Lender · TX · Member since 2026 · 164 posts · 67 votes
One of the fastest ways a “good deal” turns into a stressful one is underestimating holding costs.
A lot of investors run numbers assuming everything goes perfectly:
* Rehab finishes on time
* Property rents immediately
* No surprise repairs
* Rates stay manageable
* Buyers show up quickly
Reality usually looks different.
Every extra month you hold a property can mean:
* Interest payments
* Taxes
* Insurance
* Utilities
* Maintenance
* Lawn care
* Vacancy loss
* Extension fees
* Opportunity cost on trapped capital
And in today’s market, timelines are stretching. Permits take longer. Contractors disappear. Insurance costs rise. Buyers hesitate. Tenants shop around more carefully.
The investors who survive long term are not the ones with the flashiest deals — they’re the ones who build margin into their numbers before the deal even starts.
A deal that only works if everything goes perfectly usually isn’t a strong deal.
Curious what others are seeing right now:
What holding cost gets underestimated the most in your market?
Real Estate Agent · Boise, ID · Member since 2017 · 570 posts · 378 votes
4mo
Great conversation starter. A few years ago we bought a fixer in Florida. We replaced almost everything inside floors, plumbing, kitchen, bathroom, etc.
In the middle of the project, while the plumber was replacing the bathroom insert and pipes, one of the employees from the company we hired fell and broke their leg (not on our property). That delayed the project because they had to reallocate crews.
Then, right after that, a hurricane warning was issued in the area where the property was located.
All said and done, those two things alone pushed the project back about 2.5 weeks.
Fortunately, we had the reserves to carry the property longer than expected, but it was a good reminder of how quickly timelines can change. I can definitely see how this could have gone sideways if we were heavily leveraged with OPM and banking on an exact refinance or completion date.
To make things more interesting, we probably over-renovated for the area a bit, so it also took longer to rent than expected and we had to adjust our rent expectations.
That project taught me a lot about reserves, conservative timelines, and making sure the renovation level actually matches the market.