Perception of Single Family Acquisitions/Development

RunTheThrone's picture
Rank: Baboon | 137

After doing various searches on this forum, I have noticed SF is a product that doesn't get discussed frequently on this forum. I have prior experience in a Capital Markets intern role at a small developer in the Multi-family space and have recently started working for a large publicly-traded home builder in a major East coast market within their land acquisitions group. It seems there is a certain "prestige" carried with working in CRE or MF vs. SF acquisitions.

  • Other than the obvious economies of scale positioning that MF has, what are other reasons that SF is not talked about nearly as much as MF is?
  • Nuances with key metrics/ratios/jargon aside, Is it relatively easy to switch over from a SF acquisitions role to an acquisitions role in CRE?
  • What is the overall perception of a professional working for a publicly-traded home builder?

Would anyone who has either worked in both or switched over from SF to another product be able to chime in?

Comments (10)

Most Helpful
Apr 10, 2019
  1. It's more niche. Less firms go after this space, therefore less jobs are available in it. MF is a hot topic right now because it's very institutional. It's institutional because it has a steady cash flow stream and is pretty easy to understand. SF builders do not have that steady cash flow- you just need to sell at a high price and quickly.
  2. I'll let someone else respond to that. Idk myself.
  3. There's mixed reviews. I don't think it's bad experience. You will need to show you can model for that steady stream of cash flows and calculate various scenarios. You could transition to a really cool firm that does spec housing. Plus Development out in Beverly Hills has taken down some cool projects. There are numerous out there.

"The three most harmful addictions are heroin, carbohydrates, and a monthly salary." - Nassim Taleb

    • 3
Apr 10, 2019

That definitely seems to be the impression i'm getting on this forum/the broader RE Professionals community. I'd like to eventually see other products in the future and i'd definitely like to transition over to development. I'm not too sure how I feel about spec builders like a Lennar/LGI.

Apr 10, 2019

I interviewed for a Land Acquisition Analyst for Toll Brothers awhile back. It was mainly for SF.

Seemed incredibly boring and mundane modeling and basically 90% market research. All the higher level modeling was done by their Corp finance debt/equity team.

Apr 10, 2019

I can't speak for any of the other larger builders, but that might just be a nuance at Toll Brothers. I've been able to see a bit of higher level modeling and more interesting work(in a short time) but the builder I work for also doesn't have a corp-fin team sitting onsite. All modeling responsibilities fall on to our acquisitions team for our land deals.

Apr 10, 2019

I think it may be because of the end user of a product. Most SF home builders are merchant builders, unless I miss my guess. Build home and sell it to a family. Done. Wash your hands and move on to the next lot. It's hard to scale that, because it's not a product which people rent, which means on an individual basis its small potatoes, so not worth the time for an institutional player. But CMBS is obviously a massive market; that's where the institutionalized money gets on board for SF product.

Apr 10, 2019

Put frankly, it is not sexy. Building/selling homes for $200K a pop VS multi-million dollar investments in single assets/portfolios. This industry covets the big deal and loves posting high water market, highly publicized deals. Inherently, SF cannot compete on that front.

Doable, probably a bit of a challenge because you're competing with guys that have CRE exp which is obviously the most applicable and thus, plug and play.

I cannot speak from personal exp here, but perception appears to be that you guys operate in a different world. However untrue that may be.

I'd think it'd be harder than it should be to transition to a more traditional CRE development/acquisitions role but certainly doable. At the end of the day what you're doing is not much different than was we are doing. Buying, building and selling for (ideally) a profit. Understanding how to do that in your current field and extrapolating that to other products may be the key to transitioning, if that is what you decide to do.

    • 2
Apr 10, 2019

My very first real estate related internship was with a single family LP based in Southern California. Small shop of maybe 25 people total, 3 partners running things. They've done exceptionally well in the space because they were one of the first to court institutional capital for single family coming out of the S&L crisis. No one was really doing this then.

Anyways, the work seemed interesting and the top 8-10 people at this firm are all millionaires many times over. They were pretty hands on, lot of meetings with developer partners, lot of driving to check out sites, going with developers to meet with local officials, dealing with architects and landscape architects, etc. You can have a successful career and make plenty of money doing single family, it just comes down to preference I suppose.

    • 3
Apr 10, 2019
bd.charlus:

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Anyways, the work seemed interesting and the top 8-10 people at this firm are all millionaires many times over. They were pretty hands on, lot of meetings with developer partners, lot of driving to check out sites, going with developers to meet with local officials, dealing with architects and landscape architects, etc. You can have a successful career and make plenty of money doing single family, it just comes down to preference I suppose.

this. It's not prestigious in a way that anyone on wso would appreciate, I get that, but it's not going anywhere and it's challenging (it is a tough business) and it seems like there's the potential to make a ton.

    • 1
Apr 13, 2019

Second this. I know many more millionaires from building up homebuilding companies and selling than I do from more traditional investment/development RE shops.

    • 1
Apr 11, 2019
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