Holding Cost formula?

Is there a general formula that can better show what holding cost are?

Im eyeing off a property in perth with proposed zoning which i like. However i wont be able to build or demolish on it for quite some time as will be limited with funds plus the zoning must be passed.

My understanding of holding cost are rates ect being paid yearly.

This place already has a place on it so id be looking to rent this out to help with payments then once passed and i have enough funds look to demolish/subdivide.

I just want to know what money i can make from it in the future ect and how much it will cost to hold. I do realise rates for different suburbs are all different but whats involved with those rates and what else is calculated into determination of the holding cost.

Looking for something like:

Holding Cost = Years x Rates x ???? X ???? Ect

Z6
 
Annual holding costs would be

Annual Rent MINUS property management fees, land tax, all insurances, mortgage payments, council rates etc

That will be a negative amount and is what it costs you to hold.
 
Annual holding costs would be

Annual Rent MINUS property management fees, land tax, all insurances, mortgage payments, council rates etc

That will be a negative amount and is what it costs you to hold.

Thanks Westminster

Onto another slight tangent. Wouldnt all those things always be there until you sold? Or is that the point?
 
Thanks Westminster

Onto another slight tangent. Wouldnt all those things always be there until you sold? Or is that the point?

Yes.

If your trying to work out holding costs for a development, then the point is when you demolish you have no rent but full mortgage payments. Then interest on progress payments to builder and interest on other costs ie subdivision etc if using equity. Over 12 months it sure adds up and effects your bottom line.

Holding costs for investing is as westminister pointed out, less your marginal tax rate on it if it costs you over all ie negative gearing.
 
Most lenders use 20% of the gross rent as holding costs. It includes everything except home loan interest.
This is a very rough rule of thumb.
 
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