How to Pivot to Development?
Hi wso,
I’m an incoming MBA student at UW Madison, hoping to pivot into development after being a data analyst since undergrad.
Development is what really drives me but as I’ve been looking at job openings, it seems like there is less available for development than say the AM side of RE.
Should I hedge my bets by focusing on a broader set of skills that would allow me to first land a job in the RE industry and then work my way over to the development side?
The program also has an REIT track, and a Private Equity track. They do allow you to pick whatever electives but the experiential learning opportunities are limited to which track you choose.
Any insights are greatly appreciated!
Based on the most helpful WSO content, here's what you need to know:
Hedging Your Bets: It's a smart move to focus on a broader set of skills initially. Real estate development is a niche field, and opportunities can be limited compared to asset management (AM) or other areas like REITs or Private Equity (PE). By starting in a broader role within the real estate industry, you can build foundational knowledge, gain exposure to the market, and develop transferable skills that will help you pivot into development later.
Choosing the Right Track: Since UW Madison offers specific tracks, consider the following:
Electives and Experiential Learning: Take advantage of electives that focus on development-related topics, such as land use, project management, or real estate finance. Even if experiential learning is limited to your chosen track, you can supplement this by networking with alumni in development, attending industry events, or seeking internships specifically in development.
Networking and Storytelling: Real estate is heavily relationship-driven. Use your MBA to network aggressively with professionals in development. Craft a compelling narrative about why you want to pivot into development, emphasizing your passion and transferable skills from your data analyst background (e.g., analytical rigor, attention to detail).
Start Small, Think Big: If development roles are scarce, consider starting in a role that overlaps with development, such as acquisitions or project management. These roles often provide exposure to the development process and can serve as a stepping stone.
Long-Term Strategy: Remember, development requires a broad skill set, including project management, financial acumen, and an understanding of construction and operations. Focus on building these skills over time, even if your first role post-MBA isn't directly in development.
By strategically leveraging your MBA program, networking, and gaining relevant experience, you'll position yourself well to pivot into development. Good luck!
Sources: Real Estate Career after MBA, https://www.wallstreetoasis.com/forum/real-estate/mba-programs-for-real-estate?customgpt=1, Thoughts on acquisitions vs. development, Best path to Development?, MBA after entry-level development role?
Transitioning into development isn't impossible but it will be difficult. Partially because development is just trickier in general right now with higher interest rates and elevated construction costs, but also because there are just fewer roles for it. Acquisitions and AM work essentially encompasses all of the existing real estate on top of anything new in any given real, development is just the slice of new buildings.
Aside from that, developers in general require a broader knowledge base. Sure, as a developer you will most likely specialize in a specific asset class whereas private equity or debt roles are more broad from that perspective, but the actual work you do as a developer is far more varied. The nature of the work requires it, you are responsible for the entire project, from start to finish, and each phase of the project requires knowledge in a different field.
You will need to know how to model a deal and underwrite potential land acquisitions and developments. That will encompass Excel work, finding comps, understanding neighborhoods and the intangibles about what makes some real estate better than others (beyond location). You will need to know how to sell the deal and negotiate with equity and debt partners. You will need to know how to manage the architects and civil engineers who are putting your drawings together, how to manage their designs, understand what makes for a good unit layout, what types of construction are more expensive, if your market likes walkthrough closets to get to the bathroom or walkthrough bathrooms to get to the closet, what amenities are worth spending on. You will need to know how to navigate your local zoning and planning boards so you can get the entitlements you need to actually build the damn thing. You need to know what you can offer in exchange for said entitlements, what requests go too far, what requests are easy wins, how you come off in public hearing so you don't become the villain developer. You need to know how construction works and how to read construction drawings, how to fight back when they keep asking for change orders, how to manage your contingencies, what you can VE and what needs to stay. You need to know how to price your units, how to manage the property managers, how to actually run the building, when to sell or refinance. You need to know when you need a lawyer to negotiate on your behalf and when you can do the redlines yourself. You need to know the dozens of consultants you need to make sure you have a functioning building. You need to understand insurance. You need to understand title. You need to be able to understand insurance and title without losing your mind. You need to figure out the telecom on your own. You need to be able to walk 20 units a day to finish your punchlists and not want to put a bullet through your head because you've been staring at drywall all day.
You will have people who will help and "do" most of the work, but your job is to oversee everything. Coming straight out of school no one will expect you to know everything on day 1, but typically people come from real estate finance, brokerage or construction, so large chunks of what I just described are already covered. For example, I came to development from construction so I was able to sell them on my construction knowledge and project management abilities. I found a firm that valued that more than a background in finance. Most places (especially the larger, more institutional ones) will care more about a strong financial background/base, so my recommendation is to really hit the finance stuff hard.
I recognize this comment has been light on advice, so here it is: Network and try to get internships during school that relate to underwriting. Getting a summer internship at a PE or debt shop would be really useful for your resume. You can't really "specialize in development", so getting deep experience in other areas of real estate finance is a plus. I'd avoid a REIT track but a PE track won't be the end of the world. Like I said, there is a lot of knowledge that goes into development, starting for a few years elsewhere in real estate is not the end of the world. People transition in from all different areas. And take a real estate or contracts law class if you can, it was insanely helpful for me.
Thank you for your reply!
As you pointed out, the breadth of responsibility in development is expansive, which is part of what draws me towards it as a career. I like the fluidity of the process, I think it lends itself to opportunities to think critically and problem solve as things constantly evolve over the duration of each project.
I come from a family of house flippers so I have been exposed to a variety of financing, design, construction, and sales conversations, albeit at a much smaller scale, but certainly analogous to the type of work that goes into a development. I’m hopeful that I can leverage this experience to make a case for why I have the capability of fostering the vision/intuition necessary to excel in the profession.
After reading your comment and doing some more digging online I am now leaning towards the PE track within the MBA program. It would provide the most hands on learning that would solidify my hard skills in finance, and then I can supplement with other development related electives, such as the real estate law course you mentioned.
Thanks again for the depth of your response, it has definitely helped me to gain some clarity on my situation.
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