For real estate agents eyeing a leap into new construction and investing, Joe Kotoch, a seasoned Chicago-based real estate strategist, offers a road map built from years of hands-on experience across a wide spectrum of property types — from multiunit apartments to luxury single-family home conversions.
Kotoch began his journey with investor clients, absorbing every bit of market knowledge he could. “I tried to absorb as much information as I could like a sponge,” he says. “Eventually I realized I was ready, and I started small with a team and grew from there.”
For agents, that preparation starts with understanding how to evaluate a deal — not just through comps, but as an investor would. He looks at all markets and considers properties in the suburbs, as well as the city. His portfolio includes projects in Wicker Park, Lakeview, Logan Square, Avondale and more.
“I’d say in the changing market and times that we’ve been in, especially in the last year-and-a-half or two, you have to be a little more willing to work outside of your preferences to find the right deals,” Kotoch said.
When evaluating a new project, he begins with the potential value of the finished product and works backward to determine if the numbers make sense.
“The cost of building has become much more of an encumbrance to the point now where you have to look at deals in a slightly different way, not so much as what the owner wants. First, I have to look at what it’s going to be worth if I do this,” he said. “And once I have that ARV (after-repair value) that I’m working with, I can work my way back and figure out what I’ll pay for the land or the property.”
Kotoch says the most critical early conversation he has is with an architect.
“The architect matters to me, because understanding what I want to do to the property, in terms of how I want to add value — whether it’s a new-construction build or whether it’s a gut rehab or some combination — I want to understand: What regulations does the city have, what am I going to need to ask for [and] what’s it going to cost me?” Kotoch said.
Beyond working with an architect, agents should leverage their existing connections to contractors and trades to assemble the right team for the job, Kotoch said. “When working with trades, especially as a real estate agent, I mean, you have access to a lot of trades, whether you realize it or not.” he adds. “Almost every real estate agent in the business should have a roofer, a plumber, an electrician, a handyman, etc.”
He advises getting two to three bids to avoid being reliant on one contractor — especially in a market where trades are booked out and pricing can shift quickly.
Timing also plays a big role in success. Kotoch prefers to list homes when they’re past the rough construction phase — once drywall is up and buyers can better visualize the space.
“It’s really important from a sales standpoint that you’re timed in a way that you’re catching the spring market,” he said. “It’s super important. Do not miss the spring market; that’s your best opportunity to sell and get top-dollar pricing, so to speak.”
For agents serious about breaking into development, Kotoch’s top advice is to find a mentor and start adding value — whether that’s sourcing deals, handling sales or helping manage a project. Most builders are getting pitched a variety of projects from agents, Kotoch said, and it’s important to distinguish yourself early.
And if there’s one thing he’d do differently? “I wish I would have started investing pretty much around the beginning of my career and just found ways where I could contribute small amounts,” he said.