Market Intelligence · RET Frameworks
The Carrying-Cost Test
Compare the running costs, loan payments, extra charges and selling costs of illustrative $5M / $10M / $20M purchases.
Updated · The periods covered by the figures are shown separately.
The Question
Can you afford the home for longer than planned? A $10M purchase in the illustration below costs $347,000 a year before debt service, assessments or sale costs. Waiting another three months costs $86,750 on those assumptions. That is the budget consequence of an exit taking longer; it is not a prediction of the property's marketing time.
What changed?
| Purchase | Assumed tax / year | HOA / month | Insurance / year | Maintenance / year | Operating total / year | Extra 3 months |
|---|---|---|---|---|---|---|
| $5,000,000 | $90,000 | $3,000 | $25,000 | $25,000 | $176,000 | $44,000 |
| $10,000,000 | $180,000 | $6,000 | $45,000 | $50,000 | $347,000 | $86,750 |
| $20,000,000 | $360,000 | $10,000 | $80,000 | $100,000 | $660,000 | $165,000 |
Assumptions: annual property tax at 1.8% of purchase price, maintenance at 0.5%, and the displayed HOA and insurance allowances. These are analytical inputs, not local tax rates, insurance quotes or association budgets. Insurance does not claim a particular flood limit or deductible; replace the allowance with actual coverage quotations. Buyer tax reassessment, exemptions, parcel assessments and home type can materially change the result.
What it means for you
| Purchase | Loan | Annual principal + interest | Operating + debt cash outflow |
|---|---|---|---|
| $5,000,000 | $2,500,000 | $206,079 | $382,079 |
| $10,000,000 | $5,000,000 | $412,158 | $759,158 |
| $20,000,000 | $10,000,000 | $824,317 | $1,484,317 |
7.32% is Freddie Mac's October 22, 2026 national conforming-loan survey benchmark, not an available jumbo-loan offer or APR. The table merely tests that rate on a hypothetical loan. Principal repayment is cash outflow that builds equity; it is not all an economic expense. A lender's actual rate, points, term and building approval can change the financing case.
Who Should Care
A buyer comparing a new condo with a completed home should start with real service charges where available: Perigon 606's May sheet lists $8,489.43 per month, or $101,873.16 a year by arithmetic, before individual taxes and insurance. This historical unit example demonstrates why a generic $3,000 HOA allowance can be too low for a serviced home.
What RET would do next
In the cash-purchase examples, five years of running costs plus an assumed 6% combined cost of buying and selling would use 23.6%, 23.35% and 22.5% of the initial $5M, $10M and $20M prices respectively. The sale price would need to cover those costs before you broke even on cash spent. This excludes investment returns, tax effects and the benefit of using the home. Actual transaction charges vary and can be negotiated; a short ownership period gives you less time to spread them out.
Worth Knowing
The seller's tax bill is not your post-purchase tax forecast: Broward and Palm Beach appraisers explain that assessment protections can reset after a change in ownership. Also separate economic opportunity cost: an assumed 4% annual alternative return on $5M cash is $200,000, but that return is uncertain and is neither a bill nor a forecast of property appreciation. Do not add it to a cash-flow total without labeling it.
What to Compare
Ask for the same cost documents on every $10M home you consider: estimated taxes after purchase, association budget, approved assessments, insurance, maintenance and any loan quote. An assessment is an extra charge to owners, often for building work. A $100,000 assessment equals about 3.46 months of the $347,000 annual running-cost example. It can erase an apparent purchase-price saving.
Sources and dates
- Broward Property Appraiser: buyer taxes and reassessment - Reviewed 2026-10-23
- Palm Beach Property Appraiser: assessment caps - Reviewed 2026-10-23
- FEMA / NFIP: policy coverage limits and terms - Reviewed 2026-10-23
- Freddie Mac Primary Mortgage Market Survey - 2026-10-22
- Fannie Mae LL-2026-03: project standards and insurance - 2026-03-18; phased effective dates
- Perigon: supplied dated availability, interior areas and maintenance - 2026-05-04; supplied 2026-10-22
- Florida DBPR: condominium records, inspections and reserves - Reviewed 2026-10-23
Research reviewed October 23, 2026. Periods, geography and property type follow each source; asking prices are not closing prices, medians are not repeat-sale appreciation, and illustrated costs are assumptions. RET analysis is not an appraisal or a forecast. Property documents and current written quotes govern a transaction.
What will it cost to own?
Add your own estimates or written quotes to total the running costs. Enter zero only when a cost truly does not apply. This worksheet does not estimate taxes, insurance or investment returns. It excludes loan payments and the costs of buying or selling.
An assessment is an extra charge to owners, often for building work. Keep one-time assessments separate from regular bills. Use current quotes and property documents for the amounts you enter.
Bring the evidence into your decision.
Request a deeper RET reviewAsk RET uses dated published evidence and approved property readers. Availability inquiries remain a separate request.