Two investors debate house flipping versus buy-and-hold. One claims half your profit goes to taxes and values double in a decade. The other pushes back: capital gains tax is much lower than 50%, and future appreciation isn't guaranteed. It depends on strategy and market conditions.
Here's why flipping houses can't create long-term wealth. Let's say you bought this fixer behind me for $560,000, then you put in $140,000 to remodel this house to make it look nice. Now it's worth $900,000 because you actually put money in it to make it look nice. Let's say you decide to fix and flip this. There's $200,000 worth of equity. You don't really net $200,000 because you got to pay Uncle Sam the other half of the money, so you really only net $100,000. But if you decide to keep it and build long-term wealth like what I do, then you get to keep all $200,000 of equity in the property. On top of that, If I wait roughly about 10 years, the property is going to double in value. It's going to go from $900,000 to $1.8 million.
I disagree 100%. Number 1, you don't owe Uncle Sam 50% of the capital gains. That part of the statement is completely false and stupid, stupid, stupid information to be passing on to real estate investors. Number 2, you can't guarantee that that property will appreciate. It all depends upon what your strategy and structure is.
