Real Estate in RI: Flipping is Dead (At Least the Way We Knew It) – Emilio DiSpirito

By Emilio DiSpirito, contributing writer, License Partner and Private Office Advisor, Engel & Völkers

For years, real estate flipping was marketed as a shortcut to wealth. Buy distressed. Renovate quickly. Sell for a 20 to 30 percent return. Rinse and repeat.

That playbook no longer works in most markets, and Rhode Island is a prime example.

This is not a dramatic headline meant to discourage investment. It is a reality check for anyone still underwriting deals based on yesterday’s assumptions.

The Wholesaler Flood Changed the Math

One of the biggest shifts in the flipping landscape has been the explosion of wholesalers.

Investor education platforms, low-cost marketing tools, and assignment-friendly contracts have dramatically lowered the barrier to entry. According to data cited by ATTOM, a growing share of distressed properties nationally are now sold to investors before ever reaching the open market, often changing hands multiple times.

Assignment fees layered on top of already elevated acquisition prices push entry costs higher before a single hammer swings.

By the time a true end buyer closes, much of the margin has already been extracted upstream.

The result is thinner spreads, higher risk, and very little room for error.

Slower Markets and Slower Appreciation

At the same time, appreciation has normalized.

National home price growth has slowed meaningfully from pandemic-era highs. Freddie Mac and Redfin data both show price growth reverting toward long-term averages, while days on market have increased across most regions.

In Rhode Island, there are selective seasonal opportunities, particularly in winter, when reduced buyer competition can allow disciplined investors to buy slightly better. Many real estate professionals and economists expect interest rates to trend lower, which could increase buyer demand and support higher values in the spring.

That may provide a small cushion.

It is not a return to the golden era of flipping.

The 20 to 30 Percent Flip Is a Myth Today

Here is the uncomfortable truth most social media narratives ignore.

A flipper who renovates a home correctly today, including permits, licensed trades, code compliance, and quality finishes, is often breaking even or taking a loss.

Once you factor in:

• Inflated acquisition prices driven by wholesalers
• Construction costs that remain well above pre-2020 levels, according to the National Association of Home Builders
• Closing costs on both the purchase and the resale
• High interest private money, often at double digit rates
• Upfront points paid to private lenders
• Insurance, taxes, utilities, and extended carrying time

The margin that once justified the risk simply is not there.

In many cases, profit exists only on paper and disappears the moment timelines slip or costs exceed projections.

The Pivot to New Construction and Its Limits

In response, many investors shifted toward new construction.

On paper, it makes sense. Control the product. Eliminate unknown defects. Build to modern standards.

In Rhode Island, however, this strategy is facing serious headwinds.

Land costs here are among the highest on average in the country when measured against usable acreage and zoning constraints. Studies cited by Urban Institute and regional planning agencies consistently show that states with limited developable land and strict local regulation experience higher per-acre costs and longer development timelines.

Small infill lots command premiums, while larger parcels often require variances, environmental review, or frontage relief.

Add in:

• Extended timelines for surveys, engineering, and wetlands review
• Utility coordination delays
• Municipal approval processes that can stretch months or years
• Rising soft costs, professional fees, and holding expenses

The cost of doing business in Rhode Island has become increasingly prohibitive compared to other markets.

Capital Is Voting With Its Feet

This is not theoretical.

According to migration and investment flow data from U.S. Census Bureau, states like Florida continue to attract population growth, capital, and development dollars, while high-cost, high-regulation states struggle to compete.

One of our long time clients, a builder who has operated in Rhode Island for decades, recently told us he is stepping away from the Rhode Island market entirely.

Not slowing down. Not repositioning.

Exiting.

He is reallocating capital to Florida, where approvals are more predictable, timelines are shorter, and capital turns faster. His decision was not emotional. It was financial.

He is far from alone.

What Actually Works Now

Flipping is not dead because real estate is dead. It is dead because inefficiency has been priced out of the system.

What works today requires:

• Conservative underwriting with real contingency buffers
• Longer hold horizons and realistic exit assumptions
• Zoning and entitlement expertise
• Development skill rather than cosmetic renovation
• Acceptance of lower, steadier returns instead of speculative wins

The investors who succeed will not be the loudest voices online. They will be the ones who understand risk, timing, capital structure, and local regulation.

The Bottom Line

The days of easy flips and routine 20 to 30 percent returns are over.

Opportunity still exists, but only for those willing to adapt.

Those clinging to old models will continue to chase deals that look good on spreadsheets and fail in the real world.

In today’s Rhode Island market, believing flipping still works the way it used to is not just outdated. It is expensive.

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Emilio DiSpirito is a Private Office Advisor, License Partner of Engel & Völkers Oceanside, developer, investor, and host of The Wealth Architect Podcast. Ranked in the top 1% globally at Engel & Völkers with over 1,500 families served and $750M+ in closed sales, Emilio is also the featured real estate expert for WPRI’s The Roadshow and a contributor to RINewsToday.com. Recent interview on WPRI’s the Rhode Show about this topic can be seen here: https://www.wpri.com/video/welcoming-emilio-dispirito-from-the-dispirito-team-at-engel-v%C3%B6lkers-the-rhode-show/