If you are an accredited real estate investor for ground up or repurposing Houston investment opportunities the ideal partner is a general contractor in Houston.
A general contractor in Houston can provide enormous insight for preparing conceptual concept ideas and the respective construction cost support for properly evaluating the financial and constructability of proposed projects.
Real estate investing requires a large collection of special skills to succeed in developing profitable projects.
These skills are acquired through personal experience, education and the proper 3rd party professional service providers such as an attorney, tax accountant, real estate broker and prime contractor.
The right general contractor in Houston can contribute to the investment opportunity vetting and offer guidance in alternate opportunities.
Construction real estate investment projects increase the stakes for risk with all of the moving parts complicating the evaluation and assessment process.
Construction real estate improvements are a valued added method of increasing a properties ultimate market value through creative and experienced professionals that have studied the project.
In addition to these required skills there are a number of industry best practices in Houston real estate transactions that are essential in executing a profitable outcome.
Regardless if the investment property is a new luxury spec home or a multi-unit land development project, an in-depth marketing analysis and feasibility study are critical components to increasing the likelihood of success.
The right general contractor in Houston can bring enormous value to an investor’s process and achieving their goals.
The following is a brief discussion of the most important contributions a general contractor can bring to an investors team.
General Contractor in Houston Network & Experience
When an investor works with a reputable general contractor in Houston, he is not just getting the experience of the general contractor but the GC’s vast network.
A few of the professional disciplines in their network are designers, engineers, suppliers and subcontractors.
A well-developed professional network can reduce the risk and time of compiling a team for a project.
General contractors also are extremely experienced in the day-to-day operational matters of construction projects processing administrative tasks such as insurance, project cash flow and releases of lien requirements.
The prime contractor also routinely handles the details associated with civil & structural engineering, building design, and building codes & inspections.
They are experienced and understand how to efficiently deal with complications and issues that result from concealed conditions or change of use in structures.
This becomes one stop shopping for the investor having a building contractor nearly having every tool necessary and available to execute any construction project effectively.
This usually translates into significant advantages and efficiencies for the construction contracting for an investment project.
Local Real Estate Knowledge
Local real estate knowledge can make the difference in a smooth buyer acceptance of the construction investment project.
Understanding the local trends and demographics allows you to incorporate the most desired architectural features into the project design priority list.
These insights can substantially reduce the MLS listing time on market and avoid unwanted modification expenses to finished products.
Local real estate knowledge also leads to better deals from the general contractors sharing insights about land market prices and probable cost associated with preparing a lot for future construction.
This knowledge also includes the insights of local building department approval processes for building plans and land plans.
Feasibly Study & Analysis
General contractors can develop a conceptual plan for a proposed investment real estate project by gathering the information about the investment criteria, the occupancy of the property and the acceptable standards for design.
These essential investment factors coupled with the level of finishes and financing plan can lead to the creation of a detailed proforma.
Once the proforma is created, the prime contractor can do the required in-depth research about market pricing, absorption rates and a competitive analysis of the local market rates and conditions.
With the comprehensive proforma and existing market conditions, the investor can detail a model for the financial feasibility study of the project.
The feasibility study provides the investor with a model that examines if the project is a go or a no go and the critical detailed working elements to create alternative sceneries.
These are essential and powerful tools for arranging additional investors and project financing needs.
Conducting Acquisition Due Diligence
Due diligence is standard best practice for any real estate transaction, but the due diligence for a proposed construction investment is much greater.
The need for developing a financial proforma and conducting market research can feel very rushed for traditional closing periods.
This can present some problems for the investment team and lenders when evaluating deals in shortened processing periods.
Importantant items such as conducting title searches, required surveys, testing and inspections are necessary in performing the due diligence of a property.
Another advantage of a general contractor’s services are the pre-closing inspections on the property.
In the case of purchasing for lot value, the building contractor can facilitate soil test, topographical survey & analysis and drainage planning.
In the case of a building renovation, the building contractor can arrange for an underground waste line inspection, conduct structural integrity inspections and get a jump on developing as built plans for the future engineering and redesign needs.
Viewing Properties with Different Perspective
One of the best benefits a general contractor can contribute to an investment opportunity is the ability to see other potential improvements that can be applied to the property.
These different perspectives can lead to higher density multiple unit projects and/or a more efficient floor plan design that can lead to lower value engineered cost.
Having a construction minded perspective can bring value in the traditional methods of value engineering but also from the seasoned experience of the contractor serving clients.
Understanding what clients want in design criteria and combining it with the appropriate pricing strategy is paramount in selling finished properties.
As an investor clearly understands selling properties is what separates successful real estate investments from those that are not.
Developing a Concept Budget
General contractors have greater resources and more experience in preparing budgets for different structural types and specialty finishes during general contracting activities.
This provides a higher confidence level in developing an accurate proforma and financial feasibility. Preparing an accurate proforma takes experience in building and finishing many styles of home types.
Proforma’s and financial feasibility studies are moving targets that need to account for unit density and how square footage formulas effect the ultimate use for configurations that the land will play.
They require experienced knowledge to capture the detailed budget line items that compose the total project cost.
In addition, building a proforma requires a general construction schedule in order to project cash flow needs and interest expenses.
Partnering Approach
Investors developing a working relationship with a building contractor is a mutually beneficial association.
In time the investor and general contractor will build trust and a common bond for the business growth and success.
The prime contractor enjoys that he is able to do more of what he loves while building a business.
This relationship allows the investor to focus on marketing, financing and future projects rather than the construction operations details.
These relationships can lead to greater convenience and simplicity for the investor when time is at a premium to get answers and results.
As the relationship develops both investor and prime contractor can react more instinctively understanding each other’s business philosophy.
This kind of relationship can lead to greater scaling of more profitable projects through these efficiencies.
In addition, general contractors become a tremendous resource for solving technical issues and providing a more reliable warranty response then traditional contractors outside of the working relationship.
Summary
The general contractor in Houston much like any other service professional comes in many shapes and forms.
The quality of their work and previous experience varies considerably. Although there are many general contractors to choose from, the challenge is finding a likeminded one that will align their interest with you as the investor.
The investor should take their time in developing an understanding of how the right general contractor can serve their needs as a working partner.
What types of construction project experience they have, education, skill sets, licensing, professional accreditations and business acumen their potential partner possesses.
Selecting the general contractor that checks all the boxes and is the best fit for the investor’s needs will increase the likelihood of developing world class projects that return a generous return on investment.
