Managing the commercial real estate development process involves much more than just ticking off a few boxes. For investors, it also means overseeing countless intertwined processes, receiving and compiling information from external parties, and tracking how projects are progressing according to plans. Mistakes and oversights during development can be costly, both when it comes to time and expenses incurred due to setbacks. Real estate development software minimizes these risks by centralizing information about a project’s progress, including third-party deliverables.
As you search for real estate development software to better track project tasks, timelines, and deliverables across multiple deals, these are some of the factors you should consider.
6 Factors to Consider Before Purchasing Real Estate Development Software
1. Task Management and Project Progress Tracking Based on Deadlines
Some project setbacks are inevitable, but the goal of any development undertaking is to adhere as closely as possible to projected deadlines. However, a simple calendar probably won’t cut it. As you explore real estate development software options, be sure to consider how they track the many milestones between land or building acquisition and the finish line.
Development software should give a clear indication of how projects are progressing from multiple standpoints. Executives seeking an overview should be able to view pipeline deals in progress, including the project status, most recent milestones, and upcoming tasks. Individual deal pages should delve into more detail, displaying all completed and outstanding deliverables, as well as crucial dates. Additionally, team members should have the ability to leave notes that add important anecdotal context about where deals stand. With this framework, executives, management and analysts can all explore the development pipeline in their desired level of detail, while working against upcoming deadlines.
Optimally, development software should also reflect the ever-evolving pace of the real world by including dependencies. Many tasks within the development process are dependent on the successful completion of other tasks. By choosing a software with dependencies, you can automatically reset timelines based on new changes for every task impacted by the change.
Not all real estate development software is used exclusively for this process; in fact, the best options are comprehensive deal management solutions, which include development, but also acquisitions, dispositions and lending. Because every development deal begins with an acquisition, the development process should begin by smoothly transitioning that data into the development process.
2. Standardized Task Checklists Based on Project Specifications
Not all development projects are the same, but that shouldn’t mean you need to recreate the wheel by adding new task lists for every project. One crucial goal within project management for real estate development software is to standardize task lists, including deliverables like permits, environmental reports, and much more, to easily add new projects to the pipeline. Doing so helps your team work faster with a repeatable framework, while also documenting and monitoring progress in real time.
Sophisticated real estate development software will take this a step further by creating conditional checklists. These lists can be applied based on factors like the property type, development type, location, and more. For example, if all ground-up development projects in Idaho require a specific permit, then that task should populate for every property fitting that profile. To the same end, if every multifamily deal requires a thorough zoning evaluation, the task list should reflect that.
When your firm partners with the same third-party collaborators on every project, you shouldn’t have to assign the same tasks every time. Instead, look for real estate development software that automatically assigns certain deliverables to specific partners.
3. Collaboration with External Partners
Between legal counsel, environmental consultants, architects, and many more, the development process heavily relies on external parties accomplishing highly specific tasks against tight deadlines. For many firms, inputting data based on the work these third parties are doing is burdensome and leaves room for error. Maintaining a clean record of up-to-date documents can become another obstacle, too. One central goal of real estate development software should be to seamlessly collaborate with third parties directly through the tool.
The best commercial real estate development software allows third parties direct access. This gives them the opportunity to enter data or attach documents and correspond about the designated task, allowing your team to spend their time more efficiently. When it comes time to either view development deals in progress, or drill down into individual deals, these updates will be reflected and readily available.
While third parties may need access to a particular deal or a subset of data within that deal, you may not want them to view every deal within the pipeline or database. To that end, it’s important to confirm whether or not the software you’re considering allows administrators to grant selective or unregulated access.
4. Construction Management Software Vs. Real Estate Development Software for Investors
The overarching real estate development process involves the high-level process of determining feasibility, deploying financial resources, and tracking deliverables against deadlines. On a more granular level, though, it also encompasses construction. This adds another layer of specific considerations, such as building materials, contractors and teams, and much more. Monitoring all of these moving pieces is crucial for developers, but the same software won’t necessarily track everything in a measurable way.
As you research commercial real estate development and investment software, consider which type of development software suits your firm’s needs, and the level of detail required to accurately track progress. Investors typically aren’t interested in delving into the nuances of the construction process. Instead, a broader overview of how the project is performing against objectives, in terms of both time and money, offers a more valuable snapshot. Construction software, on the other hand, is more useful for general contractors managing land development.
5. Identifying Opportunities and Managing Cash Flow With Real Estate Development Software
Holistic real estate development investment software should include a deal management component that allows you to measure and project financials before diving deeper into concrete deliverables. Prior to moving forward with development, it should allow you to manipulate data from a feasibility analysis, as a way of ensuring that the plans represent the property’s highest and best use.
Initially, the software should set the standard for the anticipated ROI by allowing you to upload a pro forma. It may not offer the full functionality of real estate development accounting software, but can keep key metrics in sight. Development software should also illustrate cash flows based on a number of variables, as well as the rate of return. Purpose-built software allows you to accomplish this easier, faster, and in a more centralized manner, eliminating the pitfalls of disparate workflows like Excel spreadsheets. Finding and building on these insights within the software should also make it accessible for use further down the road.
6. Reporting on Development Portfolios
Keeping leadership and investors apprised of development project progress and projected earnings is imperative, but can become convoluted and time consuming. Normally, creating accurate reports involves sourcing data and communicating with various team members about project statuses, as well as where documents live. Real estate development software should curtail these challenges, instead making reporting turnkey.
Be sure to look for real estate development software that generates comprehensive pipeline reports. Based on your goals and the recipient of the report, you should be able to define the criteria to provide the right level of detail, whether you need a broad pipeline overview, or a drilled-down visual of deals currently in certain stages of the process.
Gaining Real-Time Visibility Into Your Pipeline
Real estate deals can change by the minute. But without clear, up-to-the-minute insight into recent changes, making informed decisions can be challenging. Watch our webinar to learn more about why your team needs real-time visibility into development deals, and how software can help you achieve it.
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