A cosmetic flip case study: the numbers on a regional Queensland deal

Last month I walked through a straightforward cosmetic flip on the site, a deal that penciled at a comfortable margin. This is the follow-up in the monthly series, and it is deliberately a different animal: a cheaper, tidier, lower-risk cosmetic job in a regional Queensland town, the kind of deal a first-time flipper looks at and thinks "this one is easy money". It does pencil. But when you put every cost on the page, a clean cosmetic flip case study like this one returns about ten per cent on total cost, and that number carries a lesson worth more than the profit.

The deal below is illustrative. The property is a composite of the sort of post-war cottage that comes up in regional Queensland, and I have used real, current cost lines for every figure so the maths is honest even though the address is not a single specific one. Where a number is an assumption, I have said so.

The deal: a tired cottage in a regional Queensland town

The property is a three-bedroom, one-bathroom post-war cottage on a level 600m² block in a regional Queensland centre. Solid timber frame, good bones, but dated: original kitchen, one tired bathroom, worn carpet over decent floorboards, tired paint inside and out, and a front yard that had given up. Nothing structural was wrong with it. It was just old and unloved, which is exactly the profile you want for a cosmetic flip.

The asking price was $499,000. Comparable renovated three-bedders in the same pocket were selling around $690,000 to $710,000, so the after-repair value looked like roughly $700,000. That gap is the whole deal. I negotiated the buy to $485,000, and that $14,000 saving at the buy matters more than it looks, which is the point of the whole exercise.

The feasibility: which strategy the block actually supported

Before running any numbers I checked what the block could actually do, because the buy price only makes sense against the right exit. On a 600m² lot in a standard residential zone with an existing dwelling roughly in the middle of the block, subdivision was not on the table without demolishing the house, and a granny flat would have added cost without adding much to a sale price the local market caps out at. A full feasibility runs the strategies a property can support rather than the ones you wish it could, and here they came down to one that made sense: a cosmetic-to-light renovation and resale to an owner-occupier.

That is worth stressing. The margin on this deal was never going to come from a clever strategy. It was going to come from buying well and renovating tightly, so every dollar had to be counted.

The numbers: a full cosmetic flip case study, line by line

Here is the whole deal on one page. This is the level of detail that separates a real cosmetic flip case study from a back-of-the-napkin guess, and it is the same structure the worked sample analysis lays out.

Buying it

Queensland transfer duty on an investment purchase uses the general rate, which is $1,050 plus $3.50 for each $100 above $75,000, so $485,000 comes to $15,400 (Queensland Revenue Office general transfer duty rates; you can check any price on the stamp duty calculator). Conveyancing sits in the usual $1,200 to $3,500 band and a combined building and pest inspection runs $400 to $800, so I used mid-range figures for both.

Renovating it

The kitchen and bathroom bands are consistent with the HIA Kitchens and Bathrooms Report (a mid kitchen commonly $25,000 to $45,000, a full bathroom around $26,700 on average), and the whole-house cosmetic scope sits comfortably inside the renovation cost per square metre ranges the reno cost calculator uses. The contingency is not optional. On a cosmetic job you will still find something behind a wall, and 12% is the floor I work to.

Holding it (six months)

The interest is an assumption: an 80% loan of roughly $388,000 at about 6.2%, which is near the mid-2026 average variable rate, over a six-month hold. If the sale drags, this line grows fast, which is the whole argument of the six-month holding-cost walkthrough.

Selling it

Regional Queensland agent commission runs a touch above the capital cities, with a state median near 2.8%, so I used that. Add it up and the deal looks like this:

What the deal score said

Run through the app, this deal scored around 66 out of 100 (illustrative). That is a "proceed, but with discipline" number, not a green light. The score was held down by exactly the thing the numbers show: a pre-tax profit of $62,400 on $613,800 of total cost is a margin of about 10% on cost. That is real money, but it is a thin buffer for anything going wrong, and the deal score is built to flag thin buffers rather than flatter them. I dig into what "enough" margin looks like in the profit benchmarks post.

There is also the tax. A flip like this is taxed as ordinary income, not as a capital gain, so there is no 50% discount (the ATO treats a genuine flip on revenue account). If this profit lands in the 37% marginal bracket, roughly 39% with the Medicare levy, the after-tax result is closer to $38,000. Still worth doing, but a long way from the "easy $60k" the top-line profit suggests.

The verdict: it pencils, but the margin is all in the buy

Here is the lesson I promised. Apply the classic 70% rule and this deal should never have been bought at $485,000: 70% of the $700,000 ARV is $490,000, minus the $95,200 reno leaves a "maximum buy" of about $394,800. The flipper paid $90,000 above that, which is exactly why the margin came out at 10% rather than the 20%-plus the rule is designed to protect. I explain why the 70% rule breaks in Australia once you load in stamp duty, agent fees and income tax, and this deal is that explanation in one worked example.

Now watch how fragile 10% is. Pay $520,000 instead of $485,000 and the extra buy price plus the extra duty drops pre-tax profit to about $26,000. Let the reno blow out to $115,000 and it falls to roughly $42,000. Have the market soften so it resells at $675,000 and you are near $38,000. Let any two of those happen together and this "easy" cosmetic flip is at break-even before tax. That is not a reason to avoid cosmetic flips. It is the reason the money is made the day you negotiate the buy, not the day you sell. This is the same conclusion the honest look at flipping profitability reaches from the other direction.

Run this kind of deal yourself

If you take one thing from this cosmetic flip case study, take the discipline of putting every line on the page before you offer. The deal that looks like easy money at the inspection is often a 10% deal once duty, holding and tax are counted, and 10% has no room for a surprise.

Before you buy anything, model it properly. Start with the flip ROI calculator to get the shape of the deal, then check the holding-cost calculator with a realistic days-on-market, and read the full cost of flipping a house so nothing on the list surprises you. When you are ready to run a real listing end to end, the full deal analysis pulls the comps, the costs and the feasibility into one place, and you can run the numbers on your next deal before you commit a dollar. If you are still learning the whole process, the beginner's guide to flipping a house in Australia walks it end to end.

This is general information only and not financial, legal or tax advice. The deal above is an illustrative worked example; the property is a composite, the profit and deal score are indicative, and costs, duty rates, interest rates, agent fees and market values vary by property, state and time. Confirm current figures and get independent advice from a licensed agent, accountant and conveyancer before you act.

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