What every Aussie flipper gets wrong about holding costs

Ask ten Australian flippers to estimate their holding costs and nine will give you a number that's 30 to 40% low.

It's not laziness. It's that holding costs in Australian property are made of small line items that look insignificant on their own and bite hard when they stack. Below is the full list of what to budget, and the three line items most spreadsheets miss.

The obvious ones

Loan interest is your biggest holding cost. On a $600k purchase with 80% LVR at current 6.2% rates, you're paying around $2,500 a month, or $625 a week.

Council rates vary by LGA. In metro Sydney and Melbourne, expect $1,800 to $3,500 per year, pro-rated to your holding period. Water and sewerage have fixed access charges that apply even when the property is vacant — usually $200 to $400 per quarter. Building insurance is required by your lender and runs $1,200 to $2,500 a year for a typical home.

Land tax only applies if you're holding in your own name above the threshold (NSW $1.075M land value, VIC $50k). Tier-based and easy to forget.

That's the spreadsheet stuff. Now for the three most flippers miss.

Vacancy utilities

Even when the property is empty, the meters keep ticking. Electricity has access charges of around $200 a quarter even with zero usage. Gas standing charges are about $80 a quarter. If you've installed CCTV during reno (which you should), there's the internet too at $70 a month.

Across a 5-month flip that's $700 to $1,200 most spreadsheets ignore.

The settlement-to-trades window

You exchange contracts. Settlement is six weeks away. You're not legally the owner yet, and as soon as you settle, the meter starts.

Most flippers start the holding-cost clock when the trades arrive on site. That can be three to four weeks later than settlement once you've sorted finance disbursement, booked the sparkie, and lodged any council notices. On a $600k loan, every extra month of carry is another $2,500 you didn't budget.

Sale-side carry

The reno is done. The agent lists it. You think you're out.

But average days-on-market in a soft suburb can be 60 to 90 days. Then there's the 30-day settlement after acceptance. Between "I finished the reno" and "I have the cheque", you're often holding for another 90 to 120 days. On a typical metro flip that's $7,500 to $10,000 in extra interest.

A worked example

Cosmetic flip in suburban Sydney, $620,000 purchase, 80% LVR at 6.2%. Settlement Week 0. Trades on site Weeks 4 to 12. Listed Week 14. Sold and settled Week 24.

Most spreadsheets I see for that same scenario put it at $11,000 to $13,000. The $5,000 to $7,000 gap is often the difference between "good flip" and "broke even".

I'd rather know that number before I shake hands at the auction.

FlipPro provides decision-support information only and does not constitute financial, legal or town-planning advice. Always conduct your own due diligence and seek independent professional advice before making property investment decisions.

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