'I was so stupid': Dave Ramsey lost money flipping houses in the past — here's how to invest in real estate the right way

What followed was a costly education. The property needed far more labour, capital and time than Ramsey had anticipated. He also underestimated the value of his own time and effort. When the house finally sold — four years later — Ramsey had lost more than US$14,000 (C$19,600) on a property he had initially purchased for just US$7,000 (C$9,800). (1)

That kind of loss isn't a relic of the 1980s. Across Canada, house flipping continues to tempt investors with the promise of fast returns — and deliver something far messier.

The real cost of flipping in Canada today

House flipping remains active across the country. In the second quarter of 2024, approximately 2.42% of homes sold in Canada were bought and resold within 12 months — only slightly below the record high of 2.61% seen in early 2023 (2).

But activity doesn't equal profitability — flippers are being squeezed from every direction.

Construction costs for residential buildings in the 15 largest census metropolitan areas (CMAs) rose 4% year-over-year in the third quarter of 2024, according to Statistics Canada (3). Meanwhile, 2024 marked the most expensive year on record for insurance payouts in Canada at $8.55 billion, pushing insurance rates up 5.28% in 2025. Those carrying costs eat directly into already-thin margins. Bidding wars on distressed properties — the very homes flippers need — continue to make it harder to find deals with a meaningful upside.

Then there's the tax hit. Since January 1, 2023, federal rules deem any property sold within 12 months of purchase to be business income — meaning 100% of the profit is taxable, with no access to the principal residence exemption or the capital gains inclusion rate (4). British Columbia went further, introducing a provincial home-flipping tax in 2025 that applies a 20% tax rate on income from homes sold within one year of purchase.

Simply put, the math on flipping has gotten harder — and the risks, for the unprepared, remain high.

How much home can you afford?

Whether you're hunting for a new home or looking to refinance your mortgage, knowing how much your new loan might cost you is critical. Use our handy mortgage calculator to help you understand what your payments could look like.

Get Started

Buy and hold: the strategy Ramsey recommends

On his blog, Ramsey recommends a long-term, buy-and-hold approach to real estate: purchase a property at a fair price and let it gradually appreciate over time. It's the same patient philosophy that investor Warren Buffett has applied to stocks for decades.

The historical evidence in Canada backs this up. According to the Canadian Real Estate Association (CREA), the national average home price grew from $120,200 in 1990 to $827,100 by the end of 2023 — an average annual increase of approximately 6.3% (5). Over a longer horizon, the compound annual growth rate sits at around 6.11% over the past 15 years (6).

That kind of appreciation doesn't happen in a straight line — markets rise and fall. But over time, the volatility tends to smooth out. That's precisely why the buy-and-hold approach is consistently recommended: it allows you to ride out short-term corrections and benefit from long-term compounding.

The strategy also demands less active management than flipping. Investors need to value the property appropriately — reviewing comparable sales in the neighbourhood, factoring in repair and renovation costs — and then maintain the asset while paying down the mortgage.

Buy and rent: generate cash flow while you hold

Another long-term approach is renting the property out to tenants. This creates ongoing cash flow while the asset appreciates.

The average gross rental yield in Canada currently sits at 5.72% as of Q1 2026, up from 5.55% in the Q3 2025, according to Global Property Guide (7). Being a landlord in Canada is, however, more regulated than in many other markets. Most provinces govern how much rent can be increased annually — Ontario's guideline sits at roughly 2.5% in recent years, while British Columbia and Manitoba generally allow 1% to 3% increases annually for existing tenants (8).

Rental income must be reported on your annual tax return using Form T776 (Statement of Real Estate Rentals) — or Form T2125 if the Canada Revenue Agency (CRA) determines your activity constitutes a business (9). The upside: expenses such as mortgage interest, property taxes, insurance, maintenance and advertising can all be deducted from rental income to reduce your tax bill.

Rental investing isn't truly passive — tenant disputes, vacancies and unexpected repairs are part of the job. But for investors who want income without the all-in effort of flipping, it offers a compelling balance of cash flow and long-term growth.

Minimize debt: the case for paying down your mortgage

Ramsey has long advocated for reducing debt as a real estate strategy — and in Canada's current rate environment, that advice carries real weight.

As of March 13, 2026, the best five-year fixed mortgage rate in Canada is approximately 3.64%, while the best five-year variable rate sits at around 3.34% (10). While these rates have come down significantly from the peaks witnessed in 2022 and 2023, they remain far above the pandemic-era lows when many Canadians locked in below 2%. Homeowners renewing in 2025 and 2026 are facing meaningfully higher costs than when their mortgage began.

Any new loan — whether for a new property or a refinance — adds to your carrying costs. And unlike the low-rate years, there is no guarantee rates will fall further or quickly. With the Bank of Canada's overnight rate holding at 2.25% as of early 2026 and economic uncertainty weighing on growth forecasts, the rate environment is stable but not necessarily borrower-friendly (11).

For real estate investors, minimizing leverage — and focusing on more affordable, income-producing properties — remains a sound strategy. As Ramsey himself puts it: paying off your home may be the best real estate investment you can make.

What Canadian investors can take from this

Ramsey's early failure as a flipper wasn't just bad luck. It reflected a set of mistakes that remain easy to repeat: underestimating renovation costs, overestimating resale value and ignoring how labour and time factor into actual returns.

Here are the key lessons for Canadian investors: