How do I estimate holding costs on vacant land while I own it?

Holding costs on raw land are simpler than on a house, but they still need to be accounted for accurately.

The recurring costs to plan for:
- Property tax: this accrues every year the land is owned, regardless of what's happening in the market, and is usually the largest ongoing cost.
- Loan payment and interest, if financed: principal and interest over however long the parcel is held.
- Occasional maintenance: things like brush clearing or bush hogging to keep the land presentable, particularly if it's being marketed for resale.
- A survey, if one is needed for resale: not always required, but sometimes necessary if boundaries are unclear or a buyer's attorney requests one.

One helpful comparison point: there's no mortgage insurance or utility bill equivalent for raw land the way there is for a house, which is part of why holding costs on land are usually lower on a monthly basis. But that lower monthly cost can create a false sense of security, since taxes still accrue every single year the parcel sits, whether the market is moving or not.

When running the numbers on a specific deal, it helps to lay out expected holding costs year by year over the planned hold period, rather than as a single lump estimate, since that makes it easier to see how a longer than expected hold affects the total math.