To determine the right number for your investment, analyze your expected cash flow in the first few months.
By working cost contingencies into your budget early on, you can ensure you have the funds to make up for these expenses. A typical cost contingency budget in commercial investing is between 5 and 15 percent. To determine the right number for your investment, analyze your expected cash flow in the first few months. Will that number cover early loan expenses? What about changes to the property? Even if you expect cash flow to be sustainable early on, it is always a good idea to have extra funds just in case.