Carry Default Exposure Calculator

Construction and lease-up carry can lead to default. This calculator sizes exposure.

Monthly carry

Months to stabilization

Available reserves

Sponsor backup

Default exposure

$80,000

Total carry needed

$1,530,000

Total coverage

$1,450,000

How the math works

Exposure = (monthly carry × months to stable) − (reserves + sponsor backup).

Positive exposure = capital gap. Close with additional reserves, sponsor commitment extension, or accelerated stabilization plan before lender monitoring triggers.

How to Use

Enter monthly carrying cost.
Enter months to stabilization.
Enter available reserves.
Enter expected sponsor contributions.
Read default exposure.

Frequently Asked Questions

Carry cost components?

Debt interest, insurance, property taxes, utilities, basic maintenance, management. Excludes operating costs after stabilization. On vacant land/partial construction, often $30-100k/mo per $10M of cost basis.

Reserve requirements?

Lenders require 12-18 months of carry reserves on construction loans. Sponsor typically contributes 3-6 months more via completion guaranty or carry guarantee. Total coverage 18-24 months common.

Default consequences?

Acceleration of loan. Takeover of project by lender. Sponsor personal exposure on guarantees. Reserves depleted before default is preferred — extension or workout negotiation easier with reserves remaining.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.