Joe Fairless is a highly successful entrepreneur who co-founded Ashcroft Capital, a firm that manages nearly $2 billion in real estate assets. He has long encouraged would-be investors to consider putting their money in multifamily real estate due to its high-profit potential; however, he is also aware of the pitfalls and mistakes that can be made when developing multifamily properties. He offers advice on how to select the right contractors for the job to avoid unexpected expenses and significant mistakes that can derail potential profits or even ruin a project entirely.
Good multifamily contractors aren’t easy to find, Fairless emphasizes. Most have plenty of work from word-of-mouth referrals and may not have an easily found website or social media pages. However, such contractors can be located by asking others in the industry for referrals or by contacting a construction trade organization. Finding a multifamily contractor with a good reputation isn’t enough. Joe Fairless points out that it’s important for an investor to find a company that has experience with the type of building that needs to be renovated or upgraded. There is a vast difference between a luxury multifamily building with few residents and an older one with multiple tenants. There are also important differences between similar developments in different cities, such as zoning and permitting. Building codes vary from city to city. Ideally, one will want to find a company based in the local area that has the tools, experience, and expertise needed to do the exact work that needs to be done.
Communication is yet another key to success, Joe Fairless says. To communicate effectively, an investor should first carefully consider which renovations or upgrades should be made, when the work needs to be completed, and how much money can be spent on the project. At this stage, the investor should also differentiate between essential renovations and ones that would be good if time and finances permit. The information should be put in writing, and any contractors bidding on the project should likewise respond with a detailed estimate and timetable for completion. If an investor has questions about the proposal, these should be cleared up before the renovations begin.
Renovating a multifamily unit is no small task. It’s costly, time-consuming, and will likely inconvenience current residents. At the same time, it can boost an investor’s profits if done right. Careful research is needed to pick the renovations that generate the highest investment return. Additional research is needed to find reputable, experienced contractors who can get the job done. Investors should speak at length with each potential contractor to learn more about the contractor’s experience, price points, and other information that would directly affect the success of the project. Obtaining written bids is a must to avoid future misunderstandings, Joe Fairless states, and an investor will want to stay in close communication with the contractor. At the same time, the work is being completed to ensure there are no unforeseen delays or problems.