Holding Costs (also known as carrying costs) are the monthly holding costs that you will incur while you are holding the property, such as property taxes, insurance, utilities and maintenance costs.

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The Monthly Holding Costs on Step 4 of Flip Analyzer is used to calculate the approximate Holding Costs you will pay while holding the property.

You will need to enter the Holding Period and your Monthly Holding Costs to calculate your Total Holding Costs.

Total Holding Costs = Holding Period (months) x Monthly Holding Costs

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The Holding Period (Rehab Timeline & Sales Timeline)

The first input you will need to enter for Holding Costs is the "Holding Period" which includes two inputs:

• Rehab Timeline - The amount of time it will take to renovate the property.
• Sales Timeline - The amount of time it will take to sell the property once the renovation is complete.

Both of those inputs will be added together to equal the Total Timeline (Total Holding Period) which will be multiplied by your monthly Holding Costs entered below:

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For your flexibility, you have 3 different options for calculating the monthly Holding Costs:

• Lump Sum
• $ per Month
• Detailed

Lump Sum

The Lump Sum option allows you to quickly enter a lump sum amount for the Holding Costs. For example, if you just want to quickly plug in $2,000 for the Holding Costs, you can easily plug in that value as a placeholder. Note: When you use the Lump Sump amount, the Holding Period has no impact on the Holding Costs amount, so if you increase or decrease the Holding Period, it would not change the $2,000 amount entered in the Example.

$ per Month

The $ per Month option allows you to quickly calculate the Holding Costs by multiplying a $ per month by the # of Holding Months.. For example, you could plug in $750 per Month as your Monthly Holding Costs, which is then multiplied by the Total Timeline of 6 Months, so your Total Holding Costs would be calculated at $4,500 ($750/mo x 6 months = $4,500)

Detailed

The Detailed option allows you to build out an itemized list of all of your Holding Costs. You have the flexibility to enter the itemized costs as a $ per Month or $ per Year amount, which will be converted to a monthly Holding Costs and multiplied by your Total Timeline.

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FAQ

What are the typical Holding costs & amounts I can expect to pay?

Typical Holding Costs

Here's a list of typical Holding Costs and average amounts that you will likely have on your rehab projects.

• ​Property Taxes - Property taxes will vary depending on your local property tax rates.  To find the property tax amount for a property you can search your local county assessor's website.
  
• Property Insurance ($100 to $150/month) - You will need to get a Vacant Property Insurance which will cover loss of the property and provide liability insurance for a few hundred $ per month.
  
• Utilities ($200 to $350/month) - For utilities, think about how much you pay for your own personal residence in utilities.  Generally, in the Kansas City area you will have around $200 to $350/month in utilities depending on the season.
  
• Maintenance ($50 to $100/month) - Maintenance costs include any kind of on-going property maintenance such as lawn mowing or snow removal.
  
• HOA Dues - If your property has a Home Owner's Association, you will likely have Annual HOA dues for the property.  Generally, you can find HOA information on the property listing or the neighborhood's website.

FAQ

how long does it typically take to rehab a property?

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Holding Period

A typical rehab project timeline is as follows:

• Purchase Closing (take possession)
  
• Planning, Permits, Bidding (1 week to 1 month+) - If possible, you will try to start the planning before the closing to gain a head start.  The planning process can take as little as 1 week or as long as 2 months if you have large project that requires plans, plan review, & permitting.
  
• Rehab/Construction (2 weeks to 4 months) - For a cosmetic rehab, the project may only take a few weeks, but for a larger 'gut job' it could take up to 4 months.
  
• Listing for Sale (1 week to 2 months) - In a hot seller's market in a desirable area, you may have an offer the 1st day you put the property on the market.  In a buyer's market, your property could sit for 1 to 2 months before you get an offer.
  
• Closing (1 to 2 months) - Once you get an offer under contract, it generally takes around 30 to 60 days to process the closing.

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In a best case scenario, with a cosmetic rehab that sells quickly, you are looking at a holding period of 2 to 3 months.  Overall, the average rehab will likely take around 4 to 5 months.

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