Is Flipping Or Renting More Lucrative? Financial Expert Says What ‘Actually Looks Better On Paper Could Be The Worst Investment Of Your Life’

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Flipping houses can bring in a big payday, while renting them out can provide income for decades. But which one actually makes investors more money? Personal finance expert Rachel Cruze says the answer isn’t as straightforward as it might seem.

“Flipping can make you money faster. Renting can make you money longer,” Cruze said in a recent video. But she warned that an investment “that actually looks better on paper could be the worst investment of your life.”

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Before considering either option, Cruze wants investors to have their finances in order. That means being debt-free, including having their mortgage paid off, maintaining an emergency fund, putting 15% of their income toward retirement and having additional cash reserves. She also recommends paying cash for investment properties.

“If you need debt to make the deal work, then you’re not ready for the deal yet,” she said. “And that’s okay. So, get yourself ready first.”

Flipping can produce a sizable one-time payout, but the numbers aren’t always what they seem. Cruze pointed to nearly 68,000 homes flipped in the U.S. during the first quarter of 2024, with a median gross profit exceeding $70,000.

The catch is that this figure doesn’t include renovation expenses, taxes, insurance, closing costs or unexpected repairs.

Cruze recommends following the 70% rule, which means spending no more than 70% of a property’s expected resale value on the purchase and renovations combined. For a home expected to sell for $300,000, that means keeping total acquisition and renovation costs at or below $210,000.

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Even renovations can disappoint. Cruze said an $80,000 kitchen remodel might recover only around $40,000 when the property sells.

“The question isn’t how big is the check, it is how much did I keep?” she said. “And rentals have almost the opposite problem.”

Rental Income Comes With Its Own Costs

Renting offers a different opportunity. Investors can collect monthly income for years while holding an asset that may appreciate in value.

But Cruze warned that rental income isn’t necessarily passive.

“There’s nothing passive about a tenant calling you because their toilet is leaking in the middle of the night,” she said.

Landlords must account for property taxes, insurance, repairs, maintenance, vacancies and the costs of finding new tenants. Even an empty property continues generating expenses.

See Also: This Jeff Bezos-backed platform lets eligible investors buy fractional shares of rental properties for as little as $100.

For accredited investors interested in real estate without personally flipping houses or managing tenants, other opportunities exist. Realberry offers direct access to institutional-grade real estate investments.

The company says its team has 35 years of experience and manages $3.6 billion worth of properties. It also says it has paid investors a total of $481 million as of the end of 2025 and has investments covering 13 million square feet of real estate across seven U.S. states. Explore institutional-grade real estate.

Ultimately, Cruze says flipping involves managing contractors, renovations and deadlines, while renting means dealing with tenants and ongoing maintenance.

“You’re not just choosing an investment, you’re choosing a job,” she said.

And an attractive return doesn’t necessarily mean an investment suits someone’s lifestyle.

“Don’t pick the investment that looks best on paper. Pick the one that fits your money, your goals, and your life.”

Image: Shutterstock

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This article Is Flipping Or Renting More Lucrative? Financial Expert Says What ‘Actually Looks Better On Paper Could Be The Worst Investment Of Your Life’ originally appeared on Benzinga.com

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