Ordinary Course of Business2.

It will be taxed as ordinary income either way and flow through your personal taxes.   

When you flip real estate you realize income on the sale of the property, and that gets taxed at ordinary income tax rates.

You can deduct your passive income, and on top of that, you can use the losses from the investment to offset your ordinary income.

If you don't want to go whole hog and do all this preparation and certification yourself, a fair number of these players seek out joint ventures with landowners of the right kind of land, which usually has water on one side and sells for a tiny fraction of surrounding acreage that can actually be used for ordinary purposes. 

The IRS would likely consider this to be ordinary income, in which case you'd be underpaying income tax and also missing self-employment tax payments. 

That's not capital gains, it's ordinary income.  

If not specified, Imputed- (taxable at your ordinary W-2 rate)What you are describing is an installment sale.

If you're thinking to create finished lots and sell them or to build houses on the lots and sell them, the IRS will call that creating inventory and you'll lose your benefit of the 1031 and pay ordinary income tax on the profit.

Some of the easier buttons, like fundthatflip for example, provides 1099-int income so it's just ordinary income with no advantage.