Going out on your own
year 2 of being analyst. I am dead set on going out on my own one day (at least 10+ years away). To give myself the best chance of success I want the best learning experience beforehand. Currently acquisitions at owner operator but very siloed and don’t understand anything very well in CRE except analyst level understanding of acquisitions & capital markets. Work on large deals.
If you’re me looking for the next job
1) do you try to move to well known and/or institutional types and stay in purely acquisitions? Could see this being helpful in terms of building credibility when looking to raise money/find partners.
2) Do you value the job with the greatest networking (let’s say within the region) potential the most?
3) or do you go to a really lean org that is small and not well known BUT has you touch all aspects of the lifecycle? I feel like having nose on actual operations of RE and dispositions while staying on acquisitions would be best learning to value creation but worst networking/credibility on paper. Smaller deal size too.
4) other - tell what you think
I lean towards #3 right now. But want to know what people think
Important thing here is clarifying exactly what you want to do when you go out on your own
Not sure. As of right now I envision being a single market expert but not necessarily asset class specific. Not married to that by any means- if I become a national aquarium developer but can work for myself then hell yes lol. I get what you’re saying though, appreciate the reply.
Poster above is right on you needing to figure out what you think you want when you go out on your own. I would try to align employment with that - you want to do lihtc? Work at a shop that does lihtc. I’ve noticed that most that start their own shop have a background in acquisitions or debt origination - front office sales-y roles.
People come up on their own out of both big shops and small shops. There isn’t a clear right/wrong, but they can offer different experiences. At a small shop that does deals with friends and family money you might get more operational experience. At a larger shop with institutional capital you have the opportunity to get fluent in talking finance and interface with serious equity partners, which will probably help in the future if you want to raise institutional equity. Do you need the operational experience to succeed - no, you can hire out. Do you need the capital markets experience to succeed? Also no
its a lot of choices that you should try to optimize for what you want to do. Life is short go have fun
As someone who worked at a small shop and now does my own thing, I would advise number 3 because a smaller shop usually also means working on smaller deals, which for someone who wants to go out on their own is what you want. There is a very big difference between working on a 100 unit acquisition/development and a 10 unit. Realistically, you will not be doing 100 units when you first go out on your own. You need to acquire knowledge, experience, and capital before pursuing those deals and it is very likely that you never even get to that level...not many do. You also realistically won't be raising a fund either and esp not when you first start. Realistically, you will start with a small deal, maybe in the sub-$3mm range, so ideally you want to work at a shop that exposes you to this level as much as possible. If you raise capital it will probably be in the form of family and friends on a deal by deal basis at first. However, the down side to working for a smaller shop is usually less pay which also means less borrowing power and equity to invest. Regardless of which path you take, my advice for someone who wants to go out on their own is to buy a property as soon as you feel comfortable. Honestly, you will learn a lot more about real estate this way and all the headaches that come with it. It doesn't need to be an investment property. It can be a house for yourself. You will also see if you have the balls and risk appetite for being an entrepreneur. Not everyone has the stomach to part ways with tens to hundreds of thousands of dollars for the potential to make more or lose it all.
yeah I’m not under impression that I can raise a fund and take down 9 figure deals or eventually “build an empire” or whatever that means.
Knowing how to navigate $1-20M deals makes a lot of sense to me and would probably be where I’d plan to end up. Thanks for reply.
As @CRE said, it depends on what you want to do. However, I can give a generic piece of advice that should be obvious. The experience that will be most valuable for you as it relates to starting your own shop is the role that will most closely mimic what you'll end up doing on your own, at least at first.
Working for a large institutional fund or developer can be lucrative, but you'll be insulated from a lot of the things you'll need to self-perform as a small and new operator. Yeah, it's great to have someone else who deals with the property managers, who puts together the construction draws, an in-house legal team to review deal docs, etc etc. But you're going to have to do a lot of that shit yourself when you start NewCo LLC in 10 years. And frankly, the advantage you note (gives you access to capital providers) isn't really the case. The people giving money to Hines or Savannah aren't going to be the ones funding your venture - why would they, when they have a relationship with a firm or fund that is probably bigger and more successful than you'll ever be (no offense intended, just the reality)?
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