How to calculate holding during rehab? what is the formula to holding cost in a rehab?
There is no formula as it depends on each specific situation, largely depending on your location and therefore taxes as well as financing.
I wrote a BP blog post a while back about these as well as purchase and sale costs here:
Hope that helps.
Holding Costs are calculated by taking the monthly holding costs multiplied the number of months you plan on holding the property:
Total Holding Costs = Monthly Holding Costs x # of Months Held
Here are some typical holding costs:
- Loan Payments- Monthly interest payments if you are getting outside funding for the project
- 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 Property Insurance to cover your property from loss and liabilities.
- Utilities ($200 to $350/month) - For utilities, think about how much you pay for your own personal residence in utilities. Generally, in my 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.
Jason thank you for posting this question because I was wondering the same thing! David, your response is very thorough and pretty much what i was looking for to get at least an idea of what holding costs are. Thank you for the info!