A custom family home can be a gathering place that is passed from one generation to the next. But building a home can be a complex, time-consuming project.
Drawing on lessons he learned from managing real estate projects for a family office, Grant Bowen founded Peak Projects, a project management and owner’s representative firm, in 2014 to provide guidance to wealthy families and family offices as they embark on residential construction projects. He talks about what he has learned and how he works with family offices:
How did you get into the business of managing real estate projects for wealthy families?
I worked at a single family office in the San Francisco Bay Area for seven years, managing the principal’s personal residential real estate projects. What I learned there was an empathetic, collaborative and rigorous approach to project management. It wasn’t about just getting the project done. It was about building relationships, fostering trust, doing thorough due diligence and implementing project controls to achieve success.
I learned a lot of best practices, such as how to look at acquiring property: making sure you get all the reports and inspections you need to have a comprehensive understanding of the constraints of that property. I also learned to do due diligence on the people you’re about to hire. What motivates them? What’s their company structure like? What’s their work ethic like? What are their past projects, their current projects, their bandwidth? This helps you make a decision based on qualitative and quantitative data, not just on a friend or colleague saying, ‘Oh, you should hire that architect because they’re great.’
I was helping two principals at the family office, and I wanted to help as many people as I could have a positive experience with residential real estate development. I started Peak Projects to provide real estate support for these types of clients.
How do you interact with family offices?
Roughly half of our clients have some form of family office, single or multi. We give the family office an executive weekly update and interface on legal, insurance and financial matters. We’re often interfacing with the family office team if we’re managing multiple projects for either one or multiple family members. In that case, we’re the sole point of contact for the family office and their various construction projects.
How do you help clients make decisions about construction projects?
To advise on whether building a significant custom home is a good idea, we want to understand how long they see themselves living in in this location, given their job, family lifestyle, the length of time they like to stay in one place. These factors are coupled with their goals for the property and the stage of life they’re in.
Price is always an item we thoroughly talk about. All of our clients are building private custom homes that are specifically designed and detailed to them and their needs. Some clients want to spend as much as they need to achieve their vision. Some are more cost conscious and want to understand how long it will take to recoup the investment. A lot of elements come into play: location, the type of home, architectural significance. Most of our clients are wanting to invest significant resources into that property to make it special for them then, and also durable enough that their kids and their kids’ kids can enjoy it as well. In those cases, budget is looked at differently.
What pitfalls have you observed in personal real estate projects?
Every business has a business plan, a strategic plan with goals and related KPIs. But that model in business is very rarely translated to the built environment, especially for a custom home development project.
We have seen a lack of project management in projects which you typically wouldn’t see at a successful company. In a typical home development process, there’s an architect, a contractor and a client. Early on, the architect typically plays the owner’s representative or project management role. But they’re also responsible for designing the project. The contractor also sometimes plays that project management role but is ultimately responsible for building the project. There’s rarely an individual responsible for managing the architect and the contractor and the rest of the team to march toward the client’s goals.
We also see kind of a lack of rigorous accounting. There are a lot of costs that go into a project: design, construction, insurance and myriad other costs. Rarely does a client have a global budget of everything that’s getting updated in real time.
In addition to a lack of project leadership and financial and risk management, there are issues like invoice processing. Clients need to pay quickly if they want their project to continue moving quickly. It’s so basic, but so important. A lot of clients don’t have the proper teams set up to process invoices quickly, like an accounting team, a family office team, etc.
One other pitfall we have seen is not having the appropriate legal representation. For example, when we’re setting up a project, we need to execute a lot of contracts and to make sure those cover the entire scope of the project and protect the owner. Sometimes we come on to projects after contracts have already been signed, and they may not be set up for success.
