Construction company raise price after contract?

[Nikki Bai]

Hi Investors,

I signed my first investment property contract back in March this year. While today, the construction company told me to either accept a $42000 increase on top of the contract price, or get off. I understand now it's a seller's market and the cost is rising, but still, is this a common practice? 

If it is, what can I do in future to protect myself from this?

Happy investment!

Nikki

[Dustin Allen]

@Nikki Bai

Read your contract. Builders often have an escalation clause built in that says something to the effect of “if material costs increase more than 10% during the time of construction, builder can raise the price to cover the difference”. 

Look at your contract and see if that is what’s happening. If so, run the numbers again and see if it still works. Chances are, it’s still a good deal if it was in the first place.