Tax savings and cash flow are critical components of any successful strategy in commercial real estate investment. It’s no surprise that cost segregation—a tax planning strategy that allows for accelerated depreciation—has become a go-to method for savvy investors looking to maximize their financial returns. Cost segregation can significantly increase an investor’s after-tax cash flow by carefully analyzing and categorizing property components for faster depreciation. Cost segregation may sound complex, and the process requires a detailed understanding of tax law and construction methods. However, the financial benefits it provides can be game-changing. This article aims to demystify cost segregation and its associated benefits, from understanding the basics to identifying the properties and assets that qualify to help you leverage this powerful tool to its fullest potential. Understanding Cost Segregation Studies Cost segregation studies are detailed engineering reviews of a property’s assets to identify items that can be reclassified for shorter depreciable life spans. This reclassification allows for accelerated depreciation of those assets. Depending on the owner’s needs, such studies can be performed during construction, purchase, or years after acquisition. Historically, the Internal Revenue Service (IRS) classified real estate components with a life span of 39 years for commercial properties and 27.5 years for residential properties. However, according to IRS guidelines, cost segregation studies can identify parts of the property that could be classified as personal property or land improvements, which have shorter lives of 5, 7, or 15 years. Accelerated Depreciation: The Key to Tax Savings Accelerated depreciation is a tax method that allows businesses to deduct more depreciation in the early years of an asset’s life. The logic behind this method is that assets are more productive when new and should, therefore, have higher depreciation during these years. By identifying assets that can be depreciated faster, cost segregation allows real estate investors to decrease their tax liability in the early years of ownership, which results in significant tax savings.  Reducing tax liability also increases cash flow that investors can use to reinvest in their business or take advantage of other opportunities. The Working Process of Cost Segregation Studies The cost segregation process typically involves a team of professionals, including tax experts, engineers, and appraisers. These professionals analyze the property’s purchase or construction costs and identify assets that can be reclassified for faster depreciation. The study begins with a review of relevant information, including building plans, construction contracts, and other data. The team then conducts a site visit to inspect the property and identify assets eligible for accelerated depreciation. These assets are documented, and their costs are estimated or valued.  Finally, the team prepares a detailed report outlining the assets that can be reclassified and the associated depreciation deductions. Identifying Assets Eligible for Accelerated Depreciation Not all property components are eligible for accelerated depreciation. Generally, the assets that can be depreciated faster include non-structural elements, such as carpeting, wall coverings, lighting, and landscaping. These items fall into personal property or land improvements, which the IRS allows to be depreciated over shorter life spans than structural buildings. Structural components, such as the building envelope, structural walls, and roofing, are classified as 39-year property for commercial real estate and 27.5-year for residential real estate. However, with a detailed cost segregation study, many components can be identified for accelerated depreciation. Leveraging the “Time Value of Money” for Immediate Tax Benefits The concept of the “time value of money” is essential to understanding the benefits of cost segregation. This principle suggests that money available today is worth more than the same amount in the future due to its potential earning capacity. Regarding cost segregation, the sooner depreciation deductions are taken, the more valuable they are. By front-loading depreciation deductions, cost segregation provides immediate tax benefits. Instead of spreading depreciation deductions evenly over 39 years, cost segregation allows investors to take larger deductions in the early years of ownership, effectively lowering their tax liability and improving their cash flow. Benefits of Cost Segregation Studies The primary benefits of cost segregation studies include tax savings, increased cash flow, and accurate asset accounting. These studies allow property owners to maximize depreciation deductions, which reduces their current tax liability and provides an influx of cash that can be used for business operations or reinvestment. Furthermore, cost segregation provides a more accurate breakdown of a property’s assets, which can benefit asset management, insurance purposes, and future sale or refinancing activities. Who Qualifies for Cost Segregation? Cost segregation studies can benefit property owners in various sectors, including commercial real estate investors, residential property owners, and businesses that own their premises. If a property has been purchased, constructed, expanded, or renovated since 1987, it may qualify for a cost segregation study. Even if a building was constructed or bought many years ago, it might still qualify for a cost segregation study. The IRS allows a “catch-up” depreciation deduction for properties that could have used this strategy but didn’t. Potential Pitfalls and Considerations While cost segregation offers many benefits, there are also potential pitfalls and considerations that investors should be aware of. For instance, while accelerated depreciation increases cash flow in the early years, it can lead to higher taxable income in the later years as the depreciation deductions decrease.  Additionally, cost segregation studies can be expensive and may not be cost-effective for smaller properties. Investors should also be aware that the IRS closely scrutinizes cost segregation studies, and there is a risk of audit. Proper documentation and a well-prepared study by experienced professionals are crucial to withstand IRS scrutiny.  Lastly, investors should consider the impact of cost segregation on estate planning and asset sales as it may affect the tax basis of the property. It is essential to weigh the benefits and potential drawbacks carefully and consult with a tax professional before proceeding with a cost segregation study. Bottom Line Cost segregation is a powerful tax strategy that can maximize tax savings and improve cash flow for real estate investors. By leveraging the benefits of accelerated depreciation, investors can significantly reduce

Navigating the multifaceted world of commercial real estate can be like unraveling a complex puzzle, where even the seemingly inconspicuous elements hold significant value. Among these hidden gems, the concept of parking ratios might appear trivial, yet it holds a powerful sway over a property’s appeal, functionality, and profitability. Though often overshadowed by more prominent features, parking ratios serve as an unsung hero in shaping the success of commercial spaces. Why Worry About Parking in Commercial Real Estate? Believe it or not, parking is an essential cog in the machine of commercial real estate success. Whether it’s a bustling shopping center, an elegant office building, or a thriving multi-family complex, the adequacy of parking can make or break the deal. It’s not merely about convenience; parking affects everything from tenant satisfaction to traffic flow, and even the property’s market value. Let’s dissect this further. What is a Parking Ratio in Commercial Real Estate? A parking ratio might sound technical, but it’s quite straightforward. In the simplest terms, a parking ratio refers to the number of parking spots available per unit of measure in a commercial property. This ratio is commonly expressed as the number of parking spots available per 1,000 square feet (SqFt) of rented space.  This metric is essential because it helps stakeholders, including developers, investors, tenants, and city planners, determine whether a commercial property can adequately accommodate the parking needs of its expected occupants and visitors. Factors Influencing a Property’s Parking Ratio A variety of factors can influence a commercial property’s parking ratio. One of the primary determinants is the property type. Different types of commercial properties, such as retail centers, office buildings, and restaurants, have differing parking needs. For example, a restaurant may need a higher parking ratio to accommodate peak dining hours. At the same time, an office building may require fewer spaces due to consistent working schedules and public transportation options. Geographical location also significantly impacts parking ratios. Properties in urban areas may need fewer parking spaces due to a higher prevalence of alternative transportation options, such as buses, subways, and bicycles. Conversely, suburban or rural properties, where driving is more common, typically require higher parking ratios. Cracking the Numbers: How to Calculate Parking Ratios Here’s how you can figure out a property’s parking ratio: divide the total parking spaces by the rentable square footage, then multiply by 1,000. It’s as simple as that. This is typically expressed as ‘X per 1,000 SqFt.’ For example, if a commercial property has 500 parking spaces and contains 100,000 SqFt of rentable space, the parking ratio would be: (500 ÷ 100,000) x 1,000 = 5 per 1,000 SqFt This means that for every 1,000 square feet of rentable space, five parking spaces are available. The Art of Perfecting Parking Ratios What makes a “good” parking ratio? It depends on the property type and location. Retail properties, for example, may require a balance of 5-10 spaces per 1,000 SqFt, while office buildings may be adequate with 3-4 spaces per 1,000 SqFt. Again, geographical location and the expected number of visitors or employees also factor into this calculation. A good parking ratio should accommodate peak occupancy while providing a buffer for guests or additional employees. If parking is consistently overcapacity, it can lead to tenant dissatisfaction and potential loss of business. Impact of Parking Ratios on Commercial Properties Parking ratios can have a profound impact on the success of commercial properties. Adequate parking can contribute to tenant satisfaction, as customers and employees appreciate convenient parking. It can also impact a property’s value, as properties with good parking are generally more attractive to potential tenants and buyers. Conversely, a poor parking ratio can be beneficial to a commercial property. Limited parking can lead to congestion, increased vehicle emissions, and frustrated visitors. In extreme cases, inadequate parking can result in a loss of tenants and decreased property value. Fringe Case Example: Calculating Complex Parking Ratios Consider a multi-use property, such as a mixed-use building with retail stores, offices, and residential units. The parking ratio calculation can be more complex in this case, as each component of the mixed-use building may have different parking requirements. For example, suppose the retail component requires five spaces per 1,000 SqFt. In that case, the office requires four areas per 1,000 SqFt, and the residential requires 1.5 spaces per unit; the overall parking requirement would be a weighted average of these ratios, considering the proportion of each component’s square footage in the general property. Maximizing Parking Efficiency: Innovative Solutions Given the significant impact of parking ratios, many property owners and developers look for innovative ways to maximize parking efficiency. Solutions include implementing vertical parking structures, shared parking arrangements, and utilizing technology to manage parking space usage better. Some even employ robotic parking systems, dramatically increasing the number of cars a parking area can accommodate. With the rise of ride-sharing services and the potential for increased autonomous vehicle usage, the future of parking ratios in commercial real estate may change dramatically. These trends could decrease the demand for parking, allowing for more flexible use of space. Technology and Changing Trends: A New Horizon for Parking Ratios As we step into an era marked by technological advancements and changing transportation trends, the traditional norms governing parking ratios are being challenged. The rise of electric vehicles, smart parking systems, and a growing emphasis on environmental sustainability are reshaping the way we approach parking in commercial real estate. Developers are now considering charging stations and energy-efficient designs to cater to the modern commuter’s needs.  Furthermore, with an increasing societal shift towards public transportation, cycling, and carpooling, the future demands a reevaluation of parking ratios. Understanding these emerging trends is vital for those seeking to stay ahead in the ever-evolving landscape of commercial real estate. It underscores the fact that parking ratios are not just a static element but a dynamic and adaptable feature that must grow with the times. Bottom Line Parking ratios might seem like a small detail in

Building an apartment complex can be a significant but rewarding investment. Whether you’re a seasoned real estate developer or a beginner in property development, understanding the costs associated with such a project is crucial for successful financial planning and execution.  Many factors can significantly influence the total cost of building an apartment complex, from purchasing land to total construction costs. This comprehensive guide explores the factors contributing to the cost of building an apartment, offering detailed insights to help you navigate this complex process. Average Cost Per Square Foot for Apartment Construction According to Fixr and The Brookings Institute, the average cost to build an apartment complex in the United States is $310 per square foot. However, this average cost may fluctuate based on the location, type of construction materials, and finishings used in the building process. It’s worth noting that these figures represent an average, meaning costs can either scale down or up based on various factors such as building size, local labor costs, and the specific features incorporated into the apartment’s design. Breaking Down the Costs of Building an Apartment Complex Financing Costs When constructing an apartment complex, you’ll only cover part of the cost upfront. It’s crucial to consider various financing costs like loan origination fees, interest, and additional lender fees. Also, understand that the nature and terms of the loan can have a massive impact on these costs, including the duration of the loan and whether it’s a fixed-rate or variable-rate loan. Hard Costs Hard costs encompass physical construction expenses, such as land acquisition, worker salaries, and the cost of materials and equipment. They include direct construction costs, such as labor and materials, and indirect costs related to the construction, such as construction site security and temporary utilities. Soft Costs These refer to expenses unrelated to the physical construction but equally essential. Soft costs cover business licenses, permits, taxes, engineering, inspections, and architectural designs. Other considerations may include insurance, legal fees, and costs related to marketing and leasing the property once it’s completed. Long-Term Costs Long-term costs incorporate recurring expenses required to sustain the apartment building. These include utilities, maintenance, and amenity costs, which are often higher in luxury apartments. Additionally, expenses related to property management, routine upkeep, property taxes, and any financing payments fall under this category. Cost Component Average Percentage of Total Cost Land Acquisition 10-20% Hard Costs 60-70% Soft Costs 10-15% Financing Costs 5-10% Essential Factors Impacting the Cost of Building an Apartment Location Influence The location significantly affects the total cost of constructing an apartment complex. For instance, a building in downtown New York will attract higher costs due to the elevated price of land, materials, and labor compared to a similar project in Boise, Idaho. The location also influences the potential return on investment from the property due to differences in rent prices and occupancy rates. The Role of Labor Labor costs, including contractors, subcontractors, architects, and real estate attorneys, play a significant role in determining the overall construction expense. Though more expensive, skilled professionals can save costs by maintaining the project timeline and preventing costly errors. It’s also crucial to remember that labor costs can vary based on the region and the availability of skilled workers. Material Selection and Cost The choice and cost of materials can substantially impact the total expenditure. For example, the cost of constructing a luxury apartment with high-end features and materials will significantly surpass that of an affordable housing unit. The choice of materials can affect the upfront construction costs and the long-term maintenance costs. Affordable vs. Luxury Building When deciding between constructing an affordable housing unit or a luxury apartment, remember that the latter will attract higher construction costs due to additional amenities and upgrades. However, luxury apartments can also command higher rent, potentially yielding substantial returns. Conversely, affordable apartments may be cheaper to build but offer stable income due to the consistent demand for such units. Building Size and Cost Implications The building’s size impacts the overall cost. A larger building with more units will cost more to construct. However, the price per square foot decreases as the size of the building increases. This is due to economies of scale, as some expenses remain fixed or do not increase proportionally with the size of the project. For instance, you would need only one architectural design and permit, even if the building size increases. The Time Factor: Duration of Building an Apartment Complex The construction timeline affects the overall cost of building an apartment. Extended construction durations can inflate expenses due to increased labor and carry costs. A delay can increase interest payments if you finance the project through a loan. Efficient planning and project management are critical to prevent budget overruns. Stages of Construction: A Timeline from Planning to Completion Planning (Pre-Construction): This stage entails developing the idea, working with an architect, determining the scope, and securing financing. It also includes a feasibility study to ascertain the project’s economic viability and obtain necessary construction permits and clearances. Construction: This phase includes physical building, from ground-breaking to the final touches. During this phase, investors should regularly monitor and adjust to ensure the project stays within the budget and schedule. The construction phase is typically the most resource-intensive part of the project, consuming the bulk of the project’s budget. Post-Construction: This final phase covers finalizing all necessary tasks to prepare the building for sale or lease. This might include cleaning and decorating the apartments, final inspections, marketing the property, and starting the leasing process. Despite seeming like the end of the journey, this phase is crucial in ensuring a smooth transition to the operational phase of the apartment complex. Innovative Strategies to Minimize Costs When Building an Apartment To save on building costs, consider purchasing land in a less expensive location, leveraging relationships to get discounts on materials, and hiring experienced professionals who can ensure the project remains on schedule, avoiding costly delays. Furthermore, effective project management can help keep track of the budget

Despite economic fluctuations, the multifamily real estate sector in the United States has shown remarkable resilience. This robustness can be attributed to top developers consistently delivering high-quality developments, introducing innovative concepts, and offering attractive investment opportunities. This article uncovers the top-tier players in the industry, focusing on their contributions, standout regional and national performances, and the innovative trends setting the pace in the multifamily market. Multifamily Development Companies: Key Players in the Industry The forefront of the multifamily development sector is occupied by experienced companies with a proven track record of successful projects. These companies include Greystar Real Estate Partners The largest multifamily developer in the US, with over 700,000 units under management. Greystar’s portfolio extends nationwide, especially in high-growth markets. Alliance Residential Company Alliance is a prominent rental residential real estate developer headquartered in Scottsdale, Arizona. With 19 regional offices, they specialize in developing, constructing, and acquiring residential communities across 16 states and 39 metropolitan markets. With 40 years of experience, Alliance has developed over 115,000 multifamily units, solidifying its position as a leader in the industry. JLL Multifamily As a part of a global real estate services company, JLL Multifamily boasts an extensive range of property and investment management services. JLL Multifamily offers comprehensive services for maximizing profits and optimizing multifamily properties. They provide multifamily financing, debt and equity placement, loan servicing, and asset management. With direct access to Fannie Mae, Freddie Mac, and FHA financing, they ensure the best possible financing structure. Lincoln Property Company With over 200,000 units under management, this Dallas-based company is one of the most respected and diversified in the country. Macerich Known for upscale apartment communities in some of the country’s most desirable locations. Listed on the New York Stock Exchange as NYSE:MAC, stands as a prominent figure in the real estate industry, excelling as an owner, operator, and developer of significant retail and mixed-use properties. Pinnacle A leading property management company managing over 165,000 residential units nationwide. Headquartered in Miami, Pinnacle emerges as a distinguished full-service real estate development and construction firm committed to creating affordable, workforce, and market-rate housing options.  Backed by a wealth of combined expertise spanning over a century, Pinnacle thrives in designing and overseeing exceptional multifamily communities across Florida and various other regions. PulteGroup PulteGroup, established in 1950, has achieved a remarkable milestone of constructing nearly 750,000 homes across the United States. From its humble beginnings with founder Bill Pulte building a single home, the company has now become the nation’s third largest homebuilder, operating in over 40 major cities. Richman Group Since 1986, The Richman Group has emerged as a dominant player in the residential apartment market, consistently earning a place among the Top 10 largest portfolios in the United States. The Richman Group holds a significant presence in both luxury rental apartments and affordable housing sectors, boasting an impressive portfolio of over 2,070 properties comprising more than 166,500 units, with a total development cost exceeding $28 billion. The Michaels Organization With a vast reach, The Michaels Organization manages a portfolio of over 60,000 units across 425 developments in 35 states, including Washington D.C. and the U.S. Virgin Islands.  With a focus beyond affordable housing, the company also manages and develops military housing, student housing, and luxury living communities across the United States. TRG Realty Company A Los Angeles-based firm that is renowned for creating distinct and vibrant communities. With approximately 20,000 units managed across multiple states and a portfolio of over 100 properties, TRG Management Company LLLP demonstrates expertise in various housing types, including subsidized, workforce, affordable, mid-rises, high-rises, luxury rentals, and single-family homes. National and Regional Multifamily Developers The multifamily development industry is segmented into national and regional players, each with unique strengths. For example, The Michaels Organization has an impressive national footprint, while companies like PulteGroup and Alliance Residential Company exhibit significant regional expertise. Leading Multifamily Developers Nationwide Leading developers such as Lincoln Property Company and Pinnacle are redefining the industry with a strong national presence and unrivaled property management. Developer Headquarter Major Markets Specialty Greystar Charleston, SC National Property Management Alliance Residential Phoenix, AZ National High-Growth Markets JLL Multifamily Chicago, IL Global Investment Management Lincoln Property Dallas, TX National Diversified Portfolio Macerich Santa Monica, CA National Upscale Communities Pinnacle Dallas, TX National Property Management PulteGroup Atlanta, GA National Homebuilding Richman Group Greenwich, CT National Affordable Housing The Michaels Organization Camden, NJ National Large-Scale Developments TRG Realty Los Angeles, CA California Distinct Communities Innovations in Multifamily Development Innovation continues to be a significant driving force in the multifamily development industry. Firms like JLL Multifamily and PulteGroup are pioneers in employing data-driven strategies to optimize property and investment management. These technologies help improve operational efficiencies, maximize ROI, and enhance the living experiences for residents. Moreover, the multifamily sector is increasingly emphasizing sustainable and green building practices. Developers such as Macerich and The Michaels Organization are leading the way in integrating eco-friendly materials, energy-efficient appliances, and renewable energy sources in their developments. These forward-thinking strategies contribute to environmental conservation, provide cost-saving benefits, and enhance the appeal of properties to the eco-conscious renters of today. Investment Opportunities in Multifamily Developments Investing in the multifamily real estate sector presents a wealth of opportunities, given its resilience and consistent demand. Companies like The Richman Group and Pinnacle offer direct investment options in individual properties or developments. Such investments typically provide investors with a share of rental income and potential capital appreciation. For those seeking a more hands-off approach, real estate investment trusts (REITs) offered by companies like Macerich and JLL Multifamily allow for investment in a diversified portfolio of properties. REITs offer the advantage of liquidity, as they are traded on major stock exchanges and provide investors with a stable income stream through dividends. Investor Considerations in Multifamily Development When considering investment opportunities in the multifamily real estate sector, there are a few key factors to keep in mind. Firstly, market research and analysis are crucial to identify favorable cities or regions with high growth potential. Understanding

General contractors (GCs) play a central role in apartment construction. They are responsible for managing all phases of the construction process. This includes sourcing materials, hiring and overseeing subcontractors, ensuring building code compliance, and meeting the budget and schedule.  A GC also handles necessary permits, project documentation, and final inspections. They are your project’s primary overseers, coordinators, and communicators. So, let’s find out how to find the best possible contractor for apartment construction needs. How to Choose a Quality General Contractor for an Apartment Property? Selecting the right GC is about quality, reputation, and value. Look for GCs with solid experience in apartment construction. Review their past projects, check online reviews, and ask for references. A quality GC will gladly provide this information. Factors to Consider in Selecting a General Contractor Choosing a GC should be a data-driven process. Here are some factors to consider: Experience: How many apartment projects has the contractor completed in the past five years? Evaluating their track record helps gauge their proficiency in apartment construction. References: What do previous clients say about their workmanship, timeliness, and communication? Cost: How does their bid compare to others in the market? Team: Do they have a reliable network of subcontractors? The Construction Financing Process and General Contractors Your GC plays a pivotal role in the construction financing process. A well-versed contractor can provide detailed and accurate cost estimates upfront, highlighting potential cost overruns.  The GC’s role also extends to helping you negotiate fair contract terms, protecting your investment. Managing the drawing process effectively is another crucial responsibility, ensuring that subcontractors are paid on time while the project progresses in line with the budget. The ability to offer value engineering options is another desirable trait. This involves proposing cost-effective alternatives for materials and design elements that maintain the project’s integrity and aesthetic while saving you money. Importance of Licensing, Bonding, and Insurance Always verify a GC’s licensing, bonding, and insurance status. Licensure guarantees they meet minimum industry standards. Bonding provides financial protection against failed projects, while insurance safeguards against potential liabilities during construction. Effective Communication with Your General Contractor Clear and concise communication helps avoid misunderstandings, meets your expectations, and keeps the project on schedule. Use project management tools, regular meetings, and documented correspondences to maintain open lines of communication. Common Pitfalls to Avoid in Contractor Selection One common pitfall in contractor selection is the need for more transparent communication. A contractor who doesn’t readily share information, provides vague or inconsistent updates, or seems elusive about project details is a red flag.  In addition, don’t be swayed by the allure of a significantly low bid. A low cost might seem attractive, but it may indicate a compromise in the quality of materials or workmanship. Always remember the value that a competent, experienced, and reliable contractor brings to the project is worth the investment. Maximizing Efficiency: Collaborative Strategies with General Contractors Collaboration with your GC can boost project efficiency. Engage your GC early in the design process, maintain regular communication, and involve them in key decision-making. These strategies help save time and money and lead to a more successful project outcome. Consider the Contractor’s Safety Record Safety should always be a top priority on any construction site, and a reputable GC will prioritize the well-being of their workers and adhere to strict safety standards. Inquire about the contractor’s safety policies, training programs, and incident rates.  A contractor with a strong safety record demonstrates their commitment to creating a safe working environment, reducing the risk of accidents, and ensuring a smooth and uninterrupted construction process.  By selecting a contractor with a solid safety track record, you can mitigate potential risks and contribute to the overall success of your project. The Bottom Line Choosing a general contractor is a critical decision in any apartment construction project. Consider experience, references, cost, and subcontractor network. The contractor plays a pivotal role in construction financing, providing accurate estimates, negotiating contracts, and managing budgets.  With due diligence, open communication, and a focus on quality and experience over cost, you can select a GC who will help you bring your vision to life. FAQ Section What responsibilities does a general contractor have in apartment construction projects? A general contractor takes on several responsibilities. They manage all aspects of the construction process, including hiring and overseeing subcontractors, obtaining the necessary permits, ensuring the project complies with all relevant building codes, handling all project documentation, and overseeing the project to its completion. How should I research to find a quality general contractor for my apartment property? Start by identifying potential GCs who specialize in apartment construction. Once you have a list, research each online, look at their portfolio, and read reviews from previous clients. Ask for references from past clients, especially those who had similar projects to yours, and make time to speak with them. What should I include in a project description to get accurate cost estimates from general contractors? Your project description should be detailed and comprehensive. It should include blueprints, clear materials specifications, finishes desired, appliances to be installed, and any unique requirements or features you want. The more detailed your project description, the more accurate the cost estimates will be. How many bids should I obtain from contractors for my apartment construction project? It’s generally recommended to obtain at least three bids from different contractors. This allows you to compare costs and the services each contractor offers. It also gives you a better understanding of the current market rates, helping you make a more informed decision. What should I look for when checking references for a general contractor? When checking references, ask about the contractor’s reliability, timeliness, communication, and quality of work. It’s also important to inquire if the project was completed within the proposed budget and timeline. Inquire about any issues during the project and how the contractor handled them. This will provide insight into their problem-solving skills and professionalism.