For any type of construction financing or construction mortgage application, you’re going to need to show a construction budget for the project with some third party verification of the larger cost items.
While in many cases, you are getting a locked in price for certain items, that is not always going to be the case.
Plus, in the current market, leaving some items unpriced, or without a firm price, can lead to pricing inflation during the project that can lay waste to your budget and leave you short of cash to finish the job.
According to an recent article in the National Real Estate Investor, construction material costs are on the rise….http://nreionline.com/finance/news/cost_constrution_materials_bind_0615/
While this is a U.S. based report, it does outline some of the pricing trends that are hitting the Canadian market as well including increases above the consumer price index for diesel fuel, copper, and steel.
This would speak to requiring a larger than average contingency allowance in your budgeting to make sure that you have sufficient funds to complete the job.
Construction budgeting and cash flow management is important with any construction project, but even more important in a period of rising costs where unplanned expenditures can stop a project in its tracks or require the builder, developer, or property owner to scramble around for a short term form of bridge financing, which will also add to the overall cost.
If you’re in need of construction financing for a project your planning, or for a construction project you are in the middle of where incremental capital is going to be required, I suggest that you give me a call so I can quickly assess your requirements and provide relevant construction financing options for your consideration.