Stewart Thomson
A workable flip appraisal is not three vague numbers on the back of an envelope. It is a disciplined decision. You are trying to answer one question only: should this deal be pursued, parked or passed?
The simplest framework still works best, but only if each part is done properly.
Step 1: total acquisition Costs
Start with the full buy-in cost, not just the agreed price.
That means purchase price, tax, legal fees, lender fees, broker fees where relevant, valuation costs and any cash you need to spend immediately to secure, insure or make safe the property.
If the deal is additional dwelling or investment stock, include ADS from the start. If bridging is being used, include the setup cost, not just the monthly interest.
step 2: real Refurbishment cost
Do not use hope as a budget.
Your refurbishment number should reflect the actual property type, the condition shown in the Home Report, the likely scope after strip-out and the standard needed for the end buyer in that location.
Break the works down by trade and by room where possible. Include prelims, waste, certification, contingency and any non-obvious extras such as plaster repairs after rewire, flooring transitions, common area issues, or external works needed for resale.
Step 3: real end value and exist cost
Your end value should be based on nearby sold evidence for the likely finished product, not the best asking prices you can find online.
Then deduct selling agent fee, sale legal fee, staging or dressing if needed, finance run cost during sale, council tax, utilities and any final snagging.
Only after that should you look at gross and net margin.
What makes a deal strong
- A clear end buyer.
- Enough margin after all costs, not before them.
- A property type that is well understood.
- A scope of works that does not rely on miracles.
- An area with proven resale demand.
- A downside that you can live with if the market softens or the job runs longer.
What makes a deal weak
- A narrow margin.
- A fragile end value.
- Unknown structural risk.
- Layout issues that are expensive to solve.
- Stock that appeals to almost nobody once finished.
- Too much dependence on a fast resale.
A simple decision rule
Pursue the deal if the numbers work with contingency, the exit is clear and the downside is acceptable.
Park it if the concept is right but you need better buying terms, more clarity on works or stronger comparable evidence.
Pass it if the margin only exists on optimistic assumptions.
Conclusion
Deal analysis is not about looking clever. It is about not getting trapped. The investor who says no well usually performs better than the investor who tries to rescue weak deals through effort alone.
Send a live deal for analysis or use the appraisal framework before you bid.
