Advice - What would you do differently if you could start over in RE?
I'm a college senior starting off at a small multifamily REPE shop post-grad, planning to be in RE for the long-run. What advice would you give yourself if you were in my shoes, and what do you wish you would have done differently? Did your expectations about RE match your experience thus far?
If I was 5 years older I’d probably be worth $5M more. Sometimes it’s just a matter of getting lucky.
I wouldn’t stress too much about potential regrets. There will be plenty of ups and downs in your career. That’s the nature of the business. Put your best foot forward and hope for more good times than bad.
These are observations of people, that you will later in life, maybe agree with me.
As much as CRE is about assets/properties, it is also about long term relationships with people in a marriage like structure - often times with people you know just on the surface level. Your life savings can be trapped in this marriage. You could be a party to recourse debt that you are still on the hook for even if you are long gone. Divorce is usually messy and could often lead to savage warfare. This is applies to other industries and businesses btw.
I was able to do well, but could have done significantly better.
Partner relationships determines how much you actualize. Other business owners talk to me about their problems. I’ve even helped mediate other partnership disputes. There are patterns.
Forget the business opportunity for a moment…
If you ever find the unicorn of a partner, who not only compliments your skills, but looks out for you, cares about you, is not short term greedy, does not change due to high stress or success, and if you eventually do break up, is reasonable - great.
Until then, make sure ownership/managerial control is in the hands of the most reasonable person. Not based on who’s older. And, hopefully not just because someone put in more money (that’s not a good determiner of character) - but if so, at least have terms to discourages tyranny. Always think about the breakup. After each venture, I learn a little more and try to apply to the next.
Maybe you just take the chance, because if you require everything to be perfect, it might not even start.
You will eventually learn that the world exists in the grey zone between two pillars: the Law of the Jungle and the Rule of Law.
Usually when you partner up, you’re kind of equal, but eventually the Jungle creates uneven power. Allow your partner’s family members to work at the firm - you start losing power. Bringing in outside finance partners - you as the finance person, starts losing power. Sometimes even hiring the most capable employees you can find, will lead you to lose power as a partner (I smile when I often hear the advice hire people smarter than you - maybe if you’re building a rocket ship, but in real estate?). You become replaceable, meanwhile the money gets really good, and human nature sets in.
Human nature is predictable. I see topics about “what your net worth number is” and I also smile. It’s always higher when your net worth is rising.
Partners who are not familiar with the pain of litigation, start to only see the world through the Law of the Jungle. Eventually, these people who take advantage of others get into a war with another stubborn person and get their nose bloodied.
Anyways, you have to learn these lessons yourself. But if you are lucky and you 1) create a great business and 2) have good long term partners; you’ll have great success early and it will seem easy. Because life presents you with opportunities - and the right timing - but too often the wrong people to do it with.
It’s ok to not actualize everything you deserve. Just learn. Try again. Hold on to the right people. Hopefully that’s your spouse. Learn to say no. Start trusting your gut. Do not invest money in anything if your main motivation is to gain status despite your gut telling you this is shady; be prepared to lose it all. One day, you might realize you are self reliant, learned too many lessons, and you are just happy to be alive and living in the first world. That’s a win.
Brilliant response. I’ve been fortunate to work with senior producers who have done incredible things—the common thread is great partners. They rinse and repeat. On the other hand, I’ve worked with shit partners (all institutional) and can’t wait to move on from my last deal. Working with good people (with money) is the blessing.
Thank you!
Incredible response... the fact that you suggested hiring people smarter than you isn't a good idea in real estate just shows how genuine your advice is.
Thank you
Thank you for appreciating my sometimes unconventional perspectives that I’ve learned through experience.
The conventional wisdom of always hire people smarter than you, gets muddied when the Law of the Jungle is involved. There are nuances. A smart crook is bad. A disloyal (to you) smart person is bad. A smart person who your partners think can replace you is bad.
Damn. I just know this guys a straight stud
I’d try to be born wealthier. Dad did well for himself, but there’s always room for improvement. Grandpa? PIP candidate, honestly. Dude’s been slacking for years.
I found out that my grandfather had the potential to be the richest man ($50B+) in his home city (NYC, Monaco, Hong Kong). When he was younger, he actually did business with the current richest man of his city and actually made more than him. But the difference was that the current richest man spent all his money on investing in real estate and my grandfather decided to spend all his money on blow and hookers. To this day I still express my disappointment in him when visiting his grave lol.
Yeah that may be so but who had more fun?
To CRE’s point I’m not sure I would do anything too different other than timing. I have a great gig but would have made 10x more if joined in the early 2010s compared to the late 2010s which is depressing…..
I wish I would have learned more bricks and sticks if anything. But I’m sure the shoe would be on the other foot if I was a quasi construction guy.
I was going to say I wish I majored in finance or got my start in PE/debt instead of construction, so there's your validation lol. I did mechanical engineering and worked in construction before getting the MBA and switching to development. I feel like my opportunities are pretty constrained. Sure I know how to manage a proforma and do excel modeling, but nothing like someone who spent years in and out of it.
Other things equal (and often they aren't), someone with a STEM/design/construction background is better suited to learn finance and become a well-rounded senior developer than a finance guy is to become well rounded by learning the other stuff. DCFs and Excel are pretty easy for a smart person to pick up. But, as you said, it's easier to actually get a job with the finance background.
I think that the real estate employment market is just inefficient on this. Just speculating, I think there are a few reasons. For one, many smart and ambitious people go into finance and so a finance background might be viewed as a better signal. For another, the senior real estate people tend to have finance backgrounds and often underestimate or don't respect the design and construction people, and their preference for other finance people is a product of that.
I would have plowed way more chicks
Biggest takeaway: success in CRE is less about picking the perfect role and more about timing, relationships, and staying in the game.
The partnership point is huge—who you work with matters as much as what you work on. Also, getting exposure across acquisitions, asset management, and operations early on pays off long-term.
In the end, it’s a patience game more than anything else.
If I could start over I'd became a luxury resi broker
Depending upon your personality, you may or may not need to be pushed in this direction, but: just try a lot of stuff. My observation has been that the people who succeed tend to be the people who are constantly in the game. The world is a very complicated place, and even a smart person has only a limited ability to plan everything out in advance. A lot of success comes from trial and error. People with a generally optimistic attitude and high energy tend to try a lot of things, and some of those succeed. In the long run, taking a bunch of calculated risks is, paradoxically, less risky than paralysis by analysis.
Super lame cliche, but: be curious, ask questions and dig in. It's easier to do this as a junior person who's not expected to know much. As a 20-year veteran, you can't ask your lender basic loan provision questions without losing credibility (which is ultimately your most valuable currency in this business).
The only way you can keep people (lenders, brokers, tenants, attorneys, etc) honest is if you know enough that they won't try to sneak a fast ball by you.
I have them explain this shit to me every single time. I have been doing this for 15+ years now. If you honestly think you will lose credibility because you have people explain things to you, you don't know jack shit.
you wouldn't lose any credibility with your lender if you ask 'why do I need lien waivers to draw on my good news funding after TT buildout?'
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