What a flip costs you every month you hold it
A fix-and-flip keeps costing money while nothing happens. In our public Tacoma example, holding the house runs $3,620 a month: $2,560 purchase-loan interest, $460 rehab-draw interest, $600 tax, insurance, and utilities. Every extra month comes straight out of profit, and at month 7 the loan itself can add a fee.
Where the $3,620 comes fromSample hard-money terms
From our public sample report. Loan terms are illustrative hard-money terms, not a quote: 76% purchase LTV, 100% rehab funding, 10% annual rate, 1 point origination. Property tax for the sample house from the Pierce County Assessor-Treasurer; for the conventional-rate backdrop see the Freddie Mac PMMS.
Purchase interest = $404,444 × 76% × 10% ÷ 12. Rehab interest = $110,000 × 10% ÷ 12 ÷ 2, because draws come in stages. The $600 is tax, insurance, and utilities for this house.
The first line. Most new investors model "price plus rehab versus sale price" and treat the months in between as free.
What 4, 6, and 8 months do to profitSame house, same price
Model: purchase interest × months, rehab interest at midpoint draw, 1 point origination, 6.5% selling costs, $600/month, $5,000 miscellaneous. Recomputed 2026-08-26 from the sample report's calculator terms.
The house was already a pass at six months: eight of nine cells in the sensitivity grid lost money. Time just makes it worse. The one green cell, optimistic sale and light rehab, is worth $3,600 at six months and nothing at seven.
The extension cliff at month 7Read your loan note
Illustrative. Extension fees and rates vary by lender and are set in your note; we have not verified any specific lender's terms. The one-point figure is an example on the sample's combined loan balance of about $417,000.
Short-term rehab loans have a maturity date. Sell before it and the note is paid off; miss it and you typically pay a fee, a higher rate, or both, on the whole balance.
What is the term, what does an extension cost, and is there a default rate? Three questions, and the answers belong in your model.
Where the extra months hideRealistic schedule + 2
Illustrative. Closing times depend on the buyer's financing; a conventional mortgage commonly takes 30 to 45 days from accepted offer.
The three-line survival mathBefore you offer
- 1Monthly burnPurchase interest + rehab-draw interest + tax, insurance, utilities. For the sample: $3,620.
- 2Months, honestlyContractor's schedule plus two. Sample: 4 + 2 = 6, so $21,720 of holding before a single selling cost.
- 3Subtract firstTake it off the top of expected profit. If what is left misses your target, the price has to move, not the schedule.
This is how every PropDossier report runs the numbers: nine scenarios, holding costs included, before a purchase price is called workable. See our methodology.
Why a flipper would publish this. The house in the example was fine. The price was not, and the months made it worse. Knowing your burn rate before you offer is the difference between a pass and a slow $40,000 lesson.
Please read. This article is for informational purposes only. Loan terms shown are illustrative, not quotes. It is not an appraisal, brokerage service, or investment, legal, or tax advice. Verify independently and consult licensed professionals before any real estate decision.
Related reading
Sources
- Pierce County Assessor-Treasurer parcel search (ATIP): parcel sales history, deed type, excise number, finished area, tax, checked 2026-08-26.
- Freddie Mac Primary Mortgage Market Survey (PMMS): weekly conventional mortgage rates, the market backdrop for the 10% hard-money assumption, checked 2026-08-26.
FAQ
What counts as a holding cost on a flip?
Anything you pay just because you own the house that month: interest on the purchase loan, interest on rehab draws, property tax, insurance, utilities, and any HOA or lawn service. Rehab itself is not a holding cost; the months the rehab takes are what drive holding costs.
How many months should I model for a flip?
Take your contractor's realistic schedule and add about two months for permits, inspection, listing, and the buyer's closing. A cosmetic flip modeled at four months usually closes closer to six. Run the numbers at your estimate plus two, and make sure the deal still works.
Why does the rehab loan interest look so small?
Because it is drawn in stages. In this model the rehab loan is credited at 100 percent of the budget but interest accrues on a midpoint draw, so a $110,000 budget at 10 percent costs roughly $460 a month rather than $917. Your lender's draw schedule may differ; read your note.
Do these numbers apply outside Tacoma?
The structure does; the figures do not. Interest scales with your purchase price and rate, taxes with your county, insurance and utilities with your house. Rebuild the three-line stack with your own numbers and the rest of the math is identical.
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Get a free sample analysisPublished 2026-08-26 · Updated 2026-08-26 · PropDossier Research