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The Fix and Flip Outlook Under Trump 2.0

Written by Matt Lavinder Posted On Monday, 10 February 2025 13:16
The Fix and Flip Outlook Under Trump 2.0 Photo by Tabrez Syed on Unsplash

Since Nov. 5 of last year, we’ve known that investing in residential real estate was going to look somewhat different at this point. We’re now operating under Trump 2.0, an incoming administration with audacious plans on immigration, tariffs, deregulation, and economic policy – all of which will directly affect the fix-and-flip marketplace for the foreseeable future. While there’s still a lot of uncertainty as to the level of follow through and potential fallout, one should remember that Donald Trump’s background is – and always has been - confined to the real estate sector. And he has plenty of industry experience to draw upon as he implements his vision for America’s future.

Depending on how serious the extent to which President Trump actually is in carrying out his bold plans, real estate investors and fix-and-flippers will need to take into account new risk mitigation factors. All this in a marketplace that was already squeezing profitability margins across many different fronts. To get a handle on things as best we can, let’s begin with what we know and draw calculated conclusions based on what he’s proposed in key policy areas.

As with any policies predicated on pending compromises, the outlook in some areas is promising. In others, perhaps not so much. What follows is a balanced and unbiased look at what real estate investors might expect in the Trump 2.0 era.

Economic Policy

The incoming administration for Trump 2.0 is undeniably pro-business and we should expect nothing less this time around. During his first term in 2017, he slashed the corporate tax rate from 35 percent to 21 percent and adopted a new 20 percent deduction for certain income of pass-through businesses. During his second term, he’s looking to cut the corporate tax rate even further – all the way back to 15 percent. For those who continue to invest in real estate, lower tax rates, higher depreciation benefits, and favorable capital gains policies on transactions would lead to more profitability. Anything that encourages further marketplace development has the potential to spur new opportunities. Will we finally see relief from stubbornly high interest rates? We should if Trump continues to influence the Fed on the matter. Historically, he’s favored low rates that spur lending, drive economic development, allow for an abundant flow of capital, and maintain healthy stock market returns. Interest rates, however, are primarily driven by inflation, but if they drop, we could see a more relaxed lending environment. And there still appears to be plenty of capital sitting on the sidelines that could be deployed in the near term.

Deregulation

It’s pretty clear that Trump 2.0 is a lot like Trump 1.0 when it comes to regulatory policy – less is better. And way less is way better. The widespread disparity and complexity of local building codes market-to-market became an ever-increasing factor on profitability in 2024. Depending on the degree of local codes and enforcement, many markets had much less room for error than others for real estate investors. If deregulation continues, the marketplace should expect streamlined approval processes, less stringent building codes, and fewer environmental compliance restrictions – all of which would benefit the fix-and-flip industry.

Immigration

When it comes to the sensitive issue of immigration on an already strained construction workforce, let’s start with some immutable facts. It’s estimated that immigrants make up nearly a third of the labor force and we already have a shortage of over two million skilled workers – this according to the National Association of Home Builders (NAHB). This shortfall is greatly contributing to the steady depletion of our domestic housing supply, which has reached record lows in recent years. With no short-term solution in sight, it’s now expected it will take years to overcome this deficit and harsh immigration policies under Trump 2.0 won’t do much to alleviate the problem. Deportations have already begun, but the early reporting reveals a similar exodus as with previous administrations. If this initiative increases to the level of mass deportations, it has the potential to drive up costs, strain the housing supply further, and push up prices. Compounding the problem, construction cost margins have tightened in the fix and flip industry. This means it is important to perform during the execution phase or your profit margin is at risk. The construction stage of the project has become somewhat of a force multiplier on bottom-line profitability.

Tariffs

Consider this cold hard fact – the NAHB put out a recent statement on how tariffs would affect the real estate industry, sharing that “more than 70 percent of the imports of two essential materials that homebuilders rely on – soft wood lumber and gypsum – come from either Canada or Mexico,” the initial targets of Trump’s tariff plan. And that may be on the conservative side, as our typical projects have well over 300 different construction materials to source through the supply chain. Trump’s actions in ordering tariffs on Canada and Mexico, only to pause them on day one for an additional 30 days, has left many in the real estate industry wondering if his plans are mostly bluster or destined for full follow through. Given Trump’s illustrious real estate career – a business sector he clearly knows inside out – it’s entirely possible there are underlying negotiations at stake, intended to draw more favorable concessions rather than spark an all-out trade war.

Just like with any other incoming administration, a change in parties typically signals the dawn of a new era. The sheer disparity in policies and strategic execution of them have the ability to reshape real estate investment strategies, creating both challenges and opportunities for developers and investors alike. It remains a dynamic market with its own set of concerns, but there are always bright spots if you know where to look. For residential fix-and-flippers, the good news is that the inventory of desirable homes continues to remain historically low, meaning houses that are remodeled and flipped will still be in high demand. Regardless, as we keep a close eye on the Trump 2.0 era, fix and flippers will need to be savvier than ever in quantifying risk for particular projects, strategic in their design decisions, and efficient in executing their projects.

 

About the Author

Matt Lavinder

 
Matt Lavinder is the Founder and President of New Again Houses®, a real estate redevelopment and technology franchise with over 50 franchise locations across the country. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..
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