Real estate investing in 2025 is undergoing a significant shift, with investors facing new opportunities and challenges. Whether you’re flipping properties, holding rentals, or leveraging creative financing, staying ahead of trends is crucial. Flipsquad has compiled the latest research, statistics, and expert insights to help real estate investors make informed decisions in 2025.
How Real Estate Investors Are Buying Properties
Real estate investors continue to play a significant role in the housing market. In 2024, investors accounted for 14.8% of all U.S. home purchases, marking a record high. This number is expected to hold steady or even increase in 2025 as more investors seek opportunities in high-growth markets.
According to ATTOM Data Solutions, institutional investors—defined as entities purchasing at least 10 properties per year—were responsible for nearly one in six home purchases in major metro areas. The top five cities with the highest investor activity in 2024 included:
- Atlanta, GA (18.2%)
- Phoenix, AZ (17.6%)
- Tampa, FL (16.9%)
- Charlotte, NC (15.4%)
- Dallas, TX (15.0%)
As affordability continues to be a challenge for individual homebuyers, investors have the capital to acquire properties in cash, outcompeting traditional buyers.
Is Real Estate Investing Still Profitable?
Flipping remains a profitable venture, but margins are tightening. The average gross profit for a flip in 2024 was $67,900, with an average return on investment (ROI) of 28.9%. While this is lower than the 34% ROI investors saw in 2022, flipping remains lucrative in high-demand areas.
For rental property owners, the picture is even better. The national median rent increased by 3.5% in 2024, following a decade-long trend of rising rental demand. Cities with the highest rental yield (annual rent as a percentage of property value) include:
- Detroit, MI – 10.8%
- Cleveland, OH – 9.6%
- Pittsburgh, PA – 8.4%
- Memphis, TN – 8.2%
- Birmingham, AL – 8.0%
Buy-and-hold investors are seeing strong returns, especially in markets where home prices remain relatively low compared to rental income.
Real Estate Tax Benefits: 1031 Exchanges & Deductions
Tax advantages remain one of the most significant incentives. Real Estate Investing in 2025 will continue to allow the following benefits:
- Depreciation Deductions: Investors can deduct property depreciation over 27.5 years for residential properties and 39 years for commercial properties, significantly reducing taxable income.
- 1031 Exchanges: Allows investors to defer capital gains taxes when selling a property by reinvesting in another property of equal or greater value.
- Opportunity Zones: Investors can receive capital gains, tax deferrals, and even tax-free appreciation if they hold their investment in a designated Opportunity Zone for at least 10 years.
- Mortgage Interest Deductions: Investors can write off mortgage interest on rental properties, reducing their tax liability.
Many investors also set up LLCs or S-Corps to take advantage of pass-through taxation and liability protection.
Fix-and-Flip Trends: Profit Margins & Market Risks
Real estate investors typically choose between two primary strategies: fix-and-flip or buy-and-hold (rentals).
Fix-and-Flip Trends
Despite rising interest rates, flipping remains a popular investment strategy. According to ATTOM, the number of homes flipped in 2024 was 8.4% of all home sales, totaling 406,000 properties. However, the average time to complete a flip has increased to 6.5 months, up from 5.9 months in 2022, as supply chain issues and labor shortages slow down renovations.
Flippers are adapting by:
- Focusing on cosmetic upgrades rather than full rehabs to shorten timelines.
- Using private lenders or hard money loans to finance deals quickly.
- Targeting foreclosures and distressed properties, which have increased by 20% in 2024 due to economic shifts.
Why More Investors Are Choosing Rentals Over Flipping
With homeownership affordability at a 30-year low, renting has become the preferred option for many Americans. This has created a golden era for rental property investors, especially in Sun Belt states where population growth is highest.
Top rental property types in 2025:
- Single-family rentals (SFRs) – Demand for SFRs has skyrocketed as more families prefer homes over apartments.
- Short-term rentals (STRs) – The Airbnb market is stabilizing after post-pandemic regulations, with STRs performing best in tourist-heavy cities.
- Multifamily properties – Duplexes, triplexes, and small apartment buildings provide stable cash flow.
How Real Estate Investors Are Funding Deals
Investors use various financing methods to acquire properties, including:
- Cash Purchases – Nearly 30% of investment properties were bought in cash in 2024.
- Hard Money Loans – Short-term, high-interest loans for flipping, with interest rates between 9% and 12%.
- Conventional Mortgages – 20-25% down payments are common for investment properties.
- BRRRR Method (Buy, Rehab, Rent, Refinance, Repeat) – Popular among buy-and-hold investors looking to scale quickly.
- Real Estate Partnerships – Over 40% of new investors partner with others to share costs and risks.
Where Real Estate Investors Are Buying
According to multiple sources, these top cities are expected to see the most real estate investing in 2025:
- Nashville, TN – Booming job market, high rental demand.
- Austin, TX – Tech hub with continued population growth.
- Phoenix, AZ – Strong rental market and affordability.
- Charlotte, NC – Fast-growing economy and rising home values.
- Tampa, FL – High investor interest due to strong tourism and job growth.
The Biggest Challenges for Real Estate Investors & How to Adapt
While the outlook remains strong, investors should be aware of key challenges:
- Rising Interest Rates – The 30-year mortgage rate is expected to hover around 6.5%.
- New Tax Laws – Potential changes to capital gains taxes and 1031 exchange rules.
- Insurance Costs – Higher premiums, especially in hurricane and wildfire-prone states.
- Local Regulations – Increased zoning and rental restrictions in some cities.
Investor FAQs: 2025 Real Estate Market Insights
Is real estate still a good investment in 2025?
Yes, though returns vary by strategy. Flipping margins have narrowed slightly, but many markets still offer substantial profits. Rental income, especially in affordable cities, continues to grow steadily.
What risks should investors be aware of this year?
Interest rates remain elevated, and insurance premiums are climbing in some regions. Investors should also watch for changes in local regulations and tax policy.
Why are more investors leaning toward rentals?
High demand and limited homeownership access have made rentals more attractive. Long-term cash flow and property appreciation offer stability compared to the shorter turnaround of flips.
What are the standard ways to finance purchases now?
Cash remains common, especially in competitive markets. Others use hard money loans, conventional financing, or structured partnerships to spread costs and risk.
Why This Is Still a Strong Year for Investors
Despite market fluctuations, real estate remains one of the most reliable wealth-building strategies. Investors who stay informed, adapt to changing conditions, and leverage tax benefits will thrive in 2025. Whether you’re flipping houses, investing in rentals, or diversifying through REITs, the key is action and education.
Need to find the best real estate deals? FlipSquad helps investors identify high-profit opportunities before the competition. Our platform delivers real-time market data, deep investment analysis, and automation tools—so you can make smarter, faster decisions and maximize your returns.
Whether you’re flipping properties or building a rental portfolio, FlipSquad gives you the competitive edge you need. Start making better investment decisions with a free trial today!”