When Considering a Construction
Project, Consider These Helpful Hints
When making the decision to get out
of the rent-paying game and move to the ranks of building ownership,
the first step is to decide if you wish to purchase an existing
business or start from scratch and build your own. Not an easy
decision. However, if you can't find an existing business for
sale that meets your needs and is in the location you desire,
the only alternative is to build.
If you find yourself in the position
to build your own facility, the first step you should take is
to enlist the help and advice of experts in the construction
field. Next, there is a definite time line and a few precautions
you should take to protect yourself and make the entire process
go as smoothly as possible. Consider these helpful hints:
Financing: Before you
start scouting for a piece of land or an available lot, find
out what size construction loan you can qualify for and any restrictions
or limitations you may have to abide by. With that information
in hand, it's easier to find the land you need and make an offer.
Never make any commitments to purchase and build or close escrow
before you have solidified your financing needs.
Permits and Zoning Requirements:
Once you find a spot to build, check the zoning restrictions
and the permitting process. If it is properly zoned for your
needs and building permits are attainable, it's now safe to make
an offer. Remember, it can take up to three months to secure
the necessary building permits. Make sure the closing is contingent
on proper zoning and that any rezoning or remapping is complete
before you sign on the dotted line. Your broker should write
this into the deal, and if they don't or refuse to, look for
a new broker. It's that important.
Architects: Again, with
financing information in hand, working with an architect becomes
much easier. You'll know exactly how much money you have to spend
and the architect will have guidelines and be able to stay on
budget. Be forewarned: It can take four to eight weeks for an
architect to complete the plans. Budget your time carefully.
Contractors: Hire the
best contractor you can afford. Get several bids on the project
and don't make your decision based solely on who's cheapest.
Ask for and verify references, financial statements, proof of
liability and worker's compensation insurance. Finally, check
with the state contractor's licensing board to see if there have
been any complaints filed or actions taken against the contractor.
Make sure your contractor and architect meet each other early
on and each understands the time line, budget and any other special
needs or circumstances.
The most common reason small business
owners cite for not building and/or owning is the lack of funds.
However, new conventional loan programs such as TMSDirect SM
as well as U.S. Small Business Administration (SBA) Guaranteed
Loans can provide high-leverage financing with low down payments
financing for qualified borrowers. These loans can be used for
a variety of uses, including real estate purchases and new construction.
An additional benefit of these specialized
loan products is that a small business owner can get one loan
to cover the costs of building, equipment purchases and working
capital, with all the fees and costs determined and disclosed
prior to closing. This means you'll only have to close one set
of documents and attend only one closing.
Construction projects can be stressful
and time consuming, but with a little patience and prudence,
building your own facility can be one of the wisest decisions
you can make. Working with competent professionals will go a
long ways toward making your project a rewarding and profitable
- David W. Moore, Jr.
- Norfolk, VA
- (757) 640-7592
Copyright 1994, 1995, 1996, 1997, 1998, 1999
by First Union National Bank All information on this server is
protected by a compilation copyright in the United States of
America and in other countries. In addition, certain other information
is copyrighted by others. Unless otherwise specified, no one
has permission to copy or republish, in any form, any information
found on the First Union system. First Union Direct and CommunityCommerce
are Service Marks of First Union Corp. (Reprinted with
permission from the Money Store and First Union.)