On Instagram, this deal is a €128K win and the opening scene of an online course. On the bank statement, it was about €51K, before income tax.
That gap is the whole job. Here is where the money went.
The numbers, line by line
Income tax comes after. It always does.
Renovation is the line that decides the deal
The renovation cost €67K, about 44% of what we paid for the flat. It is the biggest number after the purchase and the one that moves the most. In an old Lisbon building, you find out what is behind the walls after you sign, never before.
The cost that isn't in the table: time
Every month a project waits, it pays interest, insurance and IMI (the municipal property tax) for nothing. Everyone fights over the purchase price. I fight over the deadline.
When a contractor says "next week", that is not a date. It is a state of mind.
How we run a deal now: backwards
- Start with the sale price you can defend with real comparables, not the one in your dreams. 1.
- Subtract the profit you need to justify the risk. 2.
- Subtract every cost: renovation with a buffer, taxes, financing, commissions and every month of holding. 3.
- What is left is the most you can pay. If the seller wants more, you walk away. 4.
If a deal only works in the best-case scenario, it is not a deal. It is a scratch card. A spreadsheet accepts anything. The building doesn't.
FAQ
Is flipping property in Lisbon still profitable? It can be. The margin is made at the purchase price and lost in the delays. A good sale price only pays off if every cost in between was in the spreadsheet from day one.
How much does it cost to renovate a flat in Lisbon? It depends on the building, the size and what is behind the walls. In this project the renovation was €67K, about 44% of the purchase price. Treat it as one data point, not a rule.
What costs do first-time investors forget? Purchase taxes, financing, agency commissions, the monthly holding costs while the works run, and income tax on the profit.
Past returns do not guarantee future results. This article describes one completed project and is not investment advice.
About the author: Thiago Ibrahim is CFO and co-founder of Metal Ballerina (MB House of Investment), a Lisbon real estate co-investment company featured in Forbes Portugal. Before real estate, he spent 20 years building businesses for other people in oil and gas and tech startups, across more than 10 countries.
More from Metal Ballerina: all articles at mbinvestpt.com/insights, the Portuguese edition on Substack (thiagoibrahim392041.substack.com), or write to mb@mbinvestpt.com.
We bought a Lisbon flat for €152K and sold it for €280K. The profit wasn't €128K.