Life cycle of Industrial Flex space project - Managing Risk

[Rohan Bhoomkar]

Hi , I'm Rohan. I plan to undertake an Industrial Flex space project, first timer on any real-estate project . I'm very close to putting an offer on a 3 acre land and want to understand all the aspects related to construction I need to be aware of. i have build myself a exhaustive list of all that i need to consider which tell me i need the following people to work with -
Civil Engineer, Architect, Development Project Manager, Construction Project Manager, Other consultants: noise, wind, signage, LEED, lighting, etc., Landscape Architect, General contractor

Usually how would you go about the life cycle of the project. I'm thinking this should be order

1. Find suitable Land - I have found a property that is zoned correctly around 3 acers but has a creek on it and gas line running adjacent to the property 

2. Civil Engineer - to determine building codes and determine area sqft area that can be build 

3. General contractor - to determine cost of building, along with site work and other foundation costs including Landscape Architect

4. Market survey to determine average rent - I already have the numbers for current market 

5. do the profitability maths

6. I'm approved by the bank for a project already, so I need to present the bank with our proposal 

7. work through rest of the construction life cycle with general contractor 

what i'm confused with is, how do i make sure to get least number of surprises the lead bumping up to project cost significantly 
(small additional cost will always be there ) - like sewer/water is on the wrong side of the street we need special contractor and additional work done, very huge storm pond is needed, etc.. 

can i put a contingency in the land deal so that i can get enough time to square out all such unknowns related to that specific property ? 

[Kristi Kandel]

Quote from @Rohan Bhoomkar:

Quote from @Kristi Kandel:

Quote from @Rohan Bhoomkar:

Hi , I'm Rohan. I plan to undertake an Industrial Flex space project, first timer on any real-estate project . I'm very close to putting an offer on a 3 acre land and want to understand all the aspects related to construction I need to be aware of. i have build myself a exhaustive list of all that i need to consider which tell me i need the following people to work with -
Civil Engineer, Architect, Development Project Manager, Construction Project Manager, Other consultants: noise, wind, signage, LEED, lighting, etc., Landscape Architect, General contractor

Usually how would you go about the life cycle of the project. I'm thinking this should be order

1. Find suitable Land - I have found a property that is zoned correctly around 3 acers but has a creek on it and gas line running adjacent to the property 

2. Civil Engineer - to determine building codes and determine area sqft area that can be build 

3. General contractor - to determine cost of building, along with site work and other foundation costs including Landscape Architect

4. Market survey to determine average rent - I already have the numbers for current market 

5. do the profitability maths

6. I'm approved by the bank for a project already, so I need to present the bank with our proposal 

7. work through rest of the construction life cycle with general contractor 

what i'm confused with is, how do i make sure to get least number of surprises the lead bumping up to project cost significantly 
(small additional cost will always be there ) - like sewer/water is on the wrong side of the street we need special contractor and additional work done, very huge storm pond is needed, etc.. 

can i put a contingency in the land deal so that i can get enough time to square out all such unknowns related to that specific property ? 

 Yes, with development you need to put clauses into your LOIs and purchase and sale agreements (PSAs) that address inspection period, feasibility period, due diligence, governmental approvals, etc. 

You don't want to close on the land until at minimum you have planning/zoning approval but ideally not until you have all permits issued. 

Everything in the LOIs and PSA are negotiable and you'll need a broker & RE attorney likely to help you structure the LOI and PSA terms since this is your first deal. There are many nuances to development deals that you'll need professionals on your team to avoid land mines along the way.

 Thank you @Kristi Kandel, all your pointers have been just amazing and to the point. all the other research i did along the way just echoes what you mentioned. I have a learned a lot of bookish knowledge since i started researching this. By now i believe i have good comprehensive list of what i need to consider from the Civil engg, permits, estimates, approvals, testing, etc.. all the things that will take place during due diligence time. I think i have some that are MUST have and some that are good to have.

Now my next step is for me to see how i can work together with a partner ( already have one ). I will need to get in touch with an Attorney and Lender ( SBA lender that my Partner has chosen ) to make sure its feasible for me to become a 18% partner because of the SBA restriction.

we have a property identified in a well established business park ( has most utilities setup already ) that is zoned correct. already put in an offer and into the due diligence period which ends Jan 31.  Closing of Before March 1. I need some advice on how do i go about investing 18%, because we are looking at an SBA loan. my Partner need help with more upfront cash. so If im able to put in that upfront value not all at once but more like go 50% in all initial and then for the SBA qualification show the rest of the amount im will to put in.  because my partner is assuming all of the SBA loan risk but getting the loan against his business im open to contribute more earlier. How do we go about it, i fell first thing Monday I got to start calling Lender, Attorney  and CPA. But any and all advice and pointer i can gather here by them will give me time to ruminate over it. 

I know there are a lot of people very knowledgeable in here and must have already solved for this problem statement. How do i easily connect with them?   

 You need to be brave and start calling on lenders, CPAs, attorneys, etc. You have to talk to a lot of experts and find the ones that fit your team and your project needs. The first group you talk to will likely NOT be the group that you go with. You might need to talk to 10-20 experts in each group prior to making a decision. It starts with picking up the phone and having conversations, learning from each conversation and applying that knowledge.