Do you own a property or portfolio of properties and are looking to maximize their value?

Maybe you have built up your portfolio and now you own a variety of properties. Everything from land, to commercial property, to multifamily properties.

With interest rates so low now is the time to develop one or more properties. But if you’re not a full time developer you may not be sure where to start.

Before you spend time and money, take these steps.

1. Honestly assess whether you have the skills and technical knowledge to lead the design and construction. If you don’t have the requisite experience or time, then you should bring in a partner or hire someone to run the project as an owner’s representative.

2. Determine whether you can build what you want to build. Review in place zoning, create a conceptual design, share it with town or city officials. Meet with an experienced zoning attorney in your jurisdiction. He or she will advise you on what’s possible and who you need to speak with.

3. Review your financial resources or net worth. This, coupled with the cost, will determine whether you can afford to develop yourself. A loan to value (LTV) of 75% is typical, but banks will require a lower LTV when building a riskier product type or if you have less experience or financial strength.

4. Determine how much it would cost to build. This requires a relationship with a general contractor and a conceptual drawing. If you have neither, consider finding a partner that can help.

5. Create a project budget and pro forma to determine the investor returns and cash flows for your project.

Once you have gathered this information, it is time to decide whether you still want to develop the property. It may make more sense to sell.

Or if you own a portfolio of multifamilies and want to build a new multifamily building, it could make more sense to bring in a joint venture partner.

Pugh Management advises ultra high net worth individuals and families on these types of questions. We look forward to hearing from you.