For the budding commercial real estate entrepreneur, stability is the name of the game.
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It takes several years in most cases to get a project underway, and you have to be able to survive those lean times. One of the best sources of stability for young companies is to secure government work. Government jobs are stable, profitable, and build your reputation with key players in your market. This is especially true in real estate. So how can you secure government real estate work?
Request for Proposal
To get government work you first have to bid on it. In most cases this comes in the form of a Request for Proposal or RFP. An RFP is a large document that specifies the exact project the government wants done. Local, State, and Federal entities all put out RFPs on a regular basis. To find them search the websites of local, state, and federal agencies. Most federal agencies will have email notification lists you can sign up for that will let you know when an RFP is available.
Responding To the RFP
A typical real estate RFP could be over 100 pages in length with multiple sections (finance, development, property management, experience, past performance, etc) and pages upon pages of desired features. Most RFPs will give some criteria that explain how the selection will be made. Often times it is a simple points system with points allocated to meeting certain features of the RFP. Other times it is a ranking system with several categories and your response will be rated if it is unsatisfactory, satisfactory, or exceeds expectations in each category.
Before you begin fashioning your proposal, however, you need to do more research. In addition to the points listed in the RFP, you need to learn about the individuals who will be making the selection decision. Find out who they are, what they like, and the things that matter to them specifically. If possible, meet with them individually to discuss the project and get a feel for their vision. This experience will help you to fashion a proposal that speaks to the parties who will be in the room evaluating it.
Consider the Financial Impact of Your Proposal
Finally, as you submit your proposal remember that you are making a financial judgment in what you offer. There is a certain baseline that is required to be considered in most RFP processes. However, the winner of most bids usually does far more than what is required. You need to evaluate the probability you will get a project and multiply that by the NPV of the project.
For instance, you could propose to do the bare minimum in your proposal and the NPV of the project would be huge. But the likelihood of award will be next to zero. Conversely, giving them the Taj Mahal of projects won't help you much if the NPV of your project is negative. So make sure you evaluate these factors and offer something that will make you competitive while preserving profitability and stability for your real estate company.