The costs of owning a property go far beyond making a monthly mortgage payment. The costs of owning a home, especially by first time owners, can be a shock after realizing that owning a home is much more expensive than anticipated. 

Residential Carrying Costs are also known as “Holding Costs”  and can include the following:

  • Mortgage Principle

  • Mortgage Interest

  • Taxes

  • Insurances

  • Homeowner Association Fees

  • Costs of maintenance, upkeep, and upgrades

  • Utilities

It is important for homeowners to understand the cost of ownership and the impact on their discretionary income. Carrying Cost Calculators are important for potential buyers as well as helping sellers to determine the true costs of carrying property and if Auctioning a property makes more sense than the traditional approach when selling.

Commercial Carrying Costs can include all of the above as well as the following:

  • Security

  • Reserve Requirements

  • Property Management Fees

  • Vacancies

Real estate investors need to be able to manage their monthly carrying costs to avoid negative cash flow and increase their Return on Investment.





Posted by Tim Bray on
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