Real Estate investing is not for the faint of heart. The myriad decisions that need to be made before choosing a project to invest in, during construction, and throughout the sales or rental process often need both careful consideration as well as quick responses. Because of this, carefully vetting your on-the-ground construction team before making a big investment is essential.
Here are five questions that we make sure our clients have answers to when considering an investment:
What Type of Reporting System Is In Place?
As an investor, you should receive timely reports that accurately account for spending on the project, timelines, payments, contractor and subcontractor information, outstanding issues list, and actual progress. So, it’s important to ask your GC about the systems they use to provide you with this information. Investors should receive a monthly report detailing each of these components.
Also, be sure to ask whether they have access to actual spending and budgeting in real time, and the ability to make timely payments to contractors and track invoices. However, this can depend on the actual agreement between the owner and general contractor.
How Does the Bidding Process Work?
Investors should pay close attention to the bidding process for contractors and vendors. This can be one of the most time-consuming parts of the project when in pre-construction, so be sure your GC has a streamlined process for obtaining and evaluating bids. And, a scope of work report for each major aspect should also be defined.
Take a look at contractors’ active jobs, current clients, and references. And, be aware of any existing relationships between the contractor and vendors.
How Is Project Documentation Managed?
Keeping track of all the documentation associated with a project not only keeps things on track, but it also creates a project record. This is especially important for large-scale projects and if multiple changes occur. Documentation should include requests for information, submitted information, change requests, meeting minutes, and other information.
Find out if your architect, engineer, and general contractor keep electronic copies in a centralized document storage location that’s accessible by everyone that should have access.
How Are Issues Recognized and Addressed?
Projects don’t always go as planned. As an investor, it’s important to find out how your construction team will handle any issues when they come up. How long will it take them to identify issues or emergencies? And, how do they communicate any problems to the rest of the team?
How Will Costs Be Controlled?
Managing costs and staying on budget are, obviously, essential parts of a successful project. You need to make sure that your architect, engineer, and general contractor are on the same page in regards to how they create budgets, track costs, and assess performance. And, most importantly, how will this be reported to you.
Receiving timely reports from your team will help you follow the project’s progress and understand the processes involved. This ideally will be accompanied with periodic walk-throughs of the project.
If you’re a real estate investor who is looking to invest in South Florida, we would be happy to consult with you on any aspect of your project. Give us a call at 786-433-8740.
- test :