6 Questions to Ask Before Choosing a Real Estate Developer
Working with a contractor on a fixer-upper property can be stressful. As an owner or investor, there are countless things to consider before choosing a real estate developer for your next project. Knowing which real estate construction questions you need to ask is vital to protecting your asset and seeing your investment through to completion.
Here are six key real estate construction questions to ask before a single nail is hammered:
1. May I Have a Copy of Your License?
Just asking if your contractor has a license is not always enough. You want to ask if you can have a copy of their license for your records. When you do get a chance to look at it, be sure to check that the license is up to date and registered in the state in which you are doing the construction.
2. What Kind of Insurance Do You Have?
When your investment is on the line, you want to make sure your contractors are properly insured and that they have enough coverage in the event that something goes unexpectedly wrong on the job.
3. What Is Your Lead Time?
You should ask any potential developer how long a project like yours should take to build. Depending on the developer, this answer may drastically vary, with some promising highly unrealistic timelines in order to grab your attention and win the job. The most successful property developers will be able to balance your time constraints with the project’s quality.
4. What Is Your Expertise?
Most real estate developers will boast that they can take on any project, of any size, and any type. While that may be true, you should consider aligning yourself with a real estate development firm whose expertise complements your specific project.
5. Do You Use Subcontractors?
If a potential contractor says they plan to use subcontractors, this is not always a bad thing. Most contractors use subcontractors, especially for things like plumbing and electrical. You just want a good sense of how that process will run. You do not want delays on your project simply because the contractor could not get the plumber out there on time.
6. Have You Ever Filed For Bankruptcy?
Just because a contractor answers yes to this question does not necessarily mean you should discount them. It just means you need to hear more of the story. How did this happen? What steps has the contractor taken to ensure they will not happen again on your investment project? If you don’t like the answer to that question, or any of the questions you ask, feel free to move along.
Researching a commercial real estate developer’s company history, services, scale, and project portfolio will help you determine the experience and capabilities of the firm to meet your needs. Knowing if the company has a history as a preferred developer and speaking with previous and current clients will also provide great insight into just how well a developer has met the needs of those clients.