Property carrying costs are the bills that keep arriving whether or not anyone lives in the home. If you own a house in the San Gabriel Valley that you no longer occupy, you pay them every month. Most absentee owners count the mortgage and the tax bill. They miss the rest.
What Property Carrying Costs Include
Carrying costs are everything it takes to keep a property while you hold it. Start with this list:
- Property taxes
- Homeowners or landlord insurance
- Utilities, even when the home sits empty
- Landscaping and routine maintenance
- Property management fees, if you hire help
- HOA dues, if the property has them
- Mortgage interest, if you still owe on the home
Each item looks small on its own. Together, they run every month, in good markets and slow ones.
Why Vacant and Remote Homes Cost More
An empty home ages faster. Small leaks go unnoticed. Pests move in. Landscaping slips and neighbors notice. Each problem is cheap to fix early and expensive to fix late.
Insurance deserves a close look. Many policies limit coverage when a home sits vacant for an extended period. Read your policy language, and ask your carrier how it defines vacancy. California insurance costs and availability have shifted in recent years, so do not assume last year’s terms still apply.
The Property Carrying Costs You Do Not See on a Statement
Some of the most expensive costs never show up on a bill. Your equity sits in the house instead of working elsewhere. Your time goes to calls with contractors and tenants. Deferred repairs also reduce what a buyer will pay later.
Owners who live far away feel this most. Every repair needs a phone call, a vendor you trust, and someone to verify the work.
How to Calculate Your Monthly Holding Cost
You can do this in 15 minutes. Follow these steps:
- Add up every recurring monthly bill.
- Divide annual costs, such as taxes and insurance, by 12.
- Add a realistic monthly amount for repairs.
- Multiply the total by the months you expect to hold the property.
Compare your total property carrying costs to what the property earns or gains. For a clearer picture, run the seller net sheet and see what a sale would put in your pocket today. You can also confirm your assessed value with the LA County Assessor.
When Selling Makes Sense
Selling makes sense when your holding costs outpace what the property gives back. It also makes sense when the repairs keep growing or the management burden outweighs the return. Holding can be the right call too. The point is to decide with real numbers, not habit.
This post is general information, not legal or tax advice. Talk to your CPA about the tax side of a sale.
I am Jeffrey Kam, MBA, Broker and Owner of Green Street Real Estate in Pasadena. I have spent 20+ years working with owners on foreclosures, short sales, and property renovation across the San Gabriel Valley. If you own a property you do not live in and want a straight look at the numbers, call 626-660-5300.