Realistic Exit Price
£700,000
Appraised market value
Total Renovation Cost
£283,750
Principal + Interest + Fees
Actual Net Realized Profit
+£16,250
£33,750 below original expectation
Realized Return on Capital
+6.5%
Over 12 month hold
Transaction Balance Waterfall
The Cold Hard Reality: In the original Quora premise, the owner envisions spending £250,000 to transform a £400,000 house into a £700,000 asset and pocketing £50,000 cleanly. But when taking £250,000 at 6.5% interest over 12 months (£16,250) and accounting for 2.5% estate agent/legal exit friction on £700k (£17,500), £33,750 of that £50k vaporizes into banking and sales costs—leaving barely £16,250 before any capital taxes or cost overruns.
The "Trade-Up until £1,000,000" Ladder Simulation
Testing the recurring question: "Can you repeat this flip cycle 3 times to hit £1,000,000 net worth?"
| Cycle | Starting Equity | New Debt Required | Renovation Value Add | Holding & Exit Costs | Ending Equity | Verdict |
|---|