Analyst Looking to Learn More About Development

laffer

Hey man. Couple ideas below. Best of luck.

- I would double down on your existing underwriting training and set out to become a development finance wizard. If you have access to proprietary information on the development projects at your firm, I would study those and know them like the back of your hand.

- Try to learn everything you can about land and how your local jurisdictions development regulations work

- Keep a question log (I use Evernote and my phone notes). Be systematic about generating questions and reaching out to people to ask them appropriately.

- Try to find development mentor(s) outside of your company and explain the situation. Express your hunger.

-  Professional Real Estate Development by ULI - also you can sometimes find class syllabus for real estate development degrees, and I'd recommend reading whatever the top programs have their students read. I found it helpful to structure my learning by the chronology of a development project. We primarily do retail/commercial so it was like: civil engineering/feasibility/due diligence component -> deal capitalization/capital markets/financing component -> construction component -> leasing component -> disposition component

- Twitter has become a great resource for real estate. Wouldn't hurt to follow Chris Powers (@fortworthchris) and check out all the accounts he interacts with. A lot to learn there.

Thanks for the feedback.

I am comfortable underwriting most asset classes. I did the A.CRE Accelerator and I have a masters in financial engineering. I can definitely try underwriting projects that other analysts are working on for additional practice.

We have a team that deals with all the regulations. I would love to learn more about that stuff.

I like the idea of keeping notes of questions and finding a mentor outside of my company.

I have contacts that have completed the well-known MREDs and MBAs. I will ask them about books. 

TLeft

If you're truly as solid at underwriting and modeling as you say, go apply to the Treasure Island Development team (Wilson Meany Dev, Stockbridge Capital) in SF for their Sr Analyst/Associate of Dev position open. That'll teach you everything you'd ever need to know lol. Just study the ACRE development model videos on YouTube for how to properly model certain assumptions, but that'll be plenty to teach you the ropes if you're as sharp as you led on to believe.. 

I feel that I am solid in that category. I did the A.CRE Accelerator and I have a masters in financial engineering. I will have to see if they have any additional case studies. My issue is that I am not exposed to anything outside of underwriting. 

Totally agree with the comment above. I would only add, that its possible to gain a lot of this experience at another shop with the right opportunities and mentorship. During my first development job, I felt a lot like the OP did. I mostly did a lot underwriting. And although I managed various aspects of a few projects (design, entitlements, etc.), I was given very little guidance. After several years, I had successfully advanced within the company, but still didn't feel like I had a firm grasp for what I was doing. When I finally switched companies, my new boss that was willing to talk through just about anything with me. Suddenly, a lot of the concepts that had been a little fuzzy, became really clear. In short, I don't think you can learn development from books or online courses or even getting an MBA (I went to a top RE program). I think most people would tell you that you learn from 1) making mistakes and 2) learning from other people's mistakes. For me, all the other stuff is only helpful if there's a particular area that I need to get smart on quickly. Also to Fred's point, doing this on your own (at any scale) is still much different than doing it for a company. When you're doing it on your own without a support staff, everything feels (to me) a little bit harder.

Agreed. Nothing is going to teach you more and faster than complete ownership and responsibility.

Agreed

Fred Fredburger

I respectfully disagree with the advice provided so far. Well..I can't say that I totally disagree. It depends on what level of development you want to do/start at. If you want to be the next Tishman/Related and develop the next Hudson Yards, then sure, follow the advice provided by the other users i.e. be an excel monkey and work your way up the corporate ladder (Associate -> Dev Manager -> VP/Director -> MD/Partner). You will likely have to make it to MD/Partner level before you can branch off on your own and develop high-rises because you need the political capital and actual capital (It is possible at VP/Director level, but more difficult for obvious reasons.). If you are one of the one in a million that make it to MD/Partner at a reputable shop, then congratulations, but you are probably in your mid-40's to 50's by now and being MD/Partner is basically the same as running your own shop anyways, so do you really want to give up your seven digit compensation to take on the risk of starting your own firm, esp if you have a family to provide for? In my opinion, I find this route incredibly long and boring and is really just working up the corporate ladder. No problem with this, just not my cup of tea.

Now if you want a path that has more risk...potentially a lot more risk, but is a bit more exciting, can teach you more about real estate/development much faster, and has the potential to make more money than the path stated above, then my advice is that you go buy property(s). Buy a triplex, a duplex, a SFH, I don't care, but go buy property. Learn how to manage property, manage tenants, lease up units, obtain property insurance, learn how the appraisal process works, the borrowing process, the closing process, the sale process, learn how painful it is when something goes wrong and you have to come out of pocket to pay for it. When you work for a company many of the responsibilities of buying, owning managing, construction, developing property is done by someone else, but when you branch off on your own, you have to do EVERYTHING. You don't need to be an expert in all of these, but you do need to know the process and how they work. Whether you are buying a single family home or a 100 unit property, 90% of the process is the same...the numbers are just bigger and the due diligence is more in depth. After you've experienced your first property and hopefully made some money on it, then perhaps your next investment can be a small renovation. Learn how to get a construction loan, learn how construction draws work, learn how to manage a GC or subs if you are GC'ing it yourself, learn how to manage a budget, learn how to even put together a budget and price a job out, learn how to pick out cabinets/appliances/finishes. Now after you've successfully completed a small renovation perhaps you can do a more in depth renovation. Maybe a gut renovation or an addition. Learn how to pull a building permit, learn how to work with architects/engineers, perhaps you may need some type of zoning relief for this addition/renovation so you may learn about your local zoning laws and working with a zoning attorney. Now finally when you have completed these 3 projects, then perhaps you will have the experience to pursue ground up development or maybe you decide that ground up development is too risky and that you are perfectly okay with just doing value-add/rehab deals. There's nothing wrong with that. Ground up development is risky, capital intensive, and can potentially have a lot of redtape and bureaucracy depending on how much of a pain in the ass your city is. For some reason everyone thinks that ground up development is the final boss battle and is super sexy. You know what's super sexy? Making the most money with the least amount of risk. Development is full of risk, so you better damn well know what you're doing. I'm seeing so many developers getting fucked right now because they mismanaged risk (i mean some were just very unfortunate due to interest rates, but i've seen many who just took an absurd amount of risk and tbh, i'm happy to watch them burn).

Anyways, my point is learn by doing and learn slowly. You don't need to go from owning no real estate to ground up development. In my opinion this is probably the riskiest and dumbest way to do it. Also, arguably more important than anything i've said so far: LEARN YOUR MARKET. You need to know how much things sell for. If you are renovating a single family home, you better damn well know how much a renovated SFH with X sqft with a 2-car garage in XYZ location sells for if that is the product you are providing. The equation to making money is Revenue - Cost = Profit. Revenue (i.e. sales price) is out of your control, but the cost is not. You can negotiate the value of the land low enough until the deal works and pass if it doesn't. So you better know how much your Revenue (sales price) will be and then you can adjust your cost (land value) accordingly. I've said it on here many times and I will continue to say it: Investing in any asset is finding a needle in a haystack, but you better know what is a needle and what is hay.

[EDIT] Also wanted to add that if you want to do larger projects/developments, then once you know the process and are experienced then it is really just a matter of capital. If you can develop a 10-unit property, then developing a 20-unit property is not that much different..just the capital is more. Similarly if you want to go from 20 units to 50 units, the process is 95% the same...the major hurdle is the dollar amount and financing it (and finding the land)

You made some great points. I have owned a few SFHs as investment properties. I am in the process of looking for something bigger (2-4 units or 5+). So far, none of my properties have needed extensive rehabs. I think you are right with the next step for my personal investing would to be to find something needing a few updates.

As far as my end goal, I am not trying to be a huge developer. I want to be a small shop specializing in adaptive reuse or infill mixed-use projects.

I appreciate the thought-out response.