Assuming plans are 100% complete and fully bid out, and developer is 90 days from breaking ground. What are lenders requiring as a % contingency on hard cost budget (and soft costs too, if required) as part of their underwriting? And does it depend on whether the lender is a traditional bank vs a debt fund/non bank source?
I have heard in the past anywhere from 5-10% on hard costs and up to 5% on softs, but wanted to see if anyone had current (2023) data. Thanks!
Bump
Still seeing 10% on hard costs.
Lenders giving less LTC%, higher floor rates on floating
We go own with 3-5 percent gc contingency.
The real question is how much contingency do YOU feel comfortable with? Because you're going to use it all regardless lol.
I'd be shocked if any lender let you go with less than 5%.
Still seeing 5% Owner Hard Cost Contingency in addition to the GC's contingency (we are a developer doing projects $50MM+ in total cost)
3-5% for large national developers with meaningful recourse, and nearly all subs need to be bought out at closing.
10% both hard and soft costs
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