Holding Costs

Holding costs are the meter that runs the whole time you own the property but earn nothing from it — from settlement, through the renovation, until the sale actually completes. On a flip there is usually no tenant paying rent, so every one of these costs comes straight out of your margin.

The main lines are loan interest (typically the biggest), council rates, water and sewerage charges, building insurance, utilities while the place sits vacant, strata levies where they apply, and land tax in the states and above the thresholds where it bites. None of them is huge on its own; together, over a six-month project, they add up to a number that quietly turns a thin deal into a losing one.

Time is the multiplier

The trap with holding costs is that they scale with the calendar, and flip timelines almost always slip. A reno that runs two months over, a DA that takes longer than planned, or a property that sits on the market through a slow selling season — each extra month keeps the interest and rates clock ticking with no offsetting income. That is why an honest feasibility prices holding costs against a realistic timeline with a contingency, not a best-case one, and why they are one of the costs the 70% rule buffer has to cover.

Land tax deserves a special mention because it surprises people: it is assessed on land value above a state threshold and can be a meaningful annual cost on higher-value holdings, so check whether your project crosses the line in your state. Because holding costs are so easy to underestimate, model them explicitly rather than adding a vague allowance — the holding cost calculator breaks the lines out for a given hold period, and what six months really costs you walks through a worked example. This is general information, not financial advice.