Commercial Real Estate Investing From A-Z How to Build a Real Estate Project From Scratch
What is the step-by-step guide to build a real estate project from scratch? What are the best practices for the construction of self-storage, RV, and boat storage? What are some of the main legal items to keep in mind? Melissa Anderson of Forge Building Company, shares her knowledge.
Read this entire interview here: https://tinyurl.com/y8sjpt89
If someone wants to build a project from scratch, what would be the step-by-step that person would have to take, from who do they have to contact first, all the way to the team that they need to work with until completion?
Once you see what the parcel is and what it sounds like, you’re going to identify what jurisdiction has authority, whether it’s a city, the county, or a township, and then you’re going to start talking to them, to see what is the approval process in order to build on this piece of property and to find out how they feel about self-storage. If you’re going into a municipality that has a really bad taste in their mouth about storage, they’re going to put up every hurdle they possibly can because they don’t want you to build self-storage and so, that is something to be taken into consideration when you are looking at that piece of property and before you close on.
After you get it entitled, who should you start working with at that point?
You have your property and title and the next phase is what I would call the design phase. That’s when you are going to have your civil engineer, your architect is going to start working on elevations, and a lot of the details of the building. If the jurisdiction has design requirements, that is going to be working up those architectural drawings to show that you’re meeting the design requirements of that municipality. For instance, let’s say that on the street front, they don’t want to see any of the metal paneling, in that case, you’re going to have to look at other exterior finishes such as stucco, Splitface, veneer, and they’re probably going to want it to be aesthetically pleasing. If you’re in an environment where they have very strict design elements that they want, to say that they want it to match the feel and the look of the rest of the city, then that architect is going to understand what elements to put into the construction documents. That’s what you’re doing during the design phase, you are building the construction documents that are going to give the subcontractors, it’s going to give them all the very specific details of what they need to bid on the project and what will be executed during the time of construction.
What are some of the main things to keep in mind regarding legal when negotiating with anyone?
time is really important, wanting to know how quickly you can get the project done, and what obligations each person is going to have for those. Having realistic expectations is important. I've seen this in projects where the GC really wants this job, and they'll say, "Yeah, we can get the project done in nine months." And now all of a sudden, that owner has that expectation of nine months. Well, as you start working with all the subs, it may not be that and so I really encourage owners to have realistic expectations.
Then, the contractual amounts, when are you going to be paid?
Insurance is a really big thing, making sure that the GC has the correct general liability and builder's risk insurance, and that they are also making sure that all of their subs have it. One of the biggest things is safety. Is it a GC that values a safe working environment? Are they holding their subs to the exact same requirements of making sure that they have a safety program in place, and that they have a way of enforcing it?
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