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.

Matt Abadi is the founder of DealIntel. He leads the development of the platform's six-strategy underwriting engine, 25-point Kill List, and Monte-Carlo financial model — the institutional analysis stack DealIntel applies to every fix and flip deal. DealIntel was founded in 2025 with the central thesis that knowing when not to invest is the most valuable number on the page.