than others, but that misses what is actually happening. Michigan and Texas both saw inventory rise over the past 12 months, both are operating at the same interest rates, and both have experienced investors active in the market. The divergence isn’t about macro conditions. It comes down to three factors that compound differently depending on where you operate.
The first is the gap between acquisition prices and ARV. In markets where that gap has widened, where what investors are paying has corrected faster than what finished product is selling for, margins improve even when demand is modest. In Texas, acquisition prices in several submarkets held elevated longer than resale values did, compressing the spread on any given deal. Investors closing with margin in 2026 aren’t waiting for rates to drop. They rewrote their deal model, applying conservative ARV methodology with all-in costs at or below 70 to 75% of ARV, controlling rehab scope before committing to a deal, and sourcing properties off-market rather than competing with owner-occupants on the MLS.
The second factor is inventory moving faster than demand can absorb it. Supply recovery is uneven and varies significantly by region, according to Zillow Research, and in markets where inventory rose without a corresponding increase in buyer demand, investors face more competition at exit and longer hold periods. In Houston, 1,800 active listings against 1,110 homes sold in the most recent snapshot period tells you something about exit conditions that the margin figure alone doesn’t capture.
The third factor is carry cost, and it’s the one investors most often underestimate. At current rates, every additional month on a deal has a real dollar cost that sits outside the margin calculation right up until the point it doesn’t. In markets where hold times are long and margins are thin, the financing cost alone can determine whether a deal was profitable or not.
What successful investors are doing differently
The behavioral shift is visible in the transaction data. Investors in markets where margins are under pressure are operating differently from those in improving markets, not necessarily moving out of those markets, but changing how they underwrite and execute before they get to the table.
The first adjustment is tighter renovation scopes. The instinct in a softening margin environment is to add value through more extensive renovation, but the investors generating returns in 2026 are doing the opposite: identifying the minimum scope that supports the target ARV and stopping there. Every dollar added to a renovation budget in a thin-margin market requires a corresponding increase in exit price that the market may not support, and most markets under pressure right now are not in a position to absorb that.
The second is flip-first underwriting with hold treated as a contingency rather than a fallback. Investors who structure a deal assuming they can rent the property if the flip doesn’t work are taking on carry cost risk that a purpose-built hold strategy would never carry. Experienced operators in pressured markets are modeling the flip exit explicitly, understanding the financing cost of an extended hold before making an offer, and treating the rental option as a safety valve rather than a plan B they expect to use.
The third is shorter target hold times. Executing renovations under 120 days to minimize carrying costs is one of the clearest behavioral differences between investors generating returns in 2026 and those who aren’t. In markets where hold times have been drifting upward, the operators still closing profitably are the ones who built timeline discipline into the project from the start, not as a response to a delay that had already happened.
Three signals in the data
These aren’t predictions about where any specific market is heading. They’re conditions that show up in the data before margins compress, and they’re applicable to any market where you’re currently active or considering a deal.
The first is acquisition prices that haven’t corrected relative to ARV. The methodology matters more in a softening market than a rising one, and if the gap between what comparable finished properties are selling for and what distressed acquisitions are costing has narrowed over the past six months, the margin cushion that looked adequate six months ago may not hold today. Use the free ARV calculator and pull sold comps from the prior 45 days only, not 90 or 120, because in a moving market the older data is already stale.
The second is hold times rising alongside inventory growth rather than in isolation. Hold times rising on their own can mean a slower renovation or a pricing error on a single deal. Hold times rising while active listings are also increasing is a different situation entirely, because it means more competition at exit rather than a project-specific issue. Georgia’s state-level data shows margins up 78% but hold times rising 14%. Pennsylvania shows hold times up 7% over 12 months. Neither of these is a reason to avoid a market, but both are worth factoring into how you structure the deal and how you plan the exit timeline.
The third is carry cost pressure at current rates, and the hard money loan calculator does this math in under a minute. At current rates, a $300K loan on a 212-day average hold, roughly where Houston sits right now, costs over $18,000 in financing before renovation, insurance, taxes or utilities. That number needs to sit inside the margin before you make an offer, not after.
What the hold time difference actually costs
| Market | Avg hold time | $200K loan | $300K loan | $400K loan | Median margin |
|---|---|---|---|---|---|
| Jacksonville, FL | 134 days | $7,707 | $11,560 | $15,414 | $103K |
| Grand Rapids, MI | 161 days | $9,257 | $13,886 | $18,514 | $107K |
| National average | 165 days | $9,493 | $14,240 | $18,986 | $66K |
| Houston, TX | 212 days | $12,197 | $18,296 | $24,394 | $12K |
| Dallas, TX | 265 days | $15,247 | $22,871 | $30,494 | $12K |
Jacksonville and Grand Rapids
Jacksonville margins are up 92% over 12 months to $103K, with hold times down 26% to 134 days. At a $300K loan, that hold time costs $11,560 in financing, a number that sits comfortably inside a $103K gross margin even after renovation, provided the scope is controlled going in. Grand Rapids at 161 days costs $13,886 on the same loan size, against a $107K median gross margin that has risen 11% over the same period.
Neither city is without caveats. Jacksonville has high buyer leverage, meaning sellers are competing for buyers and pricing accuracy at exit matters more than it does in a low-leverage market. Grand Rapids has institutional ownership below 1% of the market, which means exit conditions are shaped entirely by private buyer demand. That demand has been strong, with 59% of homes going off-market within two weeks and 40.7% selling above list price, but it is also more sensitive to local employment and income conditions than markets with institutional floor pricing in place.
The common thread across the markets generating returns right now isn’t location. It’s the relationship between acquisition price, renovation scope, hold time and financing cost, and in each case investors have all four under control before they make an offer rather than after. The house flipping calculator models this in one place before you commit to a deal.
What the data is telling investors right now
The divide in this data isn’t necessarily permanent. Markets under pressure have corrected before, and the conditions driving margin compression in Texas, including acquisition price stickiness, inventory overhang and carry cost pressure at current rates, are the same conditions that preceded recoveries in other markets in prior cycles.
The timeline is what most investors underestimate. Carrying financing costs in a pressured market while waiting for conditions to improve is a decision in itself, whether it’s framed that way or not. Every month at current rates on a deal that isn’t moving is a cost that comes directly out of the margin.
The investors generating consistent returns in this dataset are not necessarily in better locations. They are underwriting more conservatively, controlling renovation scope more tightly and modeling carry cost before they bid rather than after. That approach is not market-specific. It travels.
Data sourced from SFR Analytics, ATTOM Q1 2026 Home Flipping Report and Redfin Q1 2026 Investor Report. Carry cost calculations at 10.5% annual rate, interest-only. State-level flip data covers the 12-month period ending September 2026.
