Biggest Challenges Investors Face in Ground-Up Projects?

Question

For investors doing new construction, what part of the process has been the most challenging — permitting, draw schedules, timelines, or financing structure?

Jacob Camhi · Answer

For the small stuff, permitting and timelines have been the biggest headaches more than the actual construction or financing. Permitting can sit on someone’s desk for weeks with little visibility, which blows up holding costs and pushes you into bad weather or slower seasons. But on the back end, draw schedules are fine on paper, but in practice the timing is rough when subs want money “today” and the lender wants inspections, photos, and updated budgets before releasing the next tranche. The structure itself is less of an issue than the lag between work getting done and money actually hitting the account. Financing is only really painful when appraisals come in light or lenders get nervous and start changing terms mid project, so the main battle has been managing cash and expectations around those slow, unpredictable parts of the process.

Jim Johnson · Answer

Ground-up projects usually get slowed down less by one big problem and more by coordination gaps.

Permitting can be unpredictable, especially with inspections and revisions, but the bigger strain often shows up in timelines slipping. When one trade falls behind, everything stacks up — and carrying costs keep running.

Draw schedules are another pressure point. Work may be done, but if inspections, paperwork, or lender reviews lag, cash flow gets tight fast.

Financing structure also matters more than people expect. Short timelines, variable rates, or tight contingency budgets leave very little room when costs or schedules move.

Most challenges come from managing the moving parts at the same time — contractors, inspectors, lenders, and budgets — all on a clock.

Rodney Menendez · Answer

Great topic — ground-up projects can produce strong margins, but execution risk is where many investors get caught off guard.

From the builder/developer side, the biggest challenges we consistently see are:

1️⃣ Site Work Unknowns
Fill, compaction, drainage, and soil conditions can shift budgets quickly — especially in markets where lot conditions vary significantly.

2️⃣ Utilities & Impact Fees
Water/sewer access, well/septic requirements, and local impact fees are often underestimated during underwriting.

3️⃣ Environmental Factors
Protected species, wetlands, and flood elevation requirements can affect both timelines and build costs.

4️⃣ Permit Timelines
Approval periods — particularly when civil or environmental reviews are involved — can extend holding costs beyond initial projections.

5️⃣ Builder Execution Capacity
Project success often comes down to the operator’s systems, trade relationships, and cycle times — not just the numbers on paper.

Because of these hurdles, we’re seeing more investors lean toward ready-to-build projects — where feasibility, plans, and permitting are already in progress or completed — as a way to reduce entitlement risk and shorten timelines.

Ground-up can be extremely rewarding, but the upfront diligence and execution planning are what ultimately determine outcomes.

Always happy to compare notes with other investors and builders working through similar projects.

Bo Smith · Answer

Honestly, it's usually the draw schedule that kills deals. Most people focus on permits and financing but don't realize contractors will front material costs for weeks while you wait for inspections to trigger the next draw. Cash flow gets tight fast. Are you planning to keep some extra buffer for those gaps between draws?

Biggest Challenges Investors Face in Ground-Up Projects?

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