Preconstruction investments are a hot topic and there’s a potential for good
profits for several reasons. Among the biggest draws of preconstruction
investments is the fact that properties can be tailored both to the local market
and to the desires of individual buyers.
But there are some real drawbacks over buying established homes that have had
previous occupants or are key-turn ready for first occupants. Those negative
points of preconstruction investment include the need to oversee construction.
Sounds exciting – until you’re dealing with zoning laws or finding out that the
highway department already has a right-of-way across the entire length of the
property you were planning to use for your preconstruction investment.
If the preconstruction investment project consists of a single dwelling or
two, an individual with some free time and a flexible schedule can probably
handle it. But if you’re planning multiple units or multi-unit buildings, you
may find that a management company would be a better choice for overseeing the
preconstruction project.
Take a moment to make a list of all the things you need to see to as part of
a preconstruction investment project. Besides the actual building, you’ve got to
have plans and (if you’re in a zoned area) you’ve got to get those plans past a
building commission or code inspection department. You’ll be dealing with code
inspections along the way, including taking modified plans for approval. If the
preconstruction investment area isn’t already developed, you’ve got to figure
out how to get utilities, streets and right-of-ways established. A management
company that deals with preconstruction investments can handle all those issues
for you, and more.
But how do you choose? Like many companies doing business in the construction
and property management arena, word of mouth is probably the biggest advertising
medium. You can ask others who have hired preconstruction investment managers
who they selected, then ask if they were happy with the overall results. Paid
advertisements and company websites will say what the person footing the bill
wants them to say – friends and professionals who have used the services of a
particular preconstruction management company will probably be brutally honest.
Remember to get it all in writing. If you want the company to manage all
aspects of preconstruction investment – including handling the money – be sure
that’s part of the contract. If you want the company to stay with the project
while the homes are being sold, be sure that’s part of the deal.
You’ll probably find that your best bet for your preconstruction investment
managers are locals, or at least have worked on other projects locally. Those
preconstruction investment mangers probably work with building officials and
constructions crews from your area on a regular basis. While you can likely find
preconstruction investment management companies from another area that are
willing to do the job, those companies aren’t likely to know of a reliable
replacement who can appear at a moment’s notice when the plumbing crew fails to
meet timeframes or be able to find additional construction workers to help meet
deadlines.
You can certainly handle your preconstruction investment yourself, but
management companies often pay for themselves over the course of the project.
