“I want to deal with this as little as possible. I'm fed up with the whole thing. I should have listened to you from the start,” J. told me at a meeting a few months ago. This was after, for more than a year, he had tried to advance the construction of a building in an Eastern European country, paid a lot of money, against our recommendation, and nothing had progressed.
About two years ago, when J. bought the plot, I suggested that we set up a team to manage the project for him. We have an excellent architect, whom we know and who has worked with other clients of ours in the same country, we know a few local contractors, and I was sure we could help him build a professional hive that would advance his project. J. preferred to rely on a local friend, who had brokered the plot for him and who recommended to him (or, more accurately, practically forced on him) working with a local fixer who, he said, would obtain the required building permit within 6 months. I raised an eyebrow, expressed doubt, but if that is what the client wants - that is what will happen.
At every step there were arguments and friction between the fixer and J., until at some point he ended the engagement with the fixer and went back to putting together a team of his own to lead the project with him.
A management team matters in every business, but when we are dealing with international entrepreneurship it takes on additional significance, because developing projects and managing investments overseas requires extensive professional knowledge, a great deal of experience and a deep understanding of different regulations, markets and cultures.
Choosing a skilled and experienced team is an important strategic decision that can significantly affect the success of the project. Such a team can bring knowledge, expertise and unique connections to the table, and help the developer achieve his business goals.
“Real estate is a people business. Your team is your most important asset, and you will need the right people at your side to succeed.” - Donald Trump
Within these challenges, the team that accompanies the developer (I tend to call it the “hive”) has a critical role in ensuring the success of the project. A professional, experienced local team in the target country can help the developer at every stage, from identifying the opportunity to realizing its potential. An experienced team knows the market's unique challenges and has proven solutions for dealing with them. The role of the support team includes helping the developer connect with relevant players in the local market, such as government authorities, banks, local developers and contractors; helping the developer identify and manage these risks correctly, while reducing the fear of failure. The team should give the developer professional and emotional support. The team coordinates between the various parties involved in the project, and makes sure everything moves forward smoothly and efficiently.
As a basis, the team should include the following functions:
- Lawyer - to ensure a legally sound transaction, reduce legal risks and represent the developer professionally before all the parties involved. It is important that the lawyer has real estate experience of at least several years in the specific country in which the transaction takes place.
- Accountant - to ensure sound financial management, reduce financial risks and provide professional advice on the economic aspects of the project. Essential for managing the project's finances efficiently and lawfully. Responsible for preparing financial statements, tax planning, cash-flow management and advice on various financial aspects of the project.
- An experienced financial adviser can help the developer raise financing for the project on optimal terms. Responsible for analyzing different financing options, negotiating with financing providers and developing a financing strategy for the project.
- Architect and planner - responsible for designing the structure, planning the infrastructure, obtaining building permits and supervising the execution of the work. The more experienced they are in their field, the more they will help in planning and developing a quality, functional project, reducing construction costs and providing professional advice on the project's planning aspects.
- Project manager - essential for managing and coordinating all stages of the project efficiently and without delays. Responsible for drawing up a work plan, managing the work crew, tracking the project's progress and reporting to the developer. It is very important that he has several years of experience managing real estate projects, with in-depth knowledge of time management and construction.
Further research, published in the “Journal of Real Estate Research,” found that teams that combine professionals from different fields, such as law, accounting, planning and development, and marketing, are more likely to succeed in complex projects than teams made up of professionals from a single field only.
What are your criteria for setting up the local team? Who are the members of your team? When did you last check or replace a member of the local team?
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית