Overview of Is Flipping Houses Still Worth It? A 20-Year Flipper Shares What’s Working
In this live Real Estate Rookie episode from the BiggerPockets conference in Orlando, Ashley and Tony talk with veteran investor James Daynard about how flipping houses has changed in a slower, higher-rate market. James, an active investor in Seattle with 20 years of experience in value-add construction, flips, new builds, apartment renovations, and hard money lending, shares why this is not the worst flipping environment he’s ever seen—but it is a market that rewards discipline, conservative underwriting, and better deal selection. The second half of the episode turns into a real-time strategy session for Tony’s struggling flip, with James offering ideas for debt restructuring, refinancing, or rethinking the exit strategy altogether.
Who James Daynard Is
James Daynard is a Seattle-based real estate investor focused on:
- House flipping
- New construction
- Apartment renovations
- Hard money lending in Washington State
His perspective is grounded in long-term market cycles, and he repeatedly emphasizes that the current environment feels more like the flat, margin-tight years of 2012–2015 than a collapse like 2008–2009.
Main Takeaways on Flipping in Today’s Market
1. Flipping isn’t dead — but margins matter more than ever
James says today’s market requires tighter underwriting and more discipline. In strong appreciating markets, investors could get away with thinner margins because price growth helped carry projects. That’s no longer the case.
His current approach:
- Aim for higher target returns than during the pandemic era
- Be more selective on acquisitions
- Build in larger buffers for time, costs, and exit risk
2. Conservative underwriting is essential
James recommends:
- Using the low end of comparable sales, not the high end
- Adding contingencies to rehab budgets
- Padding hold times
- Avoiding overly optimistic projections
His rule of thumb:
- During COVID, he targeted around a 35% return
- In today’s riskier market, he wants closer to 45%
3. Do fewer deals, but do them better
One of his strongest points is that more projects don’t always equal more profit. In slower markets, too many active flips can create inefficiency, overhead, and cost overruns.
His advice:
- Focus on what you do best
- Reduce project count if needed
- Improve execution and efficiency
- Protect profit by not overextending
4. Track absorption rates by price point, not just by city
James stresses that not every part of a market moves the same way. He tracks:
- Absorption rates
- Pending sales
- Buyer pool depth
- Price-point-specific demand
His example from Bellevue, Washington:
- Homes priced around $1.5M–$1.8M are much harder to move
- Homes priced around $1.1M–$1.3M have far more buyer activity
The bigger lesson: know where the demand actually is, not just where the market is “supposed” to be strong.
Advice for Rookie Flippers
James encourages newer investors to target properties with multiple exit strategies.
Best profile for a safer flip
- Lower-priced homes
- Strong resale demand
- Potential to refinance and hold if needed
- Properties that can work as rentals, even if cash flow is thin
He specifically likes deals where:
- You can flip them if needed
- Or refinance into a long-term hold if the market shifts
That flexibility gives investors a backup plan when the resale market cools.
Tony’s Problem Property: James’s Guidance
Tony shared a painful update on a flip that’s been sitting for nearly two years:
- Renovation was completed quickly
- The market shifted
- The home has fallen out of escrow twice
- The property can’t work as a short-term rental
- Long-term rent won’t cover the debt comfortably
- He’s likely facing a significant loss either way
James’s suggested options
-
Talk to a DSCR lender
- See how much max loan balance the property can support
- Run the numbers on whether a refinance helps reduce the immediate loss
-
Restructure the debt
- Especially with the second and third lenders
- Extend terms or renegotiate returns instead of forcing a bad sale
-
Consider giving lenders upside
- James floated the idea of lowering current returns but offering a share of future upside
- This could reduce carrying costs while keeping lenders engaged
-
Don’t rely on hope
- If the property is in a weak price band, waiting may not fix the problem quickly
- But James also believes some markets and price points will improve over time
Operational Advice: Prevent Buyer Fallout
James strongly recommends pre-inspecting every flip before listing or going under contract.
Why it matters
- Buyers are nervous
- Inspection issues can kill deals even when repairs are minor
- You need your own team to verify completed work before closing
He described a process where his team:
- Reviews the pre-inspection and re-inspection reports
- Walks the property item by item
- Takes photos of completed repairs
- Double-checks punch-list items before the buyer sees them again
His view: it’s better to spend more upfront than lose a buyer late in the process.
Other Notable Insights
- Luxury homes can still move because buyers are less interest-rate sensitive
- Affordable homes remain active because that’s where demand is strongest
- In Washington, James likes larger lots and properties with DADU potential
- DADU = detached accessory dwelling unit
- He likes the option to condoize or add value later
Bottom Line
This episode is a reality check for flippers: the market still has opportunity, but only for investors who are disciplined, conservative, and flexible. James’s core message is simple:
- Buy where the buyer pool is strongest
- Underwrite conservatively
- Keep your options open
- And don’t assume every deal needs to be a fast flip
For Tony’s deal, the best path may be less about maximizing profit and more about minimizing damage while preserving optionality.