Need of working for someone to learn value-add multifamily?

Title says it all, currently working for a large institutional GP doing acquisitions in a few residential niches and always have a desire of going out on my own. And as most people know, multifamily has been considered as relatively easy asset class in comparison to other ones and it seems to me that many people have been quite successful without having much prior multifamily background and capital.

Do you really need to spend a couple years working for someone to learn value-add multifamily? Correct me if I'm wrong, I'm thinking you can learn pretty much everything like where you should renovate to add most value and where to cut expenses to drive the NOI through online resources / books, which I think is probably more efficient use of my time?  Would appreciate any insights.

Comments (12)

  • Analyst 1 in RE - Comm
Sep 13, 2022 - 7:07pm

Agree but I do think people make money in every stage of the economy cycle and it's the matter of making more / less and adjusting investment criteria. But my question was if it's worth your time working for someone for a few years to specifically learn mulfamily. From my understanding, you can learn most of the stuff through online resources? Trying to figure out how to best use my next few years.

Sep 14, 2022 - 12:43pm
Sham Wow, what's your opinion? Comment below:

It's a contacts thing, and learning what the market is:

Do you know who to call to get debt, raise your equity, do your thirds?

Do you know the market, is every 90s deal in your market at X cap rate, partially renoed what is the market for fully renoed, partially, where can you push rents?

After a million reps with someone elses money you can do that in your sleep - learning this with your own money not be fun

Sep 13, 2022 - 7:26pm
[email protected], what's your opinion? Comment below:

Depends on the scale/size that you're looking to do. If you want to do $20mm+ deals, I think it would be very good experience (particularly on the AM side), if smaller than $10mm, I'd probably just go try to buy a duplex and learn in the school of hard knocks. Between that, I'm not sure, either way is probably fine.

Also, easier/less complex does not mean less work.

  • VP in RE - Comm
Sep 14, 2022 - 3:15pm

It's easy to underwrite, sure, but you still need to (1) get deals under control, (2) capitalize the deals and (3) execute the business plan. It's a lot easier said than done. 

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Sep 19, 2022 - 10:00am
Ozymandia, what's your opinion? Comment below:

It's easy to underwrite, sure, but you still need to (1) get deals under control, (2) capitalize the deals and (3) execute the business plan. It's a lot easier said than done. 

This, 100000000%

Underwriting multifamily may be "easy" but you still have to do 95% of the work after you've done that.  Underwriting as a job isn't accretive to anything, and that gets forgotten on a site which is heavily geared towards finance and excel skills and the like.  Underwriting a deal is like making a road map - you still have to actually do all the shit after you close, and that's way harder and more effort intensive than sitting at a desk for a day and putting together a model.

And to the original point about MF, it's worth noting that despite the ease of underwriting, politically it can be very difficult, because you're dealing with actual people and actual homes.  Raising the rent on a law firm or a CVS so they'll vacate isn't going to cause problems, but try doing that to all your tenants and you might find a lot of attention you really don't want at your front door.

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Sep 15, 2022 - 12:06pm
CREnadian, what's your opinion? Comment below:

If you have access to the capital to do some smaller scale deals and work your way up from there, then no, there's no real benefit to starting at a large shop. At analyst level you're not going to learn anything helpful beyond how to underwrite a deal and execute due diligence (both of which you can figure out on your own as you go), maybe some deal structuring stuff but a good lawyer can cover your ass there.

The real reason people who want to strike out on their own will start at a shop tends to be one of two reasons - 1. no access to capital so they want to build a resume to help with fund raising down the road, or 2. because they want to do development which is a lot harder to get into with no proper training/experience.

For value add multifamily, there are a ton of people that start out doing 5-10 unit properties with their own or friends and family money and gradually build up their wealth. You don't even learn from books/online (although it does help) but simply by doing the work and listening to your GC, consultants, and lawyer.

Sep 19, 2022 - 11:38am
Big CoC, what's your opinion? Comment below:

100%. I've been thinking about this a lot as well and I think I fall under point number 1. I want to go out on my own eventually but there's no way any LP (even the very small mom and pop ones) will take me seriously unless I have a track record and pedigree. Not to mention it's easier for me to build up sufficient funds and pay down debt through my salary/bonus now at the firm I'm at. I don't want to do development but that's a valid reason to work at a large shop first.

  • Analyst 3+ in RE - Comm
Sep 19, 2022 - 3:23am

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