Summary: The next time you’re about to start a commercial development project, check this do’s and don’ts list and consider hiring a seasoned developer.
It takes a lot of work to develop commercial real estate. Everyone could use some new advice or a refresher, whether they are starting a new business or have been involved since before cell phones were invented.
Before beginning any development project, consider the following helpful yet concise list of do’s and don’ts for intelligent building.
DO’s
- Immerse yourself in the most recent research on the best practices for commercial development and market insights on the regions you are targeting.
- Keep an eye out for Opportunity Zones investments that offer tax-deferred gains.
- Consider your alternatives. What would be the project’s most profitable course of action?
- ground-up construction
- Redevelopment.
- Build-to-suit.
- Create a thorough business strategy to enable you to make accurate revenue estimates.
- This will also prevent you from getting caught off guard by the whole amount of money you’ll require.
- *Additional credit: Obtain a lender’s acceptable pre-approval amount.
- This will also prevent you from getting caught off guard by the whole amount of money you’ll require.
- Consider working with an experienced developer to conduct a careful site selection procedure.
- Invest in qualified designers and architects to prevent overlooking essential requirements that later necessitate pricey site plan adjustments.
- Before starting the time-consuming permission procedure, ensure you comply with all local laws and codes.
- Because the amount of time and energy required is sometimes overestimated, be realistic about your engagement in the project.
- The usage of a preferred developer can help projects in more ways than you might realize, including managing the intricate logistics and arranging the contractors to collaborate effectively.
- Ask the contractor whether they are familiar with newer, more creative construction techniques and energy-saving tactics that will ultimately support the budget.
- Prepare for unforeseen, expensive schedule delays by having a contingency plan of 5–10% of the overall project budget.
- Additional gardening fees, plumbing, and electrical upgrades, and relocating expenses are a few examples. If a developer is representing you, they might cover some of the unanticipated expenses.
- Recognize that you’ll probably need to settle disputes quickly.
- As they have a firm grip on who is responsible for what and enforce compliance in accordance with their contracts, developers are well-equipped to handle disputes and may rescue you from challenges you may have experienced on your own.
DONT’s
- Consent to due diligence and underwriting period that is less than 30 days long to review all the documentation and the transaction’s history thoroughly.
- By doing a thorough Site Investigation Report (SIR) and other procedures, a recommended developer masters this process.
- Even if you intend to not keep onto the land for a long time, disregard the project’s long-term objectives.
- A lot of the risk can be taken off your shoulders by partnering with a developer.
- Start a project without a precise plan and a defined task scope.
- Cover up any problems from the site inspection.
- Before investing large sums of money, speaking with a developer could be crucial in preventing irreversible harm to the budget.
- You may believe that you won’t need to be on-site too often.
- However, having a developer handle the project provides the ease of reducing the frequency of in-person visits.
- Selecting contractors only based on the lowest bidder should be avoided.
- A variety of aspects, such as having a license, being financially secure, and providing maximum price guarantees to guard against cost overruns, should be considered.
- Do not investigate your contractors’ references, work history, or legal conflicts.
- Having a developer on your side gives you a reliable resource to use when selecting the best contractors to complete your project.
- Make alterations at the last minute a habit.
- On-the-spot decisions made hastily result in delays and expense overruns.
- After the hiring procedure, stop interfering with the designers.
- Any adjustments that result in setbacks must be wholly essential. An excellent way to prevent budget overruns, especially at this point, is to have an experienced developer supervise the project.
Therefore, the next time you’re planning a new commercial development project, refer to this helpful do’s and don’ts list for developing wisely and think about employing an experienced developer who will take your development project to the next level, as demonstrated during numerous milestones along the road.
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