3 Costs Investors Forget When Budgeting Infill

Ask most Calgary investors what infill development costs, and they’ll give you land plus construction. That’s the number every listing, every builder’s website, and every back-of-napkin calculation leads with. It’s also incomplete, and the gap between that number and what a project actually costs is exactly where investor returns quietly disappear.

The real infill development costs in Calgary include three categories that rarely show up in a quick estimate: soft costs and permits, construction financing interest, and a contingency reserve for the things no one can fully predict. None of these are exotic. They’re standard, well-documented costs that experienced developers budget for as a matter of course. The investors who get caught off guard aren’t the ones who didn’t do their homework, they’re the ones who only saw the first two numbers and assumed that was the whole picture.

What Most Investors Get Wrong About Infill Budgets

Land cost plus construction cost is the number that gets quoted, shared, and compared between projects. On a Calgary multi-unit infill, hard construction costs typically run $225 to $275 per square foot, and that figure is genuinely useful for sizing up a build. It’s also a partial picture, because a pro forma built only on land and hard construction costs can look 10% to 20% more profitable than the project will actually be.

The gap between that headline number and the real total comes from three categories that don’t scale the same way construction cost does, and rarely get added back into an informal estimate. None of the three are hidden in the sense of being deliberately obscured. They’re well documented, predictable within a range, and standard across the industry. They just don’t show up in the number that gets repeated, which is exactly why they catch first-time and even experienced investors off guard.

What Are Soft Costs, and Why Do They Add Up So Fast?

Soft costs are every infill expense that isn’t materials and labour: development permits, building permits, utility connections, architectural and engineering fees, surveys, and inspections. On a typical Calgary multi-unit infill project, these can add $50,000 to $100,000 to the total budget, depending on project size and how many units the design requires.

Some of these figures come directly from the City of Calgary’s building and trade permit fee schedule, which sets base permit fees, processing fees, and Safety Codes Council fees for residential construction. A more detailed breakdown from a Calgary mortgage broker puts development permits at $8,000 to $15,000 for single-family infill, with utility connections often running another $12,000 to $18,000 on top of that. Multi-unit builds typically sit at the higher end of these ranges, since R-CG and H-GO projects need more detailed architectural drawings and structural engineering than a single-family renovation.

Soft costs also include financing application fees, legal fees for closing the land purchase and any construction loan, and insurance during the build. Industry guidance from Altus Group’s annual Canadian Cost Guide recommends building soft costs into the budget from the earliest planning stage, since they’re far harder to estimate accurately from a simple square-footage number than hard construction costs are. None of these line items are optional, and underestimating one of them is one of the more common ways an infill budget falls apart mid-project.

Why Does Construction Financing Cost More Than the Loan Amount?

Construction loans don’t disburse the full amount on day one. They release funds in stages, called draws, as work is completed, and interest accrues on the outstanding balance from the very first draw onward. That means a $900,000 construction loan doesn’t cost interest on $900,000 for the full build, but it does accumulate real interest expense throughout the project, and most first-time investors don’t budget for it separately from the loan principal.

On an $800,000 construction project with a 12-month timeline, that interest typically runs $35,000 to $45,000, according to Calgary construction financing data. On a larger project, like a $1.55 million infill 4-plex over a 14 to 18 month build, that figure scales up accordingly, often landing closer to $60,000 to $80,000.

Lenders typically address this with an interest reserve. This is a portion of the loan set aside at the start specifically to cover interest payments during construction, so the investor isn’t making out-of-pocket payments on a property that isn’t generating income yet. The reserve is still part of the total loan amount. That means it’s still part of the real cost of the project, even though it doesn’t show up in a simple land-plus-construction estimate. A commercial real estate financing guide notes the calculation depends heavily on the draw schedule. The longer a balance sits outstanding, the more interest accrues, which is why a slower permit or construction timeline doesn’t just cost time. It compounds the financing cost too.

For multi-unit infill projects of five or more units, CMHC’s MLI Select program allows interest during construction and the CMHC insurance premium itself to be capitalized directly into the loan, which means no out-of-pocket interest payments during the build. That’s a meaningful structural advantage, but it’s still a real cost that’s now financed rather than eliminated, and it still needs to appear in the pro forma rather than being treated as if it disappeared.

How Much Contingency Should an Infill Budget Really Include?

A contingency reserve is money set aside specifically for the things that go wrong, not the things that are supposed to happen. Standard practice on a Calgary infill project is a contingency of 10% to 15% of total project cost, and skipping this line item is one of the fastest ways an otherwise well-planned project runs into trouble.

The most common contingency triggers on Calgary infill projects are hidden site conditions discovered during excavation and material price fluctuations during a multi-month build. Weather-related delays are another factor, accounting for an estimated 15% to 20% of construction delays in a typical year according to one Calgary builder. Material costs add another layer of uncertainty. Statistics Canada’s Building Construction Price Index tracks these movements quarterly. It notes that retaliatory tariffs on steel and steel-related products have contributed to price increases across the country since 2025. That’s the kind of input cost shift that’s nearly impossible to predict a year in advance, when a project is first budgeted.

Calgary’s own residential construction costs have actually held relatively flat compared to other major Canadian cities in recent quarters, according to the same Statistics Canada data. That’s good news for predictability, but it doesn’t eliminate project-specific risk, like what gets discovered once excavation starts. The broader industry context backs this up. Canadian construction cost data shows that 70% to 85% of projects go over budget when working from a rough estimate. That figure drops to 25% to 35% on projects built from a detailed cost breakdown, and the overruns that do happen are much smaller. The contingency reserve is the financial side of that gap, and the detailed pro forma is the planning side of it.

On a $1.55 million project, a 10% to 15% contingency means setting aside $155,000 to $232,500 that may or may not get spent. Investors who treat this as padding rather than a real budget line are the ones most likely to face a cash flow gap partway through construction, exactly when it’s hardest to raise additional capital.

Why These Costs Get Missed in the First Place

Most online cost estimates and even some informal builder quotes lead with a dollars-per-square-foot construction figure, since it’s the easiest number to compare across projects. Calgary’s construction-only costs for custom and infill builds are often quoted in the $185 to $400+ per square foot range depending on finish level, and that number is useful for sizing up a build. But a pro forma built only on it will systematically overstate returns, because soft costs, financing interest, and contingency don’t scale the same way construction cost does, and they’re rarely the costs a builder volunteers up front in a quick conversation.

This is also why we run actual numbers rather than rules of thumb during a Free Lot Assessment and Design & Feasibility Package. A complete budget for your specific lot, not a generic per-square-foot estimate, is the difference between a pro forma that holds up through construction and one that quietly erodes as the project moves forward.

What Does a Complete Infill Budget Actually Include?

A complete Calgary infill budget includes five components, not two: land cost, hard construction costs, soft costs and permits, construction financing interest, and a contingency reserve. Leaving out any one of the last three is how a project that looked profitable on paper turns into one that barely breaks even, or worse, runs short of capital before it’s finished.

On a representative $1.55 million infill 4-plex, that means budgeting roughly $50,000 to $100,000 in soft costs, $60,000 to $80,000 in financing interest, and $155,000 to $232,500 in contingency on top of land and hard construction costs, a combined $265,000 to $412,500 beyond the number most people quote first. The neighbourhoods that tend to support the strongest returns once all five categories are accounted for are the same ones with consistent rental demand and transit access, covered in our guide to Calgary’s top infill areas for ROI. How many units your lot can actually support is the other half of this equation, since soft costs and contingency both scale with unit count, which our R-CG zoning guide and Calgary zoning guide walk through in detail. Our Design & Feasibility Package ($5,000, credited in full if you build) is built specifically to surface all five cost categories for your lot before you commit any further capital.

The Bottom Line

Three things are worth taking away from this. First, soft costs and permits typically add $50,000 to $100,000 to a Calgary multi-unit infill project, and most of that is documented, predictable, and easy to underestimate if you only budget from a per-square-foot construction number. Second, construction financing interest accrues from the first draw, not just at completion, and can add $35,000 to $80,000 or more depending on loan size and timeline. Third, a 10% to 15% contingency reserve isn’t padding, it’s the buffer that keeps a project solvent when something real but unpredictable happens, which it usually does.

If you’re putting together a budget for a specific Calgary lot, a Free Lot Assessment runs the full five-category breakdown against your property, not a generic estimate.

Book a Free Lot Assessment →

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Frequently Asked Questions

What are the hidden costs of Calgary infill development?

The three most overlooked costs are soft costs and permits ($50,000 to $100,000 on a multi-unit project), construction financing interest ($35,000 to $80,000 or more depending on loan size and timeline), and a contingency reserve (10% to 15% of total project cost). None are truly hidden, they’re standard industry costs, but they rarely appear in a simple land-plus-construction estimate.

How much should I budget for soft costs on an infill project?

Soft costs, including development permits, building permits, utility connections, architectural and engineering fees, and legal and insurance costs, typically run $50,000 to $100,000 on a Calgary multi-unit infill project. Development permits alone can run $8,000 to $15,000, with utility connections adding another $12,000 to $18,000.

Why does construction financing cost more than the loan amount?

Construction loans accrue interest on the outstanding balance from the first draw, not just at the end of the build. On an $800,000 construction project over 12 months, that interest typically totals $35,000 to $45,000, and scales up on larger multi-unit projects. Lenders often set this aside in an interest reserve at the start of the loan, but it’s still a real cost that adds to the total project budget.

How much contingency should I include in an infill budget?

Standard practice is 10% to 15% of total project cost. On a $1.55 million infill project, that means setting aside $155,000 to $232,500 for hidden site conditions, material price changes, or weather-related delays. Skipping this reserve is one of the more common reasons infill projects run short of capital mid-construction.

Does Jenga Built’s Free Lot Assessment include a full cost breakdown?

Yes. The Free Lot Assessment and Design & Feasibility Package walk through land cost, construction cost, soft costs and permits, financing considerations, and a realistic contingency for your specific lot, not a generic per-square-foot estimate. You receive a written Lot Potential Summary with the full picture before you commit any further capital.