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Cost-Effective Development Strategies for Real Estate Projects

Discover effective strategies for cost-effective development from Jeffrey Kittle, President & CEO of Herman & Kittle Properties. This guide covers key priorities regarding Qualified Allocation Plans (QAP), green building practices, and the importance of up-front due diligence on city fees and design requirements. Learn about centralized purchasing, competitive bidding for construction materials, and proactive market analysis for pricing. Explore the cost-benefit analysis of utilities, acquisition, and rehabilitation deals, including how to work with local governments and investors to ensure project viability.

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Cost-Effective Development Strategies for Real Estate Projects

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  1. Strategies for Cost-Effective Development Jeffrey Kittle President & CEO Herman & Kittle Properties

  2. QAP Priorities Green Building Utilities Cost/Benefit of financing source (Davis Bacon?)

  3. 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.

  4. 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

  5. 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

  6. Continuous conversation that balances QAP, Costs, and long-term viability of project.Questions?

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