Best avenue to become a developer?
My goal is to start my developing myself personally and slowly build a business. I am in the Miami region and believe the area will see a lot more growth. I'm about to finish college and looking to start working in commercial real estate. I would like to start full time developing by 30 or 35. I am planning on starting within 12 months once I start work full time.
I am also very lucky enough to have my dad to work in CRE. He has done some developing here (4 sites). He is looking to develop more when he retires and with debt financing he believes he would be able to use about $8.5m (including debt) to do projects.
There are a few paths I'm tossing up to do:
Work in a big institutional developer - this would be good as it would help build relationships and have more clout to raise money and obtain financing. However I wouldn't earn as much doing REPE or Brokerage and the I wouldn't be big projects like the biggest developers. I'd be doing mostly residential projects.
Brokerage/REPE - More compensation which helps doing more/bigger projects. Downside is my developing knowledge wouldn't be as strong but I believe I would be able to learn whilst working doing developing on the side.
What would you suggest I do?
My 2 cents is go find a land brokerage team and start there. You've already got enough exposure to real estate to fumble your way through the basics, so you can find a production role quickly as well. In a good market on the right team you can make stupid amounts of money on your own all while building out your network of developers, architects, GCs, lawyers, and capital sources. It will also help you learn how to put deals together and find truly valuable and truly off-market sites. I'm intimately involved with helping many of my developers underwrite deals, find capital, analyze the market, and sell the project to their IC, and am confident in my ability to put development deals together in the future. Additionally, if you do a good job for your clients and they like you, you can usually throw your commission into the deal as a standard LP position or even as a GP if you want to be more involved or use it as a way to get the hands on development experience.
Ultimately, I've found that it's the quickest way to getting enough money, experience, and connections to start doing your own deals. Additionally, this personal capital source will give you relative independence when going out on your own. The traditional route of working for a bigger developer for 10 years and then breaking off on your own puts you at a control disadvantage. Given that you've likely only had experience working large deals and don't have the resources or experience to pull of small deals profitably, those large deals are the only projects you will be able to execute profitably. Problem is that you will have to raise 95% of the equity and be entirely under control of your investors and their return and dispo expectations. You then have to keep churning, burning, and finding deals before you gain enough money and trust to take it easier. It's a path, but seems highly risky and honestly annoying to have to deal with investors like that. It's also not at all a slow organically grown business like you mentioned wanting to build.
Not that I really have the best advice here... but I’d consider starting at a smaller shop. You’ll wear more hats and follow through on more deals, as opposed to touching them briefly, doing your one task a million times.
Brokerage (as opposed to REPE ) could give you a deeper insight into a) your target markets b) how deals are underwritten from both sides and c) you’ll see all the processes and mistakes made without risk d) if you hustle you still get to REALLY know all the players and deals, which might come in handy (OPM).
In the end clout comes from consistently kicking a**, not just a brand name.
Go get that golden shovel!
Agreed about starting at a smaller shop. In the big firms people can get put in a silo very fast - it's also very top down (specifics lack).
So the X factor in your post is working with your dad on deals that are underway. In theory, you could probably work in brokerage and do work for you dad without much conflict (I mean, don't expect to maximize brokerage income doing this). That is a classic entrepreneurial path, and it is the back story of a lot of successful developers for a reason.
I will say, working at an "institution" to get the branding, network, and general know-how of a institutional developer is not a bad idea, if you get the right kind of job with the right kind of firm. You really would want the "life cycle" position where you can stay with a project from acquisition to divestment/stabilization (bonus points if you have to help raise equity/debt for project, but work-life balance will be zero at times...). This is as opposed to the more function siloed teams (i.e. finance-acq-capital, design/entitlements, proj. mngt, asset mngt-leasing, etc.), where you can take years to get promoted to where you real see a "full" project life cycle.
Truth is, it is really difficult, if not outright impractical to actual try and control and manage a career to "see" and "learn" all the stuff you need for any entrepreneurial endeavor, and frankly at your age/stage of the game, it actually might see as easy or fun as it ever will. I would really just get the best job you can today, then shift/adjust as you need (or well can). There is no "perfect" move, just get in the game!
Sit repudiandae in est omnis. Nemo sequi excepturi qui maiores odio.
Nihil maiores illo dignissimos. Laborum quam perspiciatis iure rerum sunt id.
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