What you need to know about HOLDING COSTS

Today’s real estate investing term is holding cost.

You really must pay attention to this one.  Holding cost, means how much money you are you paying for that property while you’re holding on to it…to rehab, fix or waiting for buyers/renters.

It could be as short as while you’re transferring title when you are doing a wholesale deal.  Whatever the case may be, involves things like loans, insurance, electricity, and taxes. It may also include your cost of financing.

You can look at how much are you paying the bank, your monthly payments, those kinds of things, as well as your repair values. All those things have to be considered as holding costs even on a daily basis sometimes.

TIP: When you see, people say they buy a house for this much and sold it for this much, that is not necessarily the profits.  They may not be sharing the holding cost.  I’ve even seen people share checks at closing, but the check included the money from the rehab, so their profit was significantly less.

Don’t let the numbers fool you.  Look at all the ins and outs of how money is flowing through a deal so that you are aware of the actual cost of owning, fixing and flipping a house.

Make sure you go to DFWTOP.com/words if you want to download 22 Real Estate Investing Terms you need to know. It’ll help you as a new real estate investor sound like a pro.