Best route to open own shop in the Futue
I was wondering which positions/ experiences help one prepare to open up their own CRE shop in the future.
I have seen a lot of threads focus individually on many roles but I was wondering which path way will well equip someone to eventually manage and run their own shop.
I have seen some threads point out that Acquisition roles do the best in doing so because it not only exposes someone to the buy side of real estate but the ability to invest.
Is it better to have some exposure early on in acquisitions then go onto portfolio management?
Just trying to get a sense of how most investment firm owners usually went about to get to where they are now
The most important thing you need to set up your own shop is money. If you don't have equity, you're not a developer. So, while there are a lot of technical skills that you should try to develop, the most important one is the ability to source capital. It's better to be okay at all of the technical aspects of development, and also good friends with a bunch of rich guys, than to be highly skilled but without capital sources.
If you can lock down a site, you can find equity easily.
Or be an affordable developer.
Regardless, development is the easiest way to opening one's own company. It requires the least in terms of equity.
Ozymandia can you expand on your thoughts here? Why do you say developers need the least amount of money? Besides tax credit developers who have no money in the deal, you still need to fund pre dev which can be incredibly expensive. That means you’ll need a bigger balance sheet to start. (won’t tax credit developers need this too?)
The answer is, it depends. You need to figure out (1) what you enjoy in case you can’t / don’t end up opening your own firm and (2) what works for you.
Owners of investment companies in real estate (GP and LP) come from all different walks of life. Some are in real estate as a second career and bought real estate on the side, eventually transitioning to doing real estate full time. Some people were in acquisitions. Others in asset management or portfolio management, or development project management. Others were brokers - investment sales, leasing, capital markets, etc. What I think gets lost on this board is that there is not, never has been, and never will be, a “path.” You need to carve your own way in the world. Some people will have it easier than others, but that’s life.
For example, I always wanted to be an acquisitions person and eventually run my own firm. So I did that on the institutional level for some time. But I realized for me, I was going an inch deep and an inch wide in the business. All I saw was the buy, but I never saw how things went wrong after the buy (and how to fix the issues), so I left acquisitions to do development management. Where you see more of a life cycle from acquisition through the building process and eventually disposition. For me, with the goal of opening my own firm one day, this seemed like the correct move. I would get better business experience which is arguable more imperative to running your own firm. Sure, I need to be able to do the first set of acquisitions myself, but if I can grow, I’ll eventually have staff doing this. So I need to be better at managing because buying a building, in its most simplest form, is being the person who usually* (though not always) pays the most. You still need to to proper diligence so you don’t blow up and miss that all your piping needs to be replaced, for example, but anyone can buy a building, not everyone can make money with it. So with this, I say, figure out what you enjoy and what works for you.
Preach!
Doing deals. At the end of the day the instutional shops are too pigeonholled in terms of skills. The advantage there is network, still doesn't solve the deal problem though.
1. Make a ton of money
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