For example, you did 2 years as an analyst at HFF, then 2 years REPE, maybe 2 years in development, then left to start your own little shop or successfully learned enough about RE to live off your own personal RE investments?
| +82 | LP coming into deal at higher land basis. How to model returns to GP? | 19 | 45m | |
| +76 | Increasing RE Industry's Cash Compensation, Collectively | 43 | 1d | |
| +73 | Major Decisions | 13 | 1d | |
| +33 | Niche down to an operator or stay an allocator | 10 | 2h | |
| +30 | Being asked to stay behind and train my replacement | 7 | 3s | |
| +24 | Breaking into CRE late 20s | 7 | 4d | |
| +23 | Thoughts on joining an early-stage REPE fund | 7 | 1d | |
| +22 | Self Storage ECRI | 9 | 3d | |
| +20 | How to get good at RE Modelling? | 18 | 9s | |
| +18 | What does REPE actually do? | 1 | 1h |
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I'm tryin', OP. Started my own real estate-related business last year (still working in my full-time job) and produced our first revenue in December 2016. About to produce our second revenue in May 2017 (just negotiated terms). I will be looking to go full-time in March 2018 (God willing) if we can get seed/Series A investment.
Good thing I'm physically and personally repellent and therefore single, otherwise I would never have had the courage to attempt a personal venture.
Didn't check to see if mentioned yet, but I think another big part of this is the way the RE cycle would coincide with your career. Ready to leave or not, I'd rather take a salary doing questionable things with someone else's money then leave to invest in un-leveragable 3 caps with nowhere to go but down. Obviously it's not that bad everywhere, but the point remains that it's not just about you but the market as well.
To your point, in many markets the barrier-to-entry in real estate development is simply too high for budding entrepreneurs (always exceptions, of course).
Also, the current crop of people age 30-34 (a generation of college students) were simply wiped out of the real estate market when they graduated from college and went into other career fields. I'm 32 and there is virtually no one my age in the business that I know of. I'd bet there are historically few (relative to the last 40 years) true real estate entrepreneurs under 40 right now.
can you discuss specifically what you mean by barriers to entry being too high?
That's a good question. What I mean is real estate is really, really expensive relative to the last half century when adjusted for inflation. Real estate has been commoditized (by the big players, by efficiencies created through technology, by foreign investment capital, etc.). Commoditization combined with unrelenting low interest rates (which pushes up asset prices) make obtaining returns on new development good enough to compensate for development risk very difficult (though not impossible). More expensive asset pricing (relative to past cycles) requires raising relatively more equity capital, and higher debt underwriting standards puts traditional debt out of the reach of less experienced Sponsors.
In sum, real estate development--in the tier 1 markets, at least--is dominated by institutional investors/developers who don't require particularly high returns (and thus can pay "stupid" acquisition prices). Very hard for a young entrepreneur to raise the capital and to outbid an institution.