Welcome to “Tarl's Weekly Insights," my take on real estate today. 

If you’ve been following me, you know that I’m a Recovering House Flipper. You certainly learn a lot doing the kind of volume I have – you may have too.

But what you learn and when comes based on your own timeline.

One of my biggest lessons learned? I was addicted to flipping. I had always wondered if I should be keeping rentals but I had tunnel vision… focused only on getting that quick flip turnaround of cash. So how would I answer this question now: to flip or to hold? We know there’s thousands of investors out there doing both… there’s so much information it’s overwhelming, just look at YouTube University with all the gurus. Both are valid and at the end of the day, really depends on where you are in your business, what your goals are, the market, and what kind of lifestyle you want to live.

Starting with the positives of flipping, flipping houses can undoubtedly yield substantial returns. With the right deals and execution, you can make significant profits in a relatively short amount of time. Flipping has honed my skills in construction, rehab, estimating ARVs and as-is prices, and building efficient teams – talk about valuable hands-on experience.

Exciting, rewarding, highly profitable… However, flip the coin and consider the long-term benefits of holding properties for rentals…

Picture this. 

(I won’t get into the weeds of calculating taxes, expenses, etc. That’s highly individualized – but remember that flipping is considered active income thus Uncle Sam is going to ask for more come tax time.)

You flip 10 houses a year, making a tidy sum of $300,000 annually. Sounds great, right? What if instead, you kept those 10 houses and generated a net operating income of $42,000 per year, per house, totaling $420,000 annually? Not only do you get steady cash flow, but over time, your rental portfolio can appreciate, benefit from tax depreciation, and offer opportunities for cash-out refinancing if you need it.

Sure, flipping might provide instant gratification, but holding properties paves the way for lasting wealth and passive income. 

BUT! Holding properties requires significant upfront capital and the financial know-how. Many of us, myself included, didn't have the resources to dive into holding properties from the get-go. We had to build our reserves through active income strategies like flipping and wholesaling before transitioning into long-term investments. Interest rates certainly pose challenges for finding cash flowing properties. Flips may seem more attractive right now. However, by being strategic with your flipping profits, you can still acquire and hold properties for rentals, albeit at a slower pace.

You’re not going to lose those dollars invested into holding, you’re only leveraging them in a different way that yields a longer term benefit… one that may bring in less dollars now, but will build your wealth for years to come.

... To flip or to hold? Both.

Take the time to understand that having a long term strategy for wealth starts TODAY. It takes financial literacy, discipline and getting out of tunnel vision so you can focus on what matters.

Seek out resources that will help you. Don’t just consume, but take what you learn and APPLY IT.

Over time, your future self will thank you. The more houses that you keep, the more your income will grow, the more things like appreciation, and tax benefits. There's houses I kept in 2015 and 2016 that I still own today and I’m sure glad I made that decision 8-9 years ago. Deploy your resources wisely – and keep an eye on lifestyle creep. Look at starting or reinvesting more into your real estate portfolio, diversify into syndications and funds, or bolstering your financial security through prudent investments.

There's no one-size-fits-all answer to the flipping vs. holding debate. Both strategies have their pros and cons. 

Ultimately, it comes down to your goals, resources, and risk tolerance.

As for me, I'm on a journey of transition, moving from an addicted house flipper to RECOVERY! But I'm leveraging the skills and insights gained from flipping to excel in achieving my goals. And what better way to navigate your own business and shorten your timeline to building wealth than by understanding how an expert did it – and is continuing to do it (unlike many of those social media real estate influencers).

So... special announcement. I decided this was too important to put off if I want to help others learn to navigate this business, so I'm going to be live, explaining how I actually do this business, on a completely free training next week. Seats are limited so I want to give you the first opportunity to sign up.

I hope this has provided some food-for-thought and clarity as you navigate your own real estate ventures. See you next week on that training!

Best,

Tarl