Holding Costs

Definition

Holding costs (also called carrying costs) are every monthly expense a flipper incurs while owning the property — hard money interest, property tax, insurance, utilities (water, electric, gas), HOA dues, lawn care, and minimum security. On a $400,000 hard money loan at 10.5%, interest alone runs roughly $3,500/mo. Add $200–500/mo in property tax + insurance + utilities + HOA, and total holding costs average $4,000–6,000/mo. Every month of timeline slip costs that.

Worked example

A 6-month projected flip slips to 9 months. Three extra months × $4,500/mo holding costs = $13,500 of unanticipated cost. If projected profit was $40k, that's a 34% margin erosion — and explains why disciplined operators underwrite to a 9-month timeline even when the plan is 6.

How DealIntel uses it

DealIntel models holding costs as a function of financing product, property tax rate, insurance, utilities, and HOA — all populated from the metro registry. The Monte-Carlo engine stress-tests timeline slip; deals where 3 months of slip erodes more than 25% of projected profit are flagged.

Related terms

• Hard Money LoanShort-term, asset-collateralized real estate financing from a private lender — fast to close, higher-cost.
• The 70% RuleA fix-and-flip discipline that caps the maximum allowable offer at 70% of ARV minus rehab and costs.
• After Repair Value · ARVThe estimated market value of a property after planned renovations are complete.

DealIntel's underwriting team builds and maintains the platform's six-strategy engine, 25-point kill list, and Monte-Carlo financial model. Every piece of long-form content on dealintel.io is reviewed by an underwriter with direct experience scoring residential investment deals.