Hey @Kenneth Jiang - Welcome to the game! I'll provide my two cents on your questions above--please bear in mind this is a complex topic, and there are no black and white responses. If you'd like to chat about anything further feel free to DM me and we can set up a call.
1. Finding the Right Deal: How do you all evaluate properties for development in Chicago? Any tips or tools to help a newbie like me spot a good opportunity?
We start with the end product in mind. What do we want to build? Then, we look for properties that can accommodate that type of structure AND are supported by the ARVs in the neighborhoods in which we are searching. We are able to estimate construction costs roughly based on previous builds. We'll then build a spec sheet (templates we have created that are always evolving the more we learn) and then insert all of our numbers into our deal analysis. This deal analysis factors in everything from purchase price and buying costs, to holding costs, construction costs, and selling fees plus hold times. Finding good opportunities for new construction in Chicago is possible, though you'll need to work a little harder in your search and due diligence than if you were to simply rehab a hundred+ year old bungalow. Hundred plus year old homes are everywhere. Land and tear downs on properly zoned land are far and few between. Starting with a great Realtor to help you on this search can be invaluable until you learn more about how to search for the 'right' type of land for what you want to build yourself.
2. Hiring Help: I'm at a bit of a crossroads. When it comes to contractors, should I go with a General Contractor and a fixed contract or consider a Construction Management company? What are your thoughts and experiences with these choices?
How much time do you have and how in the weeds do you like to get LOL? Since you mentioned you're new to the development world, I would strongly recommend hiring a General Contractor (GC) (at the very least) to build. If you have no previous design and planning experience, I would also recommend considering a design-build firm that can offer both design and planning assistance AND construction. You can always hire a designer separately from your GC as well. Architects can provide a fair amount of guidance on how to create the foundation of a design for your property. But they are architects, rarely designers. They are also not 'home buyers', so when you design something from scratch to SELL, you'll need to keep in mind who your end buyer is, what the comps look like, how much you're planning to sell for, etc. That--in large part--will dictate your design.
3. Materials Matter: I'm curious about sourcing materials. Should I take on the task myself, or is it better to let the pros handle it? Any shortcuts or tech that's made your lives easier?
Again, how much time do you have on your hands? Sourcing and ordering materials is extremely time consuming. Then, after sourcing and ordering, you have to setup and manage the delivery. I'm making it sound a lot simpler than it is, I know. The pros of ordering your own (finish) materials are you will save some money (maybe, depending on your supplier list and what types of discounts they offer you) and likely have a lot more flexibility to choose what you want, as opposed to getting a few options presented by a GC. The biggest drawback / con is paying a premium for your GC to source all the materials--they'll charge a markup on these since they now have to navigate the whole process above. There's a nice blended option you can try, where subcontractors will supply all rough materials, and we (we are licensed GCs now but prior to being GCs we were rehabbers who hired a GC) supply all the finish materials. The easiest, most streamlined way IMO is to let your GC handle as much of the process as possible, rather than piecemealing it out. This way everything stays on the 'same' schedule. ie: your GC isn't waiting for your materials to arrive because you ordered them too late...
4. Global Sourcing: I've heard whispers about sourcing materials overseas for a better deal. Did anyone try this? Is there any tool that makes global sourcing easy?
Some of the materials we order come from overseas. We do not order directly from these manufacturers however, we always go through a US based sales rep. I do not recommend going directly overseas unless you have a contact in that country, or you've lived there, or are familiar with it and/or the language. The money you *may save could end up causing you more time and frustration than it's worth.
SUMMARY: For your first new project, hire it out! I realize it may be tough to make numbers work nowadays, and that's probably why you're tempted to take on the role of contractor to some degree. Working with an experienced team will provide you with a lot of insight and learning opportunities that you can then take with you to Project #2...
