When we started investing in multifamily, we relied on property managers to handle construction.
As the business grew, we hired GCs to run construction projects with little oversight on our part. And got very mixed results.
That’s when we realized that if we wanted to scale our multifamily portfolio, we needed an in-house team. But how do you build a construction arm for your real estate business?
Jorge Abreu is Cofounder and CEO of Elevate Commercial Investment Group, a multifamily firm based in Dallas, Texas, and Founder of JNT Construction, the in-house construction arm of Elevate CIG.
With 15 years of experience in real estate, Jorge has acquired a portfolio of nearly 7,000 units worth more than $500M.
On this episode of Financial Freedom with Real Estate Investing, Jorge explains why he started his own construction company and how JNT gives Elevate a competitive advantage.
Jorge walks us through the process he used to build an in-house construction business, describing what he looks for in a project manager and how he leverages software to hold the team accountable.
Listen in for Jorge’s insight on the importance of construction contracts and learn how an in-house construction team can help YOU scale your syndication business!
Why Jorge started his own construction company
- Trying to scale fix-and-flip business
- Hard time finding good contractors
What issues Jorge ran into before he started his own construction company
- Can’t put own systems into play when work with 3rd party
- Hard to scale, produce same quality product throughout portfolio
The process Jorge used to build his own construction company
- Serve as project manager himself to start
- 1st hires = assistant, project manager, then back office
How a construction arm gives Jorge a competitive advantage
- Management can focus on management
- Less competition on deals with high CapEx
- Come in with confident offer vs. guessing on cost
What Jorge looks for in a project manager
- Similar core values
- Experienced but not set in ways
Why interiors are the hardest part of construction
- Must find labor to work consistently at affordable price
- Crews must work at pace necessary to turn properties quickly
- Must get materials to site
- Small profit margins for contractor
How Jorge tracks construction and holds project managers accountable
- Buildertrend software to manage day-to-day
- Reports distributed internally and to owners
- Change orders housed and approved through system
- Leverage = crews that deliver get next project
How Jorge curbs change orders
- Detailed scope of work
- Build in contingency for unforeseen issues
The importance of construction contracts
- Just as important as operating and loan agreements
- Poorly written contract can lead to lien or litigation
Connect with Jorge Abreu
Email [email protected]
Connect with Michael Blank
Email [email protected]