9 Steps for Managing Your Multifamily Property Development Project
From diligent pre-planning to sourcing investors to breaking ground, there’s a mountain of work involved in a multifamily property development project. So, we’ve put together nine steps to help you successfully manage your next multifamily property development project.
1. Determine the Size of Your Project
The first logical step to properly planning your development is deciding the size of the project. How much land will you need? How many stories will it be? Remember, you can build anything from a duplex to a high-rise apartment complex. Depending on the size of your development, the answers to these questions will vary.
We recommend working with a team of architects and other property design professionals to help figure this out. They can help you understand the ins and outs of what will be required for your particular project. Dream big but stay pragmatic
2. Get to Know Local Codes and Regulations
While you’re deciding on the size and type of project you’d like to undertake, familiarize yourself with local codes and regulations. This will obviously vary, depending on your development’s location. Building a high-rise in the heart of Manhattan will be a lot different from building a triplex on the outskirts of Dallas.
It’s essential to work with lawyers that are familiar with the local real estate market and the technical details for your specific property type. As you can see, there’s a trend here. If you want to be successful in this kind of venture, a lot comes down to building the right team of trusted experts who will give you help, wisdom, and advice.
3. Find Investors, As Needed
Raising capital is an integral part of this process, especially if you’re building a more significant real estate development project. Do you need outside investors? That depends on your personal capital, the amount of equity you’re willing to part with, and your budget.
On the plus side, high-level investors bring experience and wisdom to the table. Some may even offer connections to contractors, architects, and builders, which is an invaluable commodity. Bottom line: if you need an investor, take the time to find one.
4. Establish a Budget for the Project
Speaking of numbers, much of this planning process comes down to creating and establishing your budget, which is especially vital when determining the size of your project, the team members you’re hiring, and whether or not you’ll need investors.
These are all essential questions you may need to answer. How much does the land cost? How much are you willing to spend on materials and labor? Once you’ve broken ground and are trying to fill the property, what’s your marketing budget?
Ultimately, when push comes to shove, you need to know how much capital you have and how much more you need. Then, set a realistic budget for the project.
5. Find a Contractor Who Can Complete the Work Within Your Budget
Once your budget is firmly established, it’s time to hire a professional contractor who can work with it. Hopefully, given the connections you’ve already made in this process, you’ll have an idea of the company you’d like to work with, but even if you already have that connection, don’t settle.
You need to make sure you’re working with someone you can trust. Interview as many companies as you can. Tell them that they’re one of many options you’re considering and force them to pitch themselves. Ask for references, detailed budgets, intricate timelines, and thorough contracts. This will give you the best opportunity for a successful project.
6. Create an Outline of What Needs to Be Done and a Timeline in Order to Complete the Project Successfully
This may sound obvious, but don’t skip this step. Write down everything that needs to be done. Outline it all and cross it off as soon as it’s completed.
In fact, set specific timelines and goals for yourself and your team. This will allow you to remain diligent about what’s on schedule and what isn’t. When someone misses a deadline, ask them for updates, explanations, and status reports. Motivate and push them to finish on or ahead of schedule.
Some things will not go according to plan. That’s inevitable and can’t be avoided, but if you do your best to prepare for any scenario, you can stay ahead of disasters and mitigate mistakes before they happen.
7. Make Sure Your Paperwork is In Order
Just as important as dollar signs and proper planning, paperwork is a vital component to successful real estate development. You’re going to want to lean on your lawyers for this part of the process because they’ll likely have relevant experience.
Always remember to read everything. Make sure you fully comprehend every agreement or contract you sign. Once you think you have everything you need, check again just to make sure. Don’t let a missing contract or ill-defined term sheet ruin your project.
8. Monitor Costs as They Come Up and Adjust Your Plan as Needed
When you’re dealing with real estate development, it’s essential to stay flexible. Plans often change, and you have to be ready to roll with them. If you notice that you’re approaching or exceeding your budget in some areas, you need to be able to adjust accordingly.
If it’s possible, it may be wise to hire someone whose sole job is to monitor your budget and offer daily, weekly, and emergency updates. That way, you remain in the loop at all times, and you’ll never be caught off guard.
9. Create a Comprehensive Marketing Plan to Attract Tenants
The importance of marketing is paramount and cannot be understated. There’s no point in developing a multifamily property if you don’t have anyone to live in it. That’s why marketing is absolutely vital.
Of course, remember that marketing is not quick and is never guaranteed. You need to create a solid, long-term marketing strategy as close to foolproof as possible and follow it through to the end. Stay flexible, figure out what works, and lean into it.
If you aren’t comfortable doing this yourself, you can always hire outside help. There are plenty of established and trusted real estate marketing and property management companies that would be more than willing to do the work for you. As like everything else, do the research, explore multiple options, and find a company you can trust.
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