A Melbourne house flip case study: the numbers on a Victorian deal

Every month I put one worked deal on the page, and this Melbourne house flip case study is deliberately a change of state. The last two were in New South Wales and regional Queensland, and both landed at roughly a ten per cent margin on cost. This one is a Victorian cottage, and it carries a lesson that only shows up when you flip across state lines: the same tidy cosmetic job that returns ten per cent in Queensland returns less in Melbourne, and the single biggest reason is the duty the state takes before you have swung a hammer.

The deal below is illustrative. The property is a composite of the kind of tired weatherboard that turns up in Melbourne's middle and outer ring, and every cost line is a real, current figure so the maths is honest even though the address is not one specific house. Where a number is an assumption, I have said so.

The deal: a tired weatherboard in Melbourne's outer ring

The property is a three-bedroom, one-bathroom weatherboard cottage on a level 560m² block in an outer-middle Melbourne suburb where renovated stock is starting to move. Good bones, bad everything else: original kitchen, one dated bathroom, worn carpet, tired paint inside and out, and weatherboards crying out for a repaint. Nothing structural, just old and unloved, which is the profile you want for a cosmetic flip.

The asking price was $649,000. Renovated three-bedders in the same pocket were selling around $860,000 to $895,000, so the after-repair value looked like roughly $880,000. I negotiated the buy to $625,000. In a softer 2026 market vendors are more willing to deal, and that $24,000 saving at the buy does more work than it looks like, which is the whole point of the exercise.

The feasibility: what the block actually supported

Before running the numbers I checked what the block could do, because the buy price only makes sense against the right exit. On a 560m² lot in a standard residential zone with the house sitting mid-block, a subdivision was not on the table without demolishing the dwelling, and a granny flat would have added cost without adding much to a sale price this pocket caps out at. A full feasibility runs the strategies a property can actually support rather than the ones you wish it could, and here it came down to one: a cosmetic-to-light renovation and resale to an owner-occupier. The margin was never going to come from a clever strategy. It had to come from buying well and renovating tightly.

The numbers: a full Melbourne house flip case study, line by line

Here is the whole deal on one page, the same structure the worked sample analysis lays out.

Buying it

That duty line is the headline of the whole post. Victoria's land transfer duty on a non-principal-place-of-residence purchase in the $130,001 to $960,000 band is $2,870 plus 6% of the value above $130,000, so $625,000 comes to $32,570 (State Revenue Office Victoria, current non-PPR rates; you can check any price on the stamp duty calculator). Hold that number in your head. Conveyancing sits in the usual 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, and the whole-house cosmetic scope sits inside the renovation cost per square metre ranges the reno cost calculator uses. Weatherboard exteriors need a proper repaint, which is why the exterior line is heavier than it would be on a brick cottage. The 12% contingency is not optional: on a cosmetic job you will still find something behind a wall.

Holding it (six months)

The interest is an assumption: an 80% loan of about $500,000 at roughly 6.2%, 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

Melbourne metro agent commission averages around 2.0%, inside a 1.6% to 2.5% range (PropertyNow commission by state), and a metro marketing campaign runs heavier than a regional one, so I used $5,500. Add it all up:

What the deal score said, and the duty that dragged it down

Run through the app, this deal scored around 62 out of 100 (illustrative). A pre-tax profit of $64,800 on $790,900 of total cost is a margin of about 8% on cost, and the deal score is built to flag a thin buffer rather than flatter it.

Here is the state-line lesson. Last month's regional Queensland cosmetic flip returned about 10% from a $215,000 spread between buy and ARV. This Melbourne deal needed a bigger $255,000 spread and still came out lower. On this same $625,000 buy, Victoria's duty is $32,570; in Queensland the general rate would be about $20,300. That roughly $12,000 gap is pure state tax, and it comes straight off the bottom line. Flip in Victoria and your buy has to be sharper than it would in Queensland to reach the same margin, because the state takes a bigger cut on the way in.

There is also the income tax. A flip like this is taxed as ordinary income, not a capital gain, so there is no 50% discount (the ATO treats a genuine flip on revenue account). If the profit lands in the 37% marginal bracket, roughly 39% with the Medicare levy, the after-tax result is closer to $39,500.

The verdict: in Victoria the buy has to be sharper

Now watch how fragile 8% is. Pay $650,000 instead of $625,000 and the extra buy price plus about $1,500 more duty drops pre-tax profit to roughly $38,000. Let the reno blow out to $128,000 and it falls to about $47,700. Have the market soften so it resells at $850,000, entirely plausible in a falling market, and you are near $35,000. Let any two of those happen together and this deal is close to break-even before tax.

Apply the classic 70% rule and the ceiling was clear: 70% of the $880,000 ARV is $616,000, minus the $110,880 reno leaves a maximum buy near $505,000. The flipper paid $625,000, well above that, which is exactly why the margin came in at 8% 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 a Victorian deal is that explanation at its sharpest, because the duty is the largest single acquisition cost after the house itself.

Run this kind of deal yourself

If you take one thing from this Melbourne house flip case study, take the discipline of putting every line on the page before you offer, and of knowing your own state's duty cold, because it changes the whole shape of the deal. What looks like easy money at the inspection is often an 8% deal once Victorian duty, holding and income tax are counted, and 8% has no room for a surprise.

Start with the flip ROI calculator to get the shape of the deal, 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. Whether you are buying in Melbourne or interstate, aim for the margin the profit benchmarks post argues for, not the top-line number. The next month's Perth house flip case study shows the same discipline in a sharply falling market, where the exit price, not the duty, is what puts the deal at risk. 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. New to 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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