Cost Plus Contract- Construction to Perm Loan

[Pawan Kumar]

Hi there BP, I am in looking for some advise. I'm under a contract with a builder. Even when my secured Financing is single Closing with construction to Perm Loan, interest rate @3.125.

The concern is around the contract with builder. It is a Cost Plus, it says throughout the build 5% increase in material price would initiate a price increase to me for the build. I am a new investor & would like to know that how often builders abuse this clause as it is very hard to argue and quantify if builders keeps on claiming the price has increased by 5% every 2 months during construction process. I'm just a regular 9-5 Job person & want to stick to the intial price as I live my life with budget & still want to invest in Real Estate.

Any experience or opinion like such would be greatly appreciated. Thank you!!