Rental vs Flip Math in 2026
Same house, two strategies. We run one property as a flip and as a rental with every cost included, show why many rentals don't cash flow at today's rates and Texas property taxes, and when holding still beats selling.
When a good property comes along, the first question is often "flip it or keep it?" The answer depends on math, not preference. Here's one property run both ways with all the costs included, so you can see where each strategy wins.
All numbers below are illustrative. Plug in your own purchase price, your lender's actual rate, and your county's tax rate, which varies a lot across Texas.
The property
- Purchase price: $150,000
- Rehab: $30,000
- After-repair value (ARV): $230,000
- Market rent after rehab: $1,900 a month
Option 1: Flip it
| Item | Amount |
|---|---|
| Sale price (ARV) | $230,000 |
| Purchase | -$150,000 |
| Rehab | -$30,000 |
| Buying and closing costs | -$3,000 |
| Holding costs (6 months at $1,500) | -$9,000 |
| Selling costs (about 8%) | -$18,400 |
| Profit | $19,600 |
About $19,600 in roughly six months. The cash comes back, and you can do it again. The trade-offs: profit from a flip is generally taxed as ordinary income (ask your CPA how it applies to you), and you need a steady supply of new deals to keep earning.
Option 2: Keep it as a rental
Say you buy, rehab, and then refinance into a long-term loan. Your all-in cost is the purchase, rehab, buying costs, and holding during the rehab, plus about $3,000 to refinance: roughly $195,000.
Version A: Refinance at 75% of ARV
A 75% loan on a $230,000 value is $172,500. At an example rate of 7.5% over 30 years, principal and interest is about $1,206 a month. You'd leave about $22,500 of your own cash in the deal.
| Monthly | Amount |
|---|---|
| Rent | $1,900 |
| Principal and interest | -$1,206 |
| Property taxes (about 2.2% of value) | -$383 |
| Insurance | -$150 |
| Maintenance and capital repairs (10% of rent) | -$190 |
| Vacancy (5% of rent) | -$95 |
| Cash flow | -$124 |
This property loses money every month, even though you self-manage. It isn't a bad house. High leverage, today's interest rates, and Texas property taxes add up to more than the rent.
Version B: Refinance at 60% of ARV
Borrow less, $138,000, and the payment drops to about $965. Cash flow becomes roughly +$117 a month, or about $1,400 a year. But now about $57,000 of your cash stays in the property. That's a cash-on-cash return of about 2.5%, plus roughly $1,300 of loan paydown in the first year, plus whatever the property appreciates.
Comparing the two
| Flip | Rental (Version B) | |
|---|---|---|
| Cash tied up | About $45,000 for ~6 months | About $57,000 long-term |
| Year-one cash return | $19,600 per flip, repeatable | About $1,400 cash flow |
| Other returns | None after sale | Loan paydown, appreciation, rent growth, depreciation |
| Work involved | Finding the next deal | Tenants, repairs, turnover |
On pure short-term math, the flip wins easily. The rental only makes sense if you're investing for the long term: rents and values rising over the years, the loan getting paid down by tenants, and tax benefits a CPA can explain for your situation.
When a rental is the better choice
- The rent-to-price ratio is strong. If the same house cost $120,000 all-in instead of $195,000, the rental would cash flow comfortably. Rentals work best when you buy well below the typical price for that rent.
- You want long-term wealth, not income now. Holding builds equity slowly and steadily without needing new deals every few months.
- The resale market is soft. When flips sit and prices dip, renting the property until the market recovers can beat selling at a loss.
- You have a plan for management. Either time to self-manage, or margin to pay a manager (often around 8% to 10% of rent), which would make Version A even more negative.
When the flip is the better choice
- The rental doesn't cash flow without leaving a large amount of cash in the deal.
- You need your capital back to keep growing.
- You don't want landlord responsibilities.
- The property is in an area with weak rental demand but strong resale demand.
A simple way to decide
Before you buy any property, run both columns. If the rental cash flows at a 75% refinance with every expense included, holding may be the better long-term play. If it only works by leaving most of your cash in, or not at all, flip it and put the profit toward a property that rents better for the price.
If you do keep rentals, PropPipeline's free Rental Portfolio tools help you track leases, tenants, rent, and maintenance reminders, so a single rental doesn't turn into a second job.