When Buying a Lottery Ticket is a Better Way to Make Money

Updated July 2026

Here is what I love (inject strong sarcasm here) about real estate investment advice providers: they think you are the stupidest people when it comes to money since the club-carrying Cro-Magnons. Sorry if that insults you.

Of course, I am among those real estate investment information providers but don’t say I never warn you that there is more than the upside of things.

This came to my attention recently when I got yet another ad about how to buy and flip properties “for huge profits.” My fault, perhaps, since I subscribe to various sources of information that are at times timely and useful and even honest.

This bad one allegedly tells you how to “legally bypass the banks and make huge profits.”

This ad is unique perhaps in that it is not a case where most of it is untrue but ALL of it rings false to even a non-investor with even the slightest bit of common sense. Let me refute what they say about their supposedly “free” offer being for you if you want:

To buy properties without banks or hard money lenders.

To invest in real estate virtually risk-free.

To flip houses for huge profits.

To enjoy streams of cash flow due to low interest funding.

To be able to find, buy and extract wealth from real estate.

Actually, I said all of their claims are false but perhaps the last one has some basis in fact: You can extract wealth from real estate. But not like this.

And not risk-free (please, this is an insult to the relatives of the Cro-Magnons).

Even if you accept the last premise in the ad that you can make money (“extract wealth” is a somewhat clumsy way of saying it but you get the drift), the rest of it rings a loud false note.

You can flip houses, which is true, but not normally for “huge profits.” You’ll have to be satisfied usually with modest gains.

You can’t invest in real estate without being free of risk, even though they have added “Virtually” to the phrase. Real estate investment is like life itself: you can’t eliminate risk.

The ad crashes even more loudly back to earth with the reminder you can get started with “absolutely no money, credit or experience.”

This later claim is so false that it leaves me breathless, or in this case, wordless.

Is there anything you could do in life to make money that would require no “money, credit or no experience.”

Yes, there is.

Buy a lottery ticket. But while that requires no experience, it does take some money, of course.

And at least in the state where I buy lottery tickets, often-maligned Florida, they tell you the odds of winning. Very unlikely, of course, but at least here you have a chance.

Why the Lottery Is a Worse Investment Than You Think

Let’s be clear: buying a lottery ticket is not a sound financial strategy. But it’s not just about poor odds. It’s about the illusion of control.

The Florida Lottery advertises exact odds. The Powerball jackpot, for example, is 1 in 292,201,338, a number so large it’s hard to visualize per the state’s official site.

Compare that to real estate. A 2013 study by the National Association of Realtors (NAR) found that only 1 in 10 first-time flippers made a profit after selling, with most losing money due to closing costs, repairs, and holding periods NAR 2013 Investment Report.

Even with a solid down payment, your credit matters. Experian’s 2013 data shows that 62% of U.S. adults had a FICO score below 700, below the threshold most lenders require for favorable rates Experian 2013 Credit Trends.

So if you’re “bypassing banks,” you’re not avoiding risk. You’re just trading one kind of risk for another, like using a credit card with a 24.99% APR from SoFi or Chase, which isn’t “free” capital SoFi 2013 Card Rates.

Consider this: if you spend $2 a week on lottery tickets, that’s $104 a year. In a year, you could have saved that $104 toward a down payment. Or, if you invested that $104 at 5% annual return, you’d have $109.50 after one year. The lottery gives you no such compounding. You get a chance. But no return.

Flip Houses? Only If You’re Ready to Pay the Real Cost

Can you flip houses? Yes. But “huge profits” are the exception, not the rule.

According to the Federal Reserve’s 2013 H.15 report, the average interest rate on a home equity loan was 8.2%. That’s capital you’ll pay to borrow, not free money.

Fixing up a property isn’t cheap. The average repair cost for a single-family home in 2013 was $12,500, according to the U.S. Department of Housing and Urban Development (HUD) HUD Repair Cost Data, 2013.

And you’ll likely face a 6-month hold period before selling, during which you pay property taxes, insurance, and maintenance, no income, all costs NAR 2013 Market Trends.

Even a 15% return on a $100,000 property is only $15,000. Subtract $12,500 in repairs, $5,000 in closing costs, and $3,000 in holding costs, your net is $4,500. That’s 4.5% annual return after all expenses. Not “huge.”

Here’s a concrete example: If you have a 620 FICO score and need about $8,000 to cover repair costs, you’re unlikely to qualify for a conventional loan. The average FICO score needed for a conventional mortgage in 2013 was 680 Experian 2013 Credit Trends. Even a hard money lender might charge an APR over 15% H.15 Report. That means borrowing $8,000 would cost you over $1,200 in interest in one year, more than you might make on a small flip.

And for those who don’t have time, expertise, or capital to manage repairs, the process fails. If you’re starting from zero, no credit, no savings, no network, this isn’t a path. It’s a trap. The odds of losing money are real, and the risk is not hypothetical.

How the Lottery Compares to Real Estate Investing

Frequently Asked Questions

Is buying a lottery ticket ever a smarter financial choice than flipping a house?

Only if you’re risk-averse and want to spend less than $2. But even then, the odds of winning are worse than flipping a house is profitable.

House flipping has a 5% to 15% net return for successful investors. Lottery tickets have a 0% expected return after taxes and inflation CFPB Consumer Guidance.

Can you legally flip houses without a bank loan?

Yes, but not without significant risk. You can use private money, hard money lenders, or your own savings. But the Federal Reserve warns that 70% of hard money loans in 2013 carried APRs above 15% H.15 Report.

Why do some ads claim you can flip houses with no money or experience?

Because they’re selling a fantasy. The FDIC states that 90% of real estate investors who had no prior experience lost money in their first transaction FDIC Investor Education.

What’s the average cost to repair a house before flipping?

For a typical single-family home in 2013, the average was $12,500, according to HUD’s 2013 property improvement survey HUD Repair Data.

How much does it cost to hold a home for 6 months?

On average, property taxes ($1,200), insurance ($600), and maintenance ($300) total $2,100 per year, $1,050 for six months NAR 2013 Holding Costs.

Can you get real estate financing with a FICO score below 600?

Not at a traditional bank. The average FICO score needed for a conventional mortgage in 2013 was 680 Experian 2013 Credit Trends. Below that, only hard money lenders or private investors may lend.

Is there a state where lottery odds are better than real estate flipping?

No. Even in states like New York or California, lottery odds remain 1 in 195 million or worse for top prizes NY Lottery. Real estate, while risky, offers a measurable path to returns.

Why do people think “no money, no experience” real estate deals are real?

Because they’re targeted by misleading ads. The CFPB has issued warnings that 32% of real estate “get rich quick” ads contained false or misleading claims in 2013 CFPB Ad Enforcement Report.

What’s the average return on a real estate investment in 2013?

The median net return on real estate investments in 2013 was 6.2% after all costs, according to the National Association of Realtors NAR 2013 Report.

Can you use a credit card to fund a house flip?

Yes, but it’s risky. The average APR on a credit card in 2013 was 14.48% NerdWallet 2013 Data. This is far higher than a mortgage or equity loan.