All you need to know about BTS – Built to Suit warehouse (BTS)
Let’s start with, what is BTS – Built to suit property?
In simple terms, BTS – Built to suit property is a property that is built to the demands and specifications of an end-user (who could be a tenant/ buyer/ occupier) by an investor in real estate who may or may not be the owner of the land.
The essence revolves around the consideration that the end-user will either take on lease/ rental or buy out the property once it is completed and delivered.
BTS – Built to suit properties is the lowest risk possible property investment and is very rare in the market. The owner/ investor saves the risk of interest, wrong development, loss of rentals due to vacancy and several other benefits. rentals start from day 1 which is an ideal scenario for a real estate investor
Who is the right end-user for a BTS – Built to suit warehouse property?
This is the crux of BTS – Built to suit warehouse property – finding the right end-user is the main challenge in BTS – Built to suit warehouse?. There are simple rules for the same:
- The location of the land should suit the end-user targeted
- The development should be adequate to the needs of the end-user
- The infrastructure should be perfect to the requirement of the end-user
- The finances should be placed to complete and deliver the project
- The end-user should sign an agreement and show their genuine interest and intent by placing a financial commitment on the table
How to get the right end-user for a BTS – Built to suit property?
This is a million-dollar question. The use of the right property consultant to guide you through this in the simplest and easiest way to find the right client.
There is no use in re-inventing the wheel and wasting time searching for a client. They already have their consultants who assist them in this process. All Warehouses is a property consultant of repute who provides such services in Chennai and India.
What are the fears of the end-user for a BTS – Built to suit warehouse property and how to overcome the same?
The end-user has a lot at stake if the property is not delivered in time or to the agreed specification. They could lose millions of dollars for minor variations on the agreed terms and timelines.
To overcome this, it is important that the owner/ investor does the following:
- keep the property title certified by top lawyers/ advocates with a good opinion
- keep the property compounded and filled to an optimum level
- ensure that minimal plan sanctions are in place to prove that there are no development restrictions and statutory requirements can be met
- have proof of funds to show the end-user that the project will not be delayed or corners will not be cut for financial reasons
- show a good background personally and professionally as end-users will be comfortable dealing with persons of repute
How do I arrange to fund once the property is tied up?
There will always be a minimal amount of funding required for the project to be executed and the same needs to be available as liquid funds – about 15 to 25% of the construction cost to enable approvals, sanctions, site pre-development expenses and foundation.
Once the LoI or lease agreement is signed with a tenant with a lock-in and a received security advance, financial institutions and the bank will be comfortable to fund the balance money needed to cover the complete expenses. The land will be needed to be offered as security towards such loans and advances.
How do I get the right architect, approval agency (liaison agency), advocate, specification, client, contractor and consultant to ensure that everything goes as per plan.
The timelines and specifications should be met to ensure that nothing goes wrong!
All Warehouses can arrange all of the above for you. Every process has a flow, which some are sequential, some can be done concurrently to save time. A timeline plan is made, the consultants are appointed, every specification and detail is finalized well in advance to ensure no surprises and roadblocks.
Hiring All Warehouses may cost you a small fee for all of the above but saves you the risk of time, financial and reputation losses.