Learning development in your 20s: what you did and what you wish you did?
I've just graduated and I am currently working in development as an analyst. I was wondering what your recommendations are for best practice to improve throughout your 20s.
Are there any materials you learnt from/ wished you learnt from starting out (whether it be courses, textbooks, websites etc...)? What you did/wish you did to set yourself apart as you progressed through this part of your career (e.g. regularly studying comp data or improving your knowledge of construction/design... anything you can suggest).
I wish I had really immersed myself in the construction process. Asked every stupid question I could, spent time talking to the various trades about what they were doing, how it all came together, lived on site to the extent possible. I didn't, and now it feels like I'm too far behind to catch up on that side of it
Great advice, thank you!
I second this.
As an acq analyst, I wish I asked to be included in more meetings and property tours just so I can understand the minutiae of the deal process better. I also feel a little behind compared to my peers now.
How did you immerse yourself in the construction process? I really feel like I need to learn that side, but any time I'm in OAC meetings or something they don't have time to explain stuff to me.
I've tried to find a Construction for Dummies type book but haven't really found any good resources. I really need something that talks about construction, MEP, etc. but more geared towards higher-level knowledge for someone with a finance background.
Well the point is that I didn't, and I wish I had.
But it's not something you'll learn in a book. That's the whole issue. Understanding the process soup to nuts, from the design to the mobilization and sequencing is... well, it's an entire career in and of itself, but knowing a little bit about it can help solve issues before they arise.
The only way to do that is to be involved in a project and to make an effort to spend time on site.
Couple things that my boss and mentor have recommended that have helped me out so far:
1. End up in a shop where you can co-invest or have decent promote on deals
The name of the game is to learn in your early 20s with other people's capital and eventually be able to meaningfully contribute on deals. So when you are starting out make sure that you're learning a lot to eventually start doing your own deals and meeting the people (and more importantly keeping in contact with them) who are involved in the process. So lenders, GCs, D/E financiers, etc. By your early 30s you want to be at a shop, or start your own, where a significant part of your income is coming from deals, whether this is co-invest or promote. If this isn't the case, your experience and relationships will help you recruit to somewhere where your value creation on deals will be compensated accordingly. Something I wish I did was keep track of all the deals I had worked on (size, asset class, etc) for use in recruiting at other firms.
2. Specialization
A jack of all trades is a master of none. Early on it's fine to have a wide scope, but you eventually want to focus on a given geographical area and/or asset class. I know tons of people who have made millions being the student housing guy or the go-to MFR player in South Florida, even in tier 2 cities. If you catch a development opportunity outside of your expertise, go in on the project with someone who knows that asset class and/or area cold.
3. Macroeconomic trends
Coming from a finance background out of undergrad I was shocked at how many general contractors were not keeping up to date with the news. You should know any big events that will affect the CRE market and development timeline. Commodities pricing trends, interest rates, COL, you better know cold as they can make the difference between being on-time and on-budget versus an unprofitable project. This can save you in the pre-development process.
4. Construction Knowledge
You don't have to be Bob the Builder, but you should know enough about the construction process to where you can quickly look at a continuation sheet and know if something looks off. Never skimp on pre-closing soft costs, these can save you boatloads down the road. I remember one deal we severely under-budgeted on how expensive rock blasting would be due to lack of professional expertise, and it was an expensive lesson that easily could have been avoided. Know more than the average person, but know when you are out of your depth and need to defer to someone. When starting out with a GC or developer you haven't worked with before, monthly draw reviews from an outside 3rd party are worth the dough.
Besides that, keep up to date on national CRE news (WSJ, Bisnow and The Real Deal are good). A book I'd recommend that my old mentor gave me is 'Real Estate Finance and Investments Risks and Opportunities' by Linneman. Pretty dry read, thick as hell but teaches you everything you need to know. For easier, more enjoyable reads try 'The Real Estate Game' by Cruikshank and 'The New Kings of New York' by Weinrab. Know how to model waterfalls cold. Hope this helps
That's so helpful, thank you very much for all the points! Greatly appreciate it. Did you mean the 'New Kings of New York' by Adam Piore? Weinrab seems to write about a chess team?
I don't think any amount of construction knowledge will ever stop you from busting your excavation budget
No dude, life is a chess game. The Top G does not make mistakes
As someone currently in 20s in development, something that's helped me a lot is making sure I'm on the monthly pencil req reviews with my boss, owners construction rep, architect, and GC's PM. Takes about an hour or two and we go though all the sub back up logs and basically fact check the % completes and billing the GC has received from each trade. Will help when organizing the monthly draws (which include soft + financing costs) for the bank. You'll see how much money is spent each month which is a good indication of how your project is progressing (I.e. if there's not a lot of invoices this month, how come? Are trades behind on billing or do things need to speed up? Does it reflect the amount of work you've seen done in the field?).
Pair this with weekly or bi-weekly site visits for OAC meetings, walk the buildings before the meeting if you can and bring a finish schedule to track progress on each trades floor by floor or however the construction is phased. Ask questions in the field. All this will help a lot with understanding the construction side of the business which I was (still am) lacking in when starting out, coming from the finance side of the industry before.
I am currently trying to do this to some degree, but the development manager / project QB ends up taking the responsibility for most of the items you mentioned. Right now I'm just tasked with the underwriting really and it is sometimes hard to keep a grasp on the bigger picture and all the workstreams that lead to the end product.
Any suggestion in how to get more involved and not get brushed aside as the numbers guy?
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