The role of the contractor is complex and requires knowing how to delegate. That is to say, he directs, delegates the execution tasks to the site manager and, moreover, must combine with the investors, the financing, the subcontractors, the employees and the sale or rental of the final project.
There are so many people involved in the construction of a real estate project that financing becomes secondary and many of you will neglect this aspect which you may understand less due to the multiple stages and stakeholders of the project.
Who are your stakeholders?
- Architects, Engineers
- Real Estate Brokers
- Cost Managers
- Environmental Assessors
- Merchant Appraisers
Most employees of financial institutions are not always able to advise you and equip you properly for your project. Why? First, because bank account managers are first and foremost trained to sell you a product. They're not trained to advise you on large-scale projects that require a completely different analysis and expertise. Thus, the file of a construction professional such as a contractor is often misaligned due to the lack of experience of the account manager. It is nonsense for an account manager to offer you financing without even having assessed the profitability of your project in the long term.
A complete construction file should include:
- Your personal information and those of your company
- Validation of your experience and your down payment
- Market evaluation and a study of market needs
- Compliant environmental assessment
- Details of project costs (land, construction, incidental and financial costs)
- Detailed forecasts for renting or selling
- Marketing plan
- Calculation of the project yields an estimate of the value of the rental property once the work is completed, and the rental performance has been achieved.
What you want to avoid above all are unforeseen additional costs and construction delays. This is extremely costly and could result in you losing a project or incurring costs until you get approval from all stakeholders, not to mention the potential loss of qualified buyers.
Do you want to implement one of these projects?
- Financing for the purchase of land for the purpose of building or reselling
- Construction of single-family detached and in rows
- Building of condominiums
- Construction of apartment buildings and affordable housing
- Construction of commercial and industrial buildings
First and foremost, you need to think about your commercial mortgage broker. He'll be much more than a financial partner. He'll accompany you and advise you in your steps to obtain financing and make your project profitable. He is above all your ally!
An ally who will know how to guide you to avoid pitfalls and have everything the financial institution or private lender needs to make the best decision for maximum financing, at the best rate and conditions.
Thanks to his experience and professionalism, not to mention his knowledge of the commercial mortgage market, he knows the different services offered by each of the financial institutions and knows, among all the financing conditions and terms available, which ones are best suited to your project.
Among the necessary documents, you will need a future market appraisal of the project. It's a must! This future assessment will have a major impact on obtaining your construction financing. The other documents that will be required by your appraiser are:
- Approved plans and specifications
- The lump-sum construction contract
- All bids and quotes from subcontractors
All this with the aim of having the best understanding and the best vision of the future project.
As for the down payment, the interest rate or the percentage of financing, these will depend on the appetite of the different financial institutions. Your mortgage broker will certainly be able to answer all these questions and offer you the appropriate solutions. To do this, an in-depth analysis must be completed to properly manage the project.
Progressive disbursements. A nightmare when not well planned.
Progressive disbursements will require that the stages be validated and confirmed by your appraiser, your architect if required and your cost manager. Together with your mortgage broker, you will have to plan them well to avoid delays and unpleasant surprises from your mortgage lender.
And you, dear contractor, as the title of this article so aptly says, you are the conductor, and you create beautiful symphonies with all your stakeholders. However, you must not only surround yourself with the best team to save time, energy, and money and, above all, optimize your financing by entrusting your project to a commercial mortgage broker, who will be able to put your interests and your projects first!