Holding Cost Timer

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How to use the Holding Cost Timer

1
Enter the loan
The balance and rate drive the biggest monthly cost. Set the loan to 0 if paying cash.
2
Add yearly bills
Property taxes and insurance. Vacant-property policies often cost more.
3
Add monthly bills
Utilities, HOA dues, lawn care and security.
4
Set the timeline
Then raise it by a month or two to see what a delay would cost.

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Worked example

A flipper owes $250,000 at 11%. Taxes are $4,800 a year, insurance $2,400, utilities $250 a month and lawn care $100.

Holding the house costs about $3,240 a month, or $107 a day. Interest is about 71% of that. Over six months, holding costs total about $19,450. A two-month delay would add about $6,500.

The formula

Monthly cost = Loan × Rate ÷ 12 + Taxes ÷ 12 + Insurance ÷ 12 + Utilities + HOA + Other
Total        = Monthly cost × Months
Per day      = Monthly cost × 12 ÷ 365

Common mistakes

Leaving out interest. For financed flips, interest is usually the largest holding cost.
Planning for the best case. Permits, contractors and buyers all take longer than hoped. Plan for delays.

What to do next