Okay, so the title is a bit misleading.
I'm meaning someone like a Chief Estimator or Project Manager or COO of a commercial construction company making the leap into real estate development? Are the transitions you've seen actually successful or mostly go down in flames?
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I've seen both executive level and grunt working individuals in construction successfully transition into CRE. They have a keen sense of hard costs and expectations, typically can do them cheaper than anyone else due to their industry connections/experience, and know exactly what an existing building/ground up development would cost.
That being said, it will always come down to the individual and their knowledge of all other facets of CRE development. Zoning, General/Specific plans, Acquisitions, Structuring deals, etc. etc.
My buddy (engineering degree) went from project manager to top tier manhattan private investment shop. My shop has a heavy concentration of development deals - I wish I had a construction background as it would help me vet deals much quicker.
I did construction estimating prior to starting my MRE. Nothing big, just for the family business.
Yep. Think of it this way. Getting into the industry can be done a number of ways. Thats the beauty of RE finance. Traditionally, all these guys in CRE have finance type backgrounds, are great at numbers and started (mostly) in the industry as an analyst modeling and just well being a good spreadsheet monkey. They then get in the field and grow that side of it and eventually work their own deals. They also usually go back and get an MBA at some point (mucho $$$). Well if your in a development heavy shop, I would consider their weakest link is the actual technical knowledge of how to build something. Perhaps thats one part of their toolbox they need to actually learn more about so to speak, in order to become great overall developers. On the other hand, another way into the industry of CRE if you are already in the Construction Management/General Contracting world, you can totally take that skillset to a development shop and immediately implement those skills perhaps initially as their CM guy. Most development shops have specific CM roles but they are not entry level roles. You probably need to be a good PM type level at a GC with good years of experience (7 - 10). But hey you did save on that MBA right? So its great opportunity to transition to a shop at a good level. Most CM roles I see at Dev Shops are Snr PM's, Director/VP level roles. You will be able to asses development deals better, be more aggressive on development offerings than the competition since that was your world and your network in the construction world will be massive if you have 8 years of experience or so. Once you transition to CRE, you will then need to learn more about the RE finance/Acquisition/deal making ability (since you have not done it yet). So you can eventually learn from your peers or from other resources and eventually get out on the street and transition to a quasi CM/Developer guy too. As one of the posts said above, its all on you. Personally, I came form the CM background but I can talk shop/YOC's/development budgets/rent rolls/leases rates/IRR/exit caps/hold periods to anyone at my shop. I learned that from being at a CRE shop though. Anyway, I think I am rambling a little but overall yes totally it can be done. It all comes down to the individual though and what they want to learn and if they are willing to get out there and expose themselves. You have to naturally want to know about RE finance to make it work. If you just want to do construction and being in the details of the technical side of it, CRE probably isn't the place to be. But for bigger picture, CRE is where its at. I was already doing small private RE deals outside of my GC job and I always knew I wanted to be where I am right now.
Yes, several times over. Project managers, engineers, general contractors.
One of the biggest landlords around my area began as a construction laborer. He started doing work for a local family with deep pockets and convinced them to start building apartments in the area. That was 30+ yrs ago... he has since built apartments in other several markets in addition to some office complexes and shopping centers.
This is obviously a special case. Can't imagine how many construction guys go broke on doing their first house flip or small development.
I know of a few people off the top of my head that worked as project managers ---> small dev shop ---> mm/large PE shop.
I'd say this is a great logical sequence of transitioning. Another way would be to mix your PM experience with a MSRED/MSREF. Mixing strong construction/cost knowledge with finance and a persuasive personality is one hell of a weapon in CRE that can make you a ton of money.
See, I did some cost estimating/project management before, and switched to tech sales for the upside, but I hate it. I like the more financial and analytical side of business, and am going to go back to a contractor, but I'm thinking about the long play.
Either something in real estate development or possibly just starting up my own contracting outfit. Just not sure exactly where I'm going, just know I want to make some coin and do something interesting.
I think construction is a good play to potentially pivot into RE finance/development for sure. Being a developer at a shop is an entrepreneurial type role so you could for sure start doing stuff while you are at a GC for example on the side. Stay involved in the CRE scene by being part of NAIOP and stuff like that.
Can you talk more about why you hate sales? I've read some of your previous posts and am very close to making the move to a sales position. Would love to hear any potential warnings.
I love the selling, but I hate the fact that tech startups are as meritocratic as other sales organizations.
Example, I blew quota away with one huge deal, and that deal counted for commission, but they didn't let it count for promotion, which the deal would've gave me. That's stupid in my opinion and something I've heard from others.
I'd second you guys. I have both Finance and CM degrees. Knowing the construction lifecycle gives me better insight to methods, materials and labor, all needed when planning for a deal X years in the future. I can identify potential pitfalls that have the possibility to impact construction schedule, ultimately driving costs. Knowing a potential problem before the GC tells you (or not tell you) is value add.
I know literal construction workers who became small-med size developers. Do quite a good job might I add.
Interesting thread. I think the construction industry as a whole is completely underrated. I know a handful of construction workers who run excavators and dump trucks that make a little over 100k a year. Even the guys doing sidewalks make around 80k. Granted there are days you're working outside when its 100 degrees or 10 degrees, but still not a bad gig.
I agree to a degree, but there are months/years where you make $0, or worse if you own a business then you straight up lose money or have to lay people off.
Deleted. Links at the bottom of the page answered my question (kudos WSO bringing up the relevant content in this bitch)
google the Irish pre-2008 real estate bubble. Half of those cowboys left school at 16 to work construction and at the peak were worth 8-9 figures
Dude, look up Michael Stern of JDS Development. Started in construction, started doing his own condo deals and now he's developing really interesting luxury projects. His firm has construction in-house which is how he used that initial experience to his advantage.
Not to deviate too much from the thread, but I have always been really curious about those guys (JDS). Their firm seems extremely young/inexperienced, most of their work is ridiculously high end spec condo projects and they employ all star architects like Shop who design really expensive buildings and charge very high A/E fees. I don't know much about them but I would not be surprised if they would be completely screwed if the extremely high end luxury market in NYC took a dive. For reference, 111 57th street is their high end condo project off central park, the lowest priced condo unit is $14M (that's for like the 3rd floor). Anyone have much intel on those guys?
They say they're into that project at a really good basis so they'll be ok but we'll see i guess.
Based on what I read he had the balls to tie up the walker tower project and put his deposit on the line.. found PMG as a partner to get it done and has been rolling off the success of that project to pick up new partners and more projects. Good for him, you need luck and big balls to do what he did.
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