I've been considering giving up on my Wall Street dreams and pursuing a career in RE development. Better hours, less repetitive job duties, and more entrepreneurial opportunities for people without an 8 figure net worth make the field seem a lot more interesting to me.
I feel I would be really good at zoning and environmental issues, dealing with lawyers, and really any other type of regulatory issues. At my previous PE internship I gained a lot of experience researching pharmaceutical regulations, communicating with government regulatory authorities, etc. and to make a long story short, I probably saved them more money than their in-house attorney that year. That wasn't enough to make me consider a career in healthcare law, but it did convince me that I am a valuable asset in any industry that has a lot of complex regulatory issues.
I also believe I am capable of excelling at market research and really any type of due diligence related activities the job can throw at me. Finance aspects of the job shouldn't be a problem for a finance major with good grades and a couple finance internships. The ability to think outside the box has also been one of my strong points and I could see myself being good at figuring out creative ways to milk more income out of rental properties.
What concerns me about commercial real estate, is that it seems like your ability to network and having a powerful rolodex is way more important than ANYTHING else, even more so than Wall Street. I've always been kind of a socially awkward guy and am definitely not a sales type. I'm not a complete weirdo with no friends kind of awkward, but very far from being able to walk into a room full of brokers and being able to light up the room. Should this be enough to deter me from entering the field, or can excelling at other aspects compensate for me not being a social butterfly?
Commercial real estate brokers are the lowest form of human life. You don't gauge your ability to succeed at real estate development by the lowest common denominator in the industry. They are social butterflies because they have to be to gain clients.
I can't speak to whether or not real estate development is right for you as a career, but there are plenty of people that do well in real estate development who aren't social butterflies. Raising money isn't about the quantity of contacts; it's about quality contacts. Even so, most people (not all, most) will probably spend a decade working as an employee in one form or various forms of real estate prior to going out on his own. If you're going to be a developer you'll probably work for a developer or something similar for a good, long while. Over the years you'll organically make friends and contacts, you'll learn the business, and, hopefully, you'll prove your competence and good judgment to your contacts. Things will develop (pardon the pun) organically.
Yes, the industry tends to be dominated by type A's and there are some big players who came from a brokerage background, but this whole idea that real estate is nothing but RELATIONSHIPS RELATIONSHIPS RELATIONSHIPS gets a little tired. If you want to be a broker, then yes, this is true, but for god's sake, what business is NOT about relationships? What about i-banking, is that less about relationships than real estate? I've met some very successful developers whose personalities are so robotic that they come off as borderline creepy.
I'm sorry, but what the fuck? I can't even begin to describe how this is one of the dumbest things I've ever seen on this site. Nevermind that I can't tell you the number of successful developers I know that got their starts in leasing. Do you need to be a rocket scientist for brokerage? No, of course not, but far from the lowest form of human life. Jesus.
Well, you're entitled to your opinion, wrong as it may be. I find most commercial real estate brokers to be mouth-breathing idiots. I guess I'm entitled to my (correct) opinion, too.
The reason you see so many mouth breathing brokers is because it's very easy to get into brokerage and a lot of brokers are not competent. The delta between the quality of people among different brokerage shops is huge, larger than any industry you see here.
The nature of the brokerage business requires a top broker to be "social butterflies" as you call it, but because of this, their other qualities like knowledge of the real estate business and knowledge of certain market is often overlooked by people like you.
LOL. All the little b*tches are coming out complaining that those in their profession have been observed to be largely worthless.
Haha you are going to go far with this mentality make sure you tell this to Adam Spies if you ever get a chance to meet him.
Not sure how strong your English is, but you know that a commercial real estate broker isn't the same thing as a commercial mortgage or equity broker, right? You're aware that there are brokers for yachts, classic cars, and businesses, right? So interviewing with a commercial debt/equity broker is not the same thing as interviewing with a commercial real estate broker. You're aware of this basic fact of life, right? These are all different careers. You get that, right?
To that point, my argument is that it's wrong to say "CRE brokers are lowest form of human life" becuase, just to name a few: 1. A lot of them make shit ton of money. A lot of them make more than the "higher form human life" you would think (asset mangers, etc.) 2. A lot of brokers actually know their shit. They know the market; they have a good idea of what deals will trade at; they know the story behind each deal they sold or their competitor sold.
Now, let's not try to validate your arguments by attacking posters. What's your reasoning for CRE broker being the lowest form of human life?
First of all, "making a ton of money" does not qualify someone as being competent, value-adding, or not a scum sucker. If "making money" meant someone automatically was a valuable human being than Bernie Maddoff and Jordan Belfort would be the Pope.
Second of all, very, very, very few brokers make a lot of money. I believe the stat is something like 90% of CRE brokers fail within 3 years. Any high-earning average compensation reported by brokers is simply a reality of the survivorship bias.
I dislike CRE brokers because I've yet to see them add value. We have salaried, licensed staff that lease our properties, but they are basically employees serving a function within the greater company, not fast talking salesmen. I recently ran an NPV of their work and the work we hire out to DTZ, and our NPV is much better by having salaried staff handle leasing because they are hyper focused on the company's needs and not splitting their time with 50 other clients. Besides, what sells property and gets lease traffic? The listing, the price point, the location, the building class. Brokers do d*ck. We are better negotiators than our outside brokers.
Brokers told us that one of our pieces of land was worth about $10 million. Six months later I personally sold the land for $15 million. Brokers were hired to sell our crappy office condos. How did we ultimately sell them? We did seller financing to the current tenants. Brokers are great salesmen when the property sells itself. When the property sucks and you need a professional to sell it, it turns out the property is sold by location, price point, and class, not by the brokers' contacts or brilliant insight.
How do we invest in hush hush, insider deals? We have our own contacts at investment companies. We don't need to do an NAIOP bus tour to know what's happening.
Well that's aggressive. I hated being a broker for a year and I hated maybe 50% of the brokers in my office, but you probably shouldn't gauge an entire industry by the lowest common denominators of that industry either. The people who are actually successful brokers rise to the top for a reason, and that reason is usually not because they're the "lowest form of human life." There are ISIS, the KKK, Elizabeth Warren, Justin Bieber...you're purposefully ignoring a lot.
Ah, but this is correct. Very much so.
It's hyperbole, a verbal device used to make a point, not to be taken literally. The point is, broker is at the bottom of the list of people a prospective developer needs to model his career after.
"I interviewed with them [NGKF] in June of last year for a senior analyst role in their debt/equity placement group in their NW DC office. They had just poached a team of two big originators who were looking to hire their staff. The office space is really nice, the hiring managers (team leads) seemed like nice guys, but there was no "personality fit." There was obviously no mutual interest between the sides--I wasn't down with their personalities and they were not down with mine." -DCDepository
You interviewed at a brokerage shop a few months back. Could you be a bigger hypocrite?
Wow. We're obviously talking about commercial real estate brokers, i.e. the people who need a real estate license to practice. We're not talking about debt/equity placement brokers, yacht brokers, or brothels. We're talking about commercial real estate brokers. As is clearly presented, I interviewed with a group of commercial mortgage and equity brokers.
Could you be any more dense?
Yeah, there are plenty of people who disagree with me because about 75% of the people who frequent the WSO real estate forum work as commercial real estate brokers. Congrats on commercial real estate brokers not agreeing that they are incompetent morons who produce questionable value-add.
it sounds like you may be a better fit for AM than development. In AM you would be doing a lot of the due diligence work to set yearly asset business plans and budgets, make decisions on leasing, capital improvement projects, etc. There is plenty of interaction with lawyers, accountants, property managers, contractors, etc. to figure out regulatory and legal framework for all sorts of situations - from tax avoidance strategies to construction project management. But on the other side, you generally don't need the huge Rolodex because the assets are purchased by another team and handed off to you to manage. If you went institutional, you would never make the super big $, because that usually goes to acquisitions, but you wouldn't be poor and at some places, they let employees buy into the funds.
That's good to hear.
Sounds like a viable game plan!
That's unfortunate. I had a CRE AM interview for a position in TX a few weeks ago. I didn't really have any idea what CRE AM was at the time (just blindly applied to hundreds of positions all over the country one weekend) and had two other interviews that week, that I was way more concerned about, so the interview didn't exactly go well. Now I know =].
As for going institutional or not. I wouldn't mind doing development at a smaller firm, making connections with contractors, and start flipping houses on the side. I hear flipping houses is a negative sum game, unless you are a contractor, or know a bunch of them that are going to hook you up. Although, I can see where this might not allowed due to conflicts of interest.
Two things:
Get some real estate experience before you make your decision. I've been in the industry for 3-4 years and I'm still discovering new approaches and niches and property types and the only way you do that is through experience. "Development" is such a wide spread term. There are many different jobs and even more focuses under that umbrella.
You don't need to be a slick salesman. In fact, most of the very successful people I know in the industry aren't. Still, pure spec development does lend itself toward a more...flamboyant personality, and real estate, especially when it comes to fundraising, is still all about who you know. You're going to have to join organizations, both real estate groups and otherwise, and most certainly network.
Hi,
I have seen your response in a handful of threads and love it. Are you a mentor here also? I would like to ask you a few questions.
I am currently a residential real estate broker and want to make a change to Developement. Starting my MSRE at Geogrerown this Fall 2022.
You never know until you try. Give it a shot.
Things are getting heated in here.
Pokemon Master - you really should look into the "type-themed gym" market. If you can navigate the zoning hurdles of say, installing a fire gym inside of an active volcano, I'm sure you'll be able to consult for gym leaders of all regions.
Eats popcorn
F5, F5, F5
I feel like someone, who is usually a solid poster, is having a bad day.
I just caught up on this thread and wow. Getting pretty heated.
I second CRE's comment though. DCD is definitely one of the top RE posters on WSO. Hopefully this gets resolved because if DCD stops posting there are a bunch of people that will be a lot worse off without DCD's good insight.
Regarding leasing brokers (which I am guessing what this thread turned to be out) they can be annoying and piss people off very easily. My guess is that DCD got screwed by a broker on deal and is upset about it. Brokers do have a way of doing that to people.
I had thought this conversation was about investment sales brokers.
@DCDepository your starting to sound like a middle aged asset manager that works at a boring family office and only deals with brokers on a rare occasion b/c your deal flow is so low. If you spent half as much time working on transactions as you did posting on "Wallstreet Oasis" your comments might actually be worth something. Groups that are deploying hundreds of millions annually rely on brokers b/c you can't source every single deal, if you work on a national or even regional basis, its a necessary evil and it doesn't necessarily make you "the lowest form of life." For the record, I have a brokers license that I use occasionally but I'm a developer/investor by trade.
I know several introvert/Type 'B' developers that do very well for themselves. They probably don't do as well as most of the loud mouth/dick swinging idiots that we run into, but that's simply a risk tolerance/business cycle relationship - everyone with half a brain is doing well at this point in the cycle, we'll see who is around in 2 years.
DCD what firm do you work for?
Threads in this sub-forum have a way of veering toward the point of view of the responding posters...
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