Flipping vs. Renting: Which Model Wins in Today’s Costa del Sol Market?
By George Nayda
20 May 2025
8 min read
STRATEGIC INVESTING
Flipping vs. Renting: Which Model Wins in Today’s Costa del Sol Market?
Wondering whether flipping or renting wins in Costa del Sol? Let’s break it down by ROI, risk, taxes, and timing so you make your next move with total clarity.
The Strategic Fork in the Road: Flip or Rent?
If you're reading this, you're likely weighing ROI, liquidity, tax, and exit flexibility not just dreaming of sun and sangria.
On the Costa del Sol, there are two main playbooks investors keep coming back to:
Flip it buy undervalued, renovate, resell.
Rent it buy desirable, furnish, lease short or long-term.
So which model actually delivers in 2025? Let’s break it down using local data, lived experience, and real-world client outcomes no fluff, just what works here on the ground.
Profit Potential: Quick Cash vs. Long Term Yield
Flipping:
If executed well, flipping still offers sharp upside on the Costa del Sol but returns scale differently based on the property price band. Here’s a grounded snapshot of common net ROI ranges:
Price Range Common Net ROI Real Conditions Needed
€300K-€600K 15%-25% Cosmetic updates, resale in
under 12 months
€600K-€1M 12%-20% Light layout upgrades, resale
in 12–18 months
€1M-€2.5M 10%-17% Excellent sourcing, premium
finishes, tight resale plan
€2.5M+ 7%-12% Brandable product, longer
holding, strong liquidity plan
📌 All figures are net, after renovation, buying/selling costs, holding, taxes, and agents.
Renting (Short-Term):
Short-term rentals build yield more slowly than flips, but create steady income and long-term appreciation if done right. Returns also vary by asset tier:
Price Band Common Net ROI Real Conditions Needed
€300K-€600K 3%-5% Gross yirlfd 4 - 7 %, minus STR
(apartments) management and costs; needs
STR license and professional
setup
€600K-€1M 4%-6% Central zones(Málaga, Marbella)
(villas/apartments) 65% occupancy, ADR €150 -
€180, branded STR ops
€1M-€2.5M 5%-7% High-end STRs in premium
(luxury units) zones, full service hosting,
occupancy 60% - 70% high ADR
€2.5M+ 4%-6% Low Competition but high
(ultra luxury) guest expectations; success
requires elite service delivery
📌 Net figures after management, cleaning, utilities, taxes, and license compliance.
The Truth:
At €1M+, flipping isn’t about luck; it’s about sourcing leverage, design repositioning, and liquidity timing.
Rentals build wealth more slowly but offer lower risk over time if structured and managed professionally.
Tax, Licensing & Legal Hurdles (Don’t Skip This)
Here’s where many smart buyers get stung:
Flipping:
Pay 7% purchase tax on resale properties (or 10% VAT + 1.2% stamp duty on new builds).
Plus capital gains: 19% on gains (EU/EEA citizens), 24% (non-EU)
Spain withholds 3% of the sale price at the notary to cover potential CGT for non-residents.
Need top-tier legal + renovation teams to avoid delays.
No STR license needed because you’re not renting.
Renting:
Some zones ban short-term lets without a license.
You pay 19% VAT (IVA) if run as a business (offering hotel-like services such as cleaning, check-in, etc).
If not run as a business (i.e., private individual renting without extra services), it’s generally taxed under personal income tax rules, not VAT.
Long-term rentals = simpler, but yields drop.
Key takeaway:
Flip = front-loaded tax;
Rent = ongoing compliance.
Know what you're signing up for.
The Myths That Kill ROI
Let’s bust a few myths that even experienced investors fall for:
“Sea views = premium resale.” Not if the layout, build quality, or permits fall short.
“It’ll rent itself.” Not without a curated experience. Premium guests expect more than a sea view.
“I’ll sell at the peak.” Not if you’re not prepared. Liquidity isn’t guaranteed strategy beats timing.
“New builds are safer.” VAT, developer margins, and rental caps can erode your upside.
Smart investors don’t ask, “What can I make?”
They ask, “What could break this?”
My 2025 Investor Map
Ideal for Flipping (€1M - €2.5M)
Focus on villas, not apartments, in zones like Nueva Andalucía, Guadalmina Baja, or Sierra Blanca foothills
Look for layout inefficiencies, underused terraces, or dated interiors that can be turned into ROI
Prioritise lifestyle upgrades: open-plan kitchens, spa-level bathrooms, energy efficiency, solar
Avoid full structural rehabs unless you’ve got on-site project control
Always buffer an extra 1–2 months for permits, staging, and resale prep
Ideal for Short-Term Rentals (€1M+)
Not all €1M+ properties are STR-friendly. Success depends on:
Location with consistent demand
A legal license already in place
Hotel-level guest experience (pool, A/C, parking, walkability)
Professional STR operator handling the logistics
Matching property type to tourism type:
Cultural/urban - apartments
Coastal/resort - villas or branded complexes
Hybrid Play (Rent-to-Flip)
Buy a licensed STR villa or high-end apartment around €1.5M+, ideally with proven rental performance or immediate STR potential
Operate it for 2–3 years with a professional manager (don’t self-manage, this needs systems)
Use the rental income trail and occupancy stats to position the property as a branded, income-producing asset
Exit at €1.9M - €2.2M depending on upgrades, seasonality, and market cycle - data-backed pricing beats speculation
📍 Ideal zones:
You buy, operate for 1 - 2 years with strong bookings, then exit with data-backed ROI:
El Paraiso (select locations)
New Golden Mile (select locations)
Marbella East (select locations)
Which Model Wins for You?
You won’t find a one-size-fits-all formula here but you can find a smarter framework to base your next move on:
If you want fast equity, a solid renovation team, and you’re ready to stay on top of details? Flipping might suit you.
If you prefer steady yield, lower involvement, and love the idea of owning a coastal asset? Renting wins.
Or maybe what you really want is peace of mind. The kind that comes from seeing all the angles before making your move.
Let’s talk strategy. Book a short, no-pressure call, and I’ll show you how I help buyers like you navigate this market with eyes wide open.
Real investing isn't a gamble. It's mastering timing, knowing your margins, and avoiding rookie mistakes your competition still makes.
Disclaimer: This article is based on personal experience and market insight. It is not tax, legal, or financial advice. Please consult a qualified professional before making investment decisions.
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