The math on a fix-and-flip in metro Atlanta looks straightforward on paper: buy a distressed property at a discount, renovate it, sell it at market value, pocket the spread. In practice, the spread is shrinking from both directions. Sellers of distressed properties are asking prices that reflect peak-market expectations rather than current conditions, while construction costs have climbed with tariffs pushing material prices higher. For small investors and builders who entered the market during the post-2020 boom, the result is a gap between expected and actual returns that can turn a profitable-looking project into a break-even outcome or worse.
Matthew Coleman, a private lending broker at Vi Capital Lending Group and former builder in Atlanta, sees this pattern across his client base. After a decade in lending and prior experience in ground-up construction, he works with small investors and builders navigating a market where the easy margins have disappeared.
The Capital Problem Nobody Budgets For
The most common mistake Coleman identifies is not a bad property or a bad plan – it is insufficient operating capital. Investors secure financing for the acquisition and renovation, then find themselves short on holding costs, unexpected overruns, and the gap between completion and sale.
“You don’t want to get in the deal with no reserves,” Coleman says. He compares it to renting a car for a cross-country trip with just enough money for the rental but nothing for gas. “We’re only going to get so far in that car, and we’re going to run out of gas.”
The problem was less visible during the low-rate environment when properties moved quickly and lenders funded deals with minimal reserves. Now that the market has slowed and lenders have tightened standards, the consequences of thin capitalization show up faster. Coleman says he tries to function as a consultant rather than a transaction facilitator, walking clients through the full cost picture before they commit – including holding costs and budget contingency that newer investors routinely leave out of their projections.
When the Seller Won’t Meet the Market
The inventory squeeze for fix-and-flip investors is not just about supply – it is about pricing. Coleman describes a dynamic where sellers of distressed properties, armed with online valuation tools, are listing at prices that leave no room for an investor to buy, renovate, and sell at a profit.
“The sellers are kind of unrealistic,” he says. If a property is dilapidated and the renovation cost plus purchase price exceeds the realistic after-repair value, the deal does not work. Coleman tells these sellers they may need to list at retail and find a traditional buyer, because the numbers do not support an investor purchase at the price they want.
He expects this to ease as prices continue to soften. Sellers who have had a property sitting on the market for a year are beginning to adjust their expectations. But the correction is slow, and in the meantime, some investors are pivoting to ground-up new construction, where costs are more predictable even if the upfront investment is larger. Coleman, drawing on his own construction background, sees new construction as carrying fewer unknowns than renovation – though it requires more capital at the outset and expenses like soil testing that investors may not recover if a project falls through.
The Naivety Tax on Newer Investors
Beyond capital reserves, Coleman identifies a broader pattern: investors who try to scale before they have refined their systems. The post-2020 boom brought a wave of new entrants into real estate investing, many of whom underestimate the full cost structure of a project.
Holding costs are the most commonly overlooked line item. An investor projects a $120,000 profit, does not account for $30,000 in carrying costs and contingencies, and feels like they lost money even though they never had that margin to begin with. “They don’t take into account holding costs,” Coleman says. “They don’t take into account that that 30 profit with that model is not 30.”
Coleman’s advice is granular: track every line item, maintain a spreadsheet of where money was lost on each project, and build in contingency before breaking ground. He also stresses having an exit strategy mapped out before closing – not just the primary plan of selling, but a backup plan for renting if the sale stalls. He walks clients through market rents on comparable properties so the fallback is already in place.
What Lenders Are Saying
From his position as a broker working across multiple lending sources, Coleman reports a divided mood among private lenders and fund managers. Some have capital that needs to get deployed, but qualified borrowers with adequate equity and experience are harder to find. Others are pulling back and waiting.
“Some are scrambling, and some are just waiting,” Coleman says. The lenders who extended aggressively during the boom – offering deals with no money down and no reserves – are now facing defaults. Those who maintained conservative underwriting standards are in a stronger position. Meanwhile, substantial private capital is looking for a home. “There’s a whole bunch of people who have money that would love to make money off of their money,” Coleman says. The constraint is not capital supply but borrower readiness – credit, cash, experience, and a viable property.
For small investors, the bar for getting financed has returned to fundamentals. Coleman says the market rewards those who kept reserves and stayed disciplined through the boom. “The strong will survive,” he says. “The ones that kept their money and didn’t blow it.”
Ground Truth Versus Narrative
Atlanta is frequently cited as one of the busiest real estate investment markets in the country, but Coleman says the on-the-ground reality is more mixed. The low-rate period created what he calls “a free-for-all,” and the current environment is a correction from that excess. Jobless claims remain manageable, and people are still spending, but wages have not kept pace with inflation – so buyers and investors alike feel squeezed even while employed.
Coleman sees the current slowdown as a necessary rebalancing rather than a collapse. Properties are taking longer to sell. Margins are thinner. But for investors who entered with adequate reserves and realistic expectations, the market still works. The discipline gap between those who prepared for a downturn and those who spent through the boom is now the dividing line between who stays in the market and who exits it.
About the Expert: Matthew Coleman is a private lending broker at Vi Capital Lending Group and a former builder in Atlanta, Georgia, with prior experience in ground-up construction.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
