An investor buys a dated house, renovates it over a few months, and sells it for a higher price. That strategy is a flip. The profit comes from the spread between the total cost (purchase plus renovations plus holding expenses) and the final sale price.

Successful flips depend on accurate after-repair value estimates, disciplined budgets, and speed. Holding costs accumulate quickly. Unexpected repairs and market shifts can erase projected gains. Many flippers focus on cosmetic updates that appeal to the broadest buyer pool rather than exotic custom work.

Tax treatment differs from long-term investment property; profits may be taxed as ordinary income. Local regulations sometimes restrict short-term flips or require disclosures of recent renovations. Flipping is active work, not passive investing. Those who treat it as a business with systems and contingencies fare better than those who rely on hope.

• Buy, renovate, and sell for profit in a short period
• Requires accurate cost and value estimates
• Sensitive to holding costs and market timing
• Often taxed differently from long-term holds