How Much is Time Really Costing You on a Deal?

Question

A property can look like a great investment on paper...until the timeline starts to get stretched. A flip projected to take 5 months turns into 8. Renovations run behind schedule, permits take longer than expected, the property sits on market for longer than you thought it would. Meanwhile interest, insurances, taxes, utilities, and other holding costs are adding up. These things happen.

I've been trying to pay more attention to this when looking at investment properties around Atlanta. A $60K projected profit can start to look a lot different when you're carrying the property for an extra three months. It's made me realize that the timeline deserves as much attention as the purchase price and rehab budget.

Question for seasoned investors: How much cushion do ya'll typically build into your projected holding periods?

Jimmy Samaha · Answer

What helped me was turning carry into a daily number. Say you have a 300k hard money loan at 11%, that's about 2,750 a month in interest. Add taxes, insurance, utilities and lawn and you're easily at 3,500 a month, roughly 115 a day. Three extra months is over 10k off that 60k profit before anything else goes wrong.

I build in 2 extra months on cosmetic jobs and 3 to 4 if permits are involved. Here in NYC permits alone can add months so we just assume it.

The part people forget is the sell side. Agent fees, transfer taxes and closing costs can run 8 to 10% of the sale price depending on the state, and every month on market is another month of carry. I'd rather price it right the first week than sit 60 days trying to squeeze out another 10k.

Divin Kanyama · Answer

You’re exactly right, @Madox Miller. The timeline is part of the budget. I’d underwrite at least a few extra months beyond the contractor’s best-case schedule, with separate buffers for permitting, construction, listing, and closing rather than one general contingency.

I’d also calculate the full monthly carrying cost—interest, insurance, taxes, utilities, lawn care, security, and financing fees—and stress-test the deal for both a longer hold and a lower resale price. If three additional months materially weaken the return, the margin may be too thin.

The appropriate cushion depends on project scope and local conditions, but older homes, major permits, seasonal work, and higher-end finishes deserve more time. I’d rather be pleasantly surprised by an early finish than depend on a perfect five-month schedule.

Jim Stern · Answer

Hey, great question. Most new flippers learn this one the expensive way. I’d underwrite every flip at your realistic timeline plus 2–3 months, then make sure the deal still works. In metro Atlanta the usual stretch points are permits (these vary a lot by city and county, so call the building department before you close), contractor scheduling, and days on market at resale. Turn your holding costs into one monthly number: interest, insurance, taxes, utilities, lawn. Then multiply it out. From the lending side, read your hard money extension terms before you sign. Extension fees on a slow flip sting. And price it to sell in the first 30 days. Chasing the last $5K usually costs more than $5K in carry. My clients are still having good success with their BRRRR strategies in this market, but I'd be cautious with the flips. Be sure and have a lender with no seasoning period on the refi and you can turn these around quickly...I can connect you to a great lender if you need one.

Madox Miller · Answer

I really like that approach. Underwriting both scenarios seems like a good way to account for uncertainty rather than just hoping for the best. I'm seeing timelines getting stretched on the labor side. Thanks for sharing Ametria!

Ametria Chaney · Answer

Madox, I'd underwrite two numbers: a realistic timeline and a pessimistic one, and make sure the deal still works in the pessimistic case. As a rule of thumb, take your contractor's estimate and add 20-30% — then add your monthly carrying costs (loan payment, taxes, insurance, utilities) times those extra months, plus the opportunity cost of your capital sitting still. If the profit margin can't absorb the pessimistic timeline, it's not a deal, it's a hope. From the listing side, this is also why I tell flippers to price the first week competitively rather than "test the market" — every extra week on market costs the same daily number. Are you seeing timelines stretch on the labor side, the permit side, or both?

James Jones · Answer

Time costs money in exact proportion to how loose the schedule is. On a BRRRR I don't pad the projection and hope — I fix the two timelines I control. The rehab runs a 21-day schedule with days 18–21 as the punch list, so a hold that should take three weeks doesn't quietly become eight. And I underwrite assuming a lease-up gap: the house can sit a few extra weeks waiting on inspection and still hit the 1% rule, because the purchase was under $100K against a $180K–$265K ARV. What I can't control — the housing authority's calendar, the appraiser's timing — gets absorbed by the buy price, not by optimism. If the deal only works on a perfect timeline, it doesn't work.

Madox Miller · Answer

Thanks for the advice James! I like what you said: if a deal only works on a perfect timeline, it doesn't work. Also great point about accounting for things that you can (and can't) control. Appreciate the insight!

How Much is Time Really Costing You on a Deal?

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