Carry Guaranty Burn Rate Calculator

Carry guaranties burn while NOI ramps. This calculator sizes the burn.

Monthly debt service

Monthly T&I

Monthly NOI

Burn months

Total carry burn

$1,750,000

Monthly gap

$125,000

Effective DSCR

0.51

How the math works

Monthly gap = (debt service + T&I) − NOI. Total burn = gap × months.

Size the carry reserve for the stress case, not base case. Lease-up often runs 40-60% longer than pro forma; a 12-month carry guaranty budgeted for 8 months of burn is a guarantor accident waiting to happen when the unexpected happens.

How to Use

Enter monthly debt service.
Enter monthly taxes and insurance.
Enter expected monthly NOI during burn.
Enter months of burn.
Read total carry burn.

Frequently Asked Questions

When carry guaranty hits?

During lease-up when NOI < debt service. During refi workout. During distress. Guarantor funds the gap. Common in bridge/construction loans, retail/office dev, repositioning plays with long ramp.

Typical burn?

6-18 months lease-up carry. Monthly gap $20-150k depending on asset size. Total burn $200k-$3M typical. Structure with cap (e.g., $X max or until DSCR > 1.20x for 2 consecutive quarters).

Exit conditions?

Automatic release when DSCR hits covenant for specified period (2-4 quarters). Manual release on refi or stabilization test. Key negotiation point — uncapped, no-release carry guaranties are effectively full recourse.