Strategies for Cost-Effective Development Jeffrey Kittle President & CEO Herman & Kittle Properties.
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Transcript of Strategies for Cost-Effective Development Jeffrey Kittle President & CEO Herman & Kittle Properties.
Strategies for Cost-Effective Development
Jeffrey KittlePresident & CEO
Herman & Kittle Properties
QAP Priorities Green Building
Utilities
Cost/Benefit of financing source (Davis Bacon?)
Local Design Requirements Due diligence up-front on all fees to city –
generally not negotiable
Due diligence on all design requirements – if too much, can you build in the next county and still get deal funded? Sometimes the next county on the path of growth can be very good over the long run.
Construction Material Pricing Centralized purchasing with competitive bidding Separate labor and material where possible
Roofing, siding, concrete, brick, plumbing fixtures, lumber, lighting. Proactively watch material and labor pricing markets. Retainage release at 50% completion – otherwise trades factor in a cost to
carry. Real estate with utilities (avoid lift stations) on-site and minimal topo relief Low acquisition costs of buildings for a rehab Cost benefit analysis of long-term utility savings vs. up-front costs Acquisition rehab deals – analysis of up-front rehab vs. ongoing replacement
reserve requirement Work with local unit of government on properties they have access to – likely
low or no cost Brownfield Site – funds often available for phase 1, 2, or clean-up
Investor Demands Hard Cost Contingency – reduce or post LC/Bond Operating Reserve – reduce and/or trade longer
ODG Reduction of non-basis eligible costs LP pay their own way – LP pays for their own 3rd
party costs Mutually acceptable construction inspector for
both lender and syndicator
Continuous conversation that balances QAP, Costs, and long-
term viability of project.
Questions?