From the course: Structuring a Construction Loan

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Loan-to-cost roundup: Other concepts and calculations

Loan-to-cost roundup: Other concepts and calculations

From the course: Structuring a Construction Loan

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Loan-to-cost roundup: Other concepts and calculations

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- [Instructor] A couple of other concepts worth mentioning on these proformas. Note that the Hard Cost Contingency is its own line item. We discussed earlier that the Hard Contingency would be included in the construction contract, however, the summary budget may break it out in order to clearly demonstrate the total value of what-if funds. There are a couple items in the proforma that involve calculations, rather than being contractual agreement-based. The first is the development management fee. In this case, you can easily see which items of the pro forma have been used to calculate the development management fee. We have excluded Land and the Acquisition Fee. We don't want to pay a fee on a fee. I have also excluded financing, both debt and equity-related fees and interest. Sales commissions and pre-stabilization income are also excluded. As we discussed, there is no absolute right or exact method to calculate this, but as a lender, you should know what is or is not included, as…

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