Test fit first or hard cost first? Each camp says the other is wasted money.

I didn't know a test fit was a thing you could buy separately. Reading the rest of this thread to figure out which one I'd even be able to ask for.

lantern, I've walked a lot of buildings with owners and I'll take the systems walk first, with one condition. The GC has to be told what you're aiming for in rough terms, so studio-heavy versus one-bed-heavy, and roughly where the corridor wants to run. Give them that and the range tightens up a lot. Send them in cold and yes, you get 200 to 400 a foot and a shrug.

What I actually care about on the first walk is the stuff no drawing changes. Slab thickness and whether it's post-tension, because if it is, you're not coring wherever you feel like it and the plumbing routing gets ugly fast. Existing service size at the main. Whether the shafts can carry new risers or you're building new ones through occupied floor area you were planning to rent. Floor to floor height, because once you drop a ceiling for horizontal runs on a 9 foot 6 slab to slab, you're at 7 foot something and the units feel like a basement.

None of those answers move based on the unit layout. All of them can kill the deal. A test fit tells you what you'd like to build. The walk tells you what the building will let you build, and I'd rather learn the constraint before I pay someone to draw around it.

I'm on maybe my fortieth candidate building and I've paid for neither on most of them. Both of these are third-stage spends for me.

Stage one is the photos and the footprint. Depth from window line to core, because past about 30 to 35 feet on a double-loaded office plate you're generating interior space nobody will rent as a bedroom. Window spacing versus a plausible unit width. Whether the thing is a single story box with no second floor to sell, which changes the whole math.

Stage two is the county records and the zoning text. Residential permitted by right or not, parking ratio, and anything recorded against the parcel.

Stage three is where lantern's question starts, and by then I've killed nine out of ten. So my honest position is that arguing test fit versus cost estimate is arguing about the tenth building. Girder's list is the better use of a first site visit though, since I can do a lot of the layout guessing myself off a floor plan and I cannot guess at a post-tension slab.

The order depends on which variable in your model has the wider range on this specific building.

If your unit count could plausibly swing 30 percent, the test fit goes first, because unit count sits in the numerator of your revenue and in the denominator of your per-unit cost. Both move at once. That's common on deep-plate office where the answer to how many units you get is genuinely unknown until somebody draws it. If your unit count is close to determined, say a shallow plate with regular punched windows where anyone competent lands within a unit or two of the same answer, then the layout is not where your uncertainty lives, and paying to resolve it buys you little.

On most conversions the wider range is hard cost, and the widest single item inside hard cost is plumbing and structural work to accommodate it. So the sequence a lot of capable operators run is a short engineering opinion first, aimed narrowly at slab, risers, shaft capacity, and incoming service. That's a scoped consultant hour, not a full report. It resolves feasibility as a yes or no. Then the test fit, once you know what routing the building tolerates, because the layout should be drawn against real riser locations rather than redrawn later when they turn out to be somewhere else.

One caution on the cost side. A GC range without a layout is a range on a building type, not on your building. Treat it as a screen that can kill a deal and not as a number that can approve one.

What you're actually selling, lantern, is a decision rule that tells the client which of those two uncertainties is larger on the building in front of them. Sell that ordering logic and the deliverables follow.

I'm still working out what my first deal costs, so this thread is useful in a way I didn't expect. Both of these are real line items before I own anything, and they don't come back if I walk.

What I want to know from the people who've done it, and lantern maybe you've seen this across clients, is what the total pre-contract screening spend looks like on a conversion that gets killed. If the systems walk is 1,500 and a scoped engineering opinion is another 3,000 and a test fit is 2,500, I'm at seven grand on a building I never buy, and if I have to do that four times to find one that works, that's a real number I need in my budget line before I start.

rena-expert's ordering makes sense to me exactly because it front-loads the cheapest kill. Spend the small money on the question most likely to produce a no.

Coming at this from small multifamily where I own the operating end rather than the conversion end, the thing both camps skip is the unit mix versus what the submarket actually absorbs. A test fit will happily give you 22 units that are all 480 square feet with one window each, and that yields great on paper and leases like a rock in a market that wants two bedrooms.

So if I were buying one thing first on a building, I'd want the rent survey and the absorption read before either of these. Not because the engineering doesn't matter, it obviously does, but because the engineering question is what will this cost and the market question is what will anyone pay for the result. I've had one small building teach me that a clever floor plan and a wrong bedroom count is still a vacancy problem two years later.

Between lantern's two options I'd vote systems, since girder is right that it's the one the drawing can't argue with.

Scope creep on conversions almost always comes in through the ceiling, which is an argument for the engineering walk. Every horizontal run you didn't plan for eats headroom, and every inch of headroom you lose gets bought back with structural work or a smaller unit.

But I'll push back on girder a little. The systems walk gets you a no. It rarely gets you a defensible yes, because the pricing on a conversion moves enormously depending on how many wet walls you end up with, and wet wall count is a layout output. I've had a GC number come in at 240 a foot against a rough concept and land at 305 once the actual plan stacked bathrooms badly and we were coring in eleven more places than the concept implied. That delta wasn't inflation or surprises in the field. It was the drawing changing the scope after the price was given.

So the sequence that actually works for me is walk, kill or continue, then test fit, then re-price against the test fit and treat the first number as thrown away. Two cost exercises. It feels wasteful and it's cheaper than being wrong.

What gets a conversion looked at seriously by credit is a cost number tied to a specific drawn plan and a third party who signed it. A GC range against a concept doesn't survive the first question, because nobody underwriting can tell whether the range covers your building or a category of building.

So whatever order you run internally, both deliverables end up existing before anyone lends real money against the project. The screening question is just which one you buy while you can still walk for free. I'd note that draw structures, holdbacks and how a lender treats contingency on a conversion vary a lot by lender and by program, so confirm those terms in writing with whoever you're actually talking to rather than assuming the standard construction treatment applies.

harrow's two-price approach is the version I see most often on deals that get funded. The first number decides whether to keep spending. The second number is the one anyone underwrites.

The service angle here is interesting to me because lantern is describing a product with a pricing problem, not just a sequencing problem. If the first deliverable is the one most likely to kill the deal, the client experiences your best work as the thing that made them lose money. That's a hard sell to repeat customers unless you frame the fee as insurance against the bigger spend.

The operators in this thread who've done it seem to want a scoped engineering opinion, a kill or continue decision, and a test fit afterward. That's three separate small engagements rather than one report, which is probably a better business anyway since the client can stop at any point and still feel like they got the thing they paid for.

lantern, do your clients want the recommendation or the raw findings? I'd guess the ones who've done conversions before only want the findings and the ones who haven't want you to tell them yes or no.

I came into this room reading about paper and I don't own anything, so most of the vocabulary above is new to me. What I took from it is that post-tension slab is apparently a deal killer and riser capacity decides everything, which is not where I would have looked.

One thing I'm still stuck on. If the systems walk can kill a deal but can't approve one, and the test fit can't be priced properly until the systems are known, then the first spend is always the one that produces bad news and never good news. Is that just how conversions work, that you pay repeatedly for permission to keep paying, until one building runs out of reasons to say no? Voting for the engineering walk on the strength of that.