Preconstruction Investment
Preconstruction Investment – When You Should Look For a Management Company
By Buyincomeproperty.com
Nov 12, 2005, 13:47

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.