RE Developer vs REPE Fund founder

Hello, What are the pros and cons to be developer/investor. What do you personally think is better and why? I heard a lot of developers go bankrupt but also seems like the guys that do the biggest things in the industry are the developers… Any further remarks will be much appreciated. Regards.

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Developers take risk, so it's no surprise they go bust.  Private equity allocates capital, and are by their nature less prominent in any given deal, so not only are they less likely to go bust, it's less likely you'll hear about it if they do.  LPs also rarely have recourse debt, so it is rare to see them get hit badly by a project failing.  It's more of a drag on returns than someone reaching into their pocket.  Additionally, it is very easy (or relatively so) to open your own development business, which is one of the attractions of being in this business in the first place.  That naturally entails that you've got a lot of under-capitalized developers who are more likely to go bankrupt if their project doesn't pan out, especially early on.

I prefer development, I find it more interesting and challenging and I like touching all aspects of a deal instead of just the handful that your average equity allocator looks at.  But it's entirely a matter of personal preference, one isn't "better" than the other.  The one thing to reiterate is that development is vastly easier to break into in terms of entrepreneurship and owning a company - it's an extremely realizable goal, to a degree that raising a 9 or 10 figure fund just isn't comparable.

 

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