Investor Representation: Oversight of a New Development Project

Developing a new real estate project from the ground up is much like starting a new company.

Each venture encounters unique situations and must be managed along the way. As you know, problems likely will arise given the complex nature of development over months and years. So, if you’re an investor who has completed diligence and decided to move forward with putting your money into the deal, how do you track progress and influence good decisions essential for a successful project? And, how do you accomplish this to get higher expected returns?

For some real estate financiers, whether this is their hundredth investment or first, overseeing a development project internally may not be the best use of their time or they may not have the expertise in-house. Therefore, many investors — from small shops to institutional funds — will need assistance with project oversight from a professional owner / investor representation. That representative will bring technical knowledge and managerial expertise to proactively look out for troubles and manage risks.

An investor representative looks out for your best interest regardless of whether the venture partner or fee developer is in perfect alignment. For a new real estate development project, the optimal time to involve one is during the diligence process or, at the latest, a point prior to start of construction. In some cases, you may need to bring someone in to help navigate or fix a failing job.

In addition, an investor representative can ensure that you have the right team on the project or give you recommendations to bolster the team. This includes determining if the developer, designer, contractor, etc. have the experience and capacity to achieve success. Do all parties understand the schedule and have options lined up to navigate the sticky points, especially regarding local approvals and any proprietary suppliers? Is the pricing right with appropriate assumptions and contingencies?

What else can you expect ?

Initially, an investor representative  monitors whether you, the developer and the contractor are pointed in the same direction. If not or if a situation arises, he or she facilitates alignment and comes up with options and alternatives. Throughout every stage of a project, the representative poses important questions to understand the real situations and what smart decisions need to be made. For instance, is the design of the new building appropriate for the site and marketplace? What is unique about the property? Is the design appropriate for the land? Good answers to these questions are vital to get right upfront because the land can’t be moved, and it’s difficult and costly to fix a bad design.

A good investor representative takes a deliberate and sophisticated approach to keep you informed on how well the work is progressing. Throughout the project, he or she advises on appropriate decisions and actions necessary to mitigate the downsides of real estate development investments.

Hiring an investor representative allows you to focus on your business knowing you have a project professional by your side dedicated to protecting you from the potential downsides of each investment.

For more information about Real Projectives® Owner / Investor Representation services and the expertise we can bring to your new real estate project, give us a call at 888.357.7342. Results Driven. Risks Managed™.