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IWP!, flagship product is Chicago's premiere real estate Investment
magazine. Entitled Invest With Passion!, it is the tool for investors and professionals in the
Mid-West. The publication seeks to grow it's market share by providing
powerful information designed to build the reader both as an investor and a
person.
Since it's release in January of 2006, the magazine has been well received and
continues to gain momentum and support. The education, information, and
networking opportunities for the real estate investor has been long neglected.
No More!
The time is now and the momentum is building.
It's Happening!
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10 CONSTRUCTION TIPS FOR INVESTORS
By Joe Richmond
1. Due Diligence
This is the research
phase of the project. It includes issues such as establishing the scope
of work, developing the contractual agreement, building code analysis,
zoning restrictions, permitting processes, feasibility studies, etc.
These define the parameters and lay the foundation for the project.
2. Selecting the Team
This is the phase wherein
the investor selects subject matter experts that can provide counseling on
decisions in particular areas. It is very important that the investor
select professionals based on the expertise of their field, as well as
making sure that philosophies are compatible.
3. Establishing a Budget
This is what drives the
project. The budget is the most important factor in defining the scope of
work. Typically, projects that are financed require construction
estimates (and sometimes the construction documents) early in the
financing process. One of my peers once told me, “No matter how much
money someone has, I can find a way to spend it so establishing a budget
is key. I do not want to work for someone who does not have an
established budget.” This area also defines the types of materials that
will be used in the project (high, moderate, low end finished).
4. Establishing the
Schedule
The schedule is the
second most important item to establish behind the budget. Since time is
money and buildings do not make money until they are completed, this is an
important factor that directly affects the budget. The bank wants to know
when the project will be complete (some projects start charging interest
after completion and some start as soon as the first payout is approved so
consult with your bank). The contractor will typically establish the
construction schedule. This is also how payments are scheduled .
5. Obtain Proper Permits
This is permission that
is granted by the governing municipality on the feasibility of the
project. Time should be allowed in scheduling for the permitting
process. Depending on the size of the project and the availability of the
municipal reviewers, it can take anywhere from two weeks to three months!
Also make sure that the permit is for the correct scope of work. Do not
try to get a siding and gutter permit for a total gut rehab. You will get
caught!
6. The Pre-Construction
Meeting
After the preliminary
steps have been established and the construction documents have been
completed and approved, this is where the expectations are reviewed and
re-established. This is the time that everyone has been waiting for. The
investor will sit down and speak with the team and review the schedule and
budget in an attempt to settle any conflicts in expectations between
parties.
7. Construction
Meetings/Payout Meetings
This is the time where
evaluations are done on the work performed versus the contract documents.
Typically, the investor and the contractor will review the work and talk
about any changes that have come up since the last meeting. Payments are
made to the contractor based on the progress of the work.
8. Substantial Completion
This is the phase wherein
the contractor tells the investor that the work is about done and is
preparing to close the project out. The punch list is created at this
point. The punch list is a list prepared by the contractor of items that
he needs to complete in order to closeout the project. Things such as
painting or HVAC testing and balancing are usually in this category. The
investor walks through with the contractor and the architect (if that is
in his responsibilities) and reviews items to be completed and a timetable
to complete them.
9. Closeout
Meeting/Guarantees/Warrantees/ Project Manual
This is the phase wherein
the contractor is finished and is ready to turn the property over to the
investor. This is also the time where the contractor's warrantee begins,
as well as the warrantee for the various systems in the building.
10. Post-Occupancy
Evaluation
This is the time where
the investor has moved in and is getting settled. This is the best time
to test all of the systems to inspect for defects or problems with the
systems (i.e. HVAC, electrical, leaks, etc.). This is also the time where
you find out the good versus the bad contractors. The good ones will be
able to abide by their contract and fix the problem. The bad ones will
put it off, avoid you, or not return your phone calls.
For more information,
contact Joe Richmond, owner of SK8 Residential Solutions: P.O. Box 43168,
Chicago IL 60643 (773) 960-8893 or concrete141@excite.com. |
