"Flipping" a house consists of buying a run-down property below market price, increasing its value somehow, and rapidly re-selling it for a quick profit. This is different from development investing, in which the buyer purchases a property under development, then sells or rents the unit when it's ready for occupancy. If you play your cards right, you can make $50,000 or more per flip, and do it in under 90 days.

[edit] Steps

Familiarize yourself with how to buy a home or condo. If you've already done that, then you already know the process and it's second nature. If you have not ever purchased a home, then consult with a Realtor. There's a few steps involved when purchasing a home so you need understand that process, such as: placing an offer, getting a mortgage, removing conditions and taking possession.
Educate yourself about the real estate market in which you're investing. Read magazines such as Forbes, Entrepreneur, and Money; these often have articles about real estate. The housing market is like the stock market. It has both "bull" and "bear" cycles. The difference is that the housing market can take years and years to switch from one cycle to another. All that simply means is real estate might either be in "high demand" or "low demand". After talking to at least 3 realtors and doing some investigation, if you find that the market is in low demand and everyone and their dog seems to be trying to liquidate their homes, these kinds of market conditions would make it more challenging to flip a home. Wait to buy until there's a fairly bearish real estate market.
Look for a home.
- A home with room for improvement might have a run-down yard, old carpet, a good spot for a carport, or other things that can be fixed with a little money and some hard labor. These types of fixes often provide an excellent ROI when flipping a home.
- Some people look for distressed properties. Those are ones that the seller is "desperate to sell" for reasons such as: divorce, bankruptcy, death, poor condition of the property, late on payments or other.
- Look for homes that sell in the middle to upper range. What that means is the amount where the average family would be able to afford it. Generally that means between about $200,000, and $500,000 depending on your area. You want that price range because these sell the fastest as theirs is the largest population density looking for these mid range homes. It could be much less or much more but that's about the average. The home should have: 3 or more bedrooms. It must have at least 2 full bathrooms.
Obtain a loan for at least several thousand dollars more than the price of the property you wish to flip. You'll need this money for repairs and improvements. Negotiate a purchase of the property, and buy. In the offer be sure to have multiple ways out of the contract. Have multiple ways out of the contract. The most common is simply "subject to financing by x date". If you can't make the financing by then ask for an extension on the condition date.
Work on the house to quickly and cheaply improve it. Repaint. Tear out old carpet to find hard wood floors or recarpet. Touch up old fixtures. The key is to make improvements, often merely cosmetic ones, that make the house look much better but won't cost you too much.
- Seek out the cheapest labor you can find (college kids, immigrants, even yourself) and have the property immaculately cleaned up and repaired. If there's any money left over after this, put it into a high-interest liquid savings account; do not use it to pay off part of the loan yet.
Stage the house.
Show the property to potential buyers. Discuss it with them. If a particular problem is repeatedly mentioned, see if you can use some of the money you saved to repair/improve it. Otherwise, modify your selling strategy to distract attention from it. This step should encompass less than a month, at the very most.
Sell the home for a significantly higher price than the one at which you purchased the property. Any annoyances or expenses with the property are now the buyer's problem, not yours. Pay off the loan, deposit your profit, and take a vacation.
Remember to report your profit to the IRS. An unreported $100,000 can lead to a painful audit down the road.

[edit] Tips

It is also possible to make a profit flipping a new house rather than a distressed one.
Make sure your credit is excellent. Depending on the area, you'll likely need to borrow several hundred thousand dollars (at least) to purchase the property without a mortgage.
Try a "dry run," in which you watch the prices of homes in your area and see how much you could've made if you had invested actual money. Only after you develop better instincts and gain some true confidence should you begin taking gambles with your own cash.
Attend real estate club meetings in your area. These are often well-advertised, but a Google search will usually do the trick just as well. Learn the ideas behind buying and flipping. Don't pay for the expensive weekend courses (usually around $600) unless you can truly afford it; they usually involve research you can do on your own.

[edit] Warnings

Flipping a house is exceedingly risky, and you could end up losing hundreds of thousands of dollars, on which you'll then owe interest to the bank. Only attempt it if you're sure you know exactly what you're doing.
The idea behind flipping is that you can make a sale before interest begins to accrue on your loan. If you find yourself sitting on a "black hole," cash out as best you can; a loss of a few thousand dollars is nowhere near as bad as a decaying property and a mountain of lifelong debt.