Holding Costs Explained: The Hidden Math That Can Kill Your Deal

Most new investors focus on purchase price and ARV — but forget about the silent killer: holding costs.

Every day you hold a property costs you money. This guide will show you what holding costs include, how to estimate them, and why they matter more than you think.

⏳ What Are Holding Costs?

Holding costs are the monthly (or daily) expenses you pay while owning the property — from purchase to resale or refinance.

They include:

  • Property taxes
  • Insurance
  • Utilities (electric, gas, water)
  • Lawn/snow maintenance
  • Loan interest or private money payments
  • HOA fees (if applicable)

Even if a property sits empty, these costs add up fast.

💡 Why They Matter

If your rehab takes 3 months and your holding costs are $1,200/month — that’s $3,600 off your profit.

Now imagine:

  • A delayed permit
  • A slow contractor
  • A buyer falls through

That 3-month hold becomes 6 months — and your profits vanish.

Holding costs kill more deals than bad comps.

📐 How to Estimate Holding Costs

Here’s a quick formula:

  1. Add up monthly:
    • Property taxes: $350
    • Insurance: $150
    • Utilities: $200
    • Loan interest: $800
    • Misc (mowing, snow, etc.): $100
  2. = $1,600/month
  3. Multiply by months held:
    4 months × $1,600 = $6,400 holding costs

Add this number to your Profit Calculator when analyzing deals.

🛠️ Tools to Help You

  • Profit Calculator — enter monthly holding costs + holding period
  • Deal Analyzer Wizard — includes holding cost scenarios
  • Join our membership for access to rehab timelines and faster exit strategies

✅ Pro Tips

  • Always assume a minimum of 3 months holding
  • Add 1 month buffer for safety
  • The more expensive the property, the higher the burn rate
  • Use interest-only loans when possible to reduce cost
  • Sell or rent before rehab is finished if possible

📍 Final Word

Don’t underestimate holding costs — they’re one of the most common reasons new investors lose money.

Include them in every offer and calculator — and get the timeline right from day one.

Want help running a full hold-cost scenario? Talk to our team and we’ll help you build your exit plan.