I'm new to WSO, but have found it as an amazing resource for any real estate questions that I've had on my mind, or didn't know I had.
I'm currently working for a real estate investment company, in development, on the west coast. We do a considerable amount of industrial development, and very little office or MF. The company is a family-owned company, with values that are pretty different from mine. My job is honestly a pretty good job, with very competitive pay, but it lacks independence, and all decisions are from the owner. I also do not have much freedom in finding my own deals and taking them from start to finish. Most of our projects are on land the company has owned for years. I recently received an offer from someone I've met through ULI, to come work development for a national MF firm. Top 5 firm. The development team is only him in the Pacific NW, so there is a lot of opportunity within the company, and specifically the region. I have my own thoughts on the MF sector, and it's pretty similar to what I have been reading on WSO, in that MF is peaking and it's due for a correction.
My question is, do you think moving to a MF development company in the current market, and away from a pretty stable family-owned company with limited opportunity, is a very bad idea? Or would I be better off waiting out the next 1-2 years to see where the market lands?
I just made a similar move. The opportunity to gain expertise in 1-2 other product types can serve to make you significantly more dangerous as a principal/owner 10-20 years from now, which is why I did it.
That being said, how is the firm capitalized? If they have a huge cash position on their balance sheet and are buying deals/funding construction with cash, they will likely be well positioned to take advantage of pricing dynamics in a downturn. In contrast, a group that has high portfolio leverage, requires equity sourcing on individual deals or is subject to recourse construction financing on their development-stage work may find a downturn significantly more challenging to operate in. I would just recommend understanding how the firm is structured and their investment outlook for the next 5-10 years.
I know that the MF company is NOT using their cash for their deals. They require equity sourcing, which is one of my worries with the company. However, with the development team is small and serves the whole Pacific Northwest, which has pretty diverse employers, especially Seattle.
What's a "top 5" multifamily firm? If you go by units it's:
None of those companies have a development team that consists of only one guy up in Seattle or something. Is it a regional office? Are you using some other metric?
I guess they are actually top 10 not top 5, but they have a large west coast presence but mainly out of California. All the back of house legal, design review etc. is ran from their California office and then there are regional partners. Basically the "boots on the ground" of finding the sites and putting together the deals is a one man show with support of their corporate office.
I agree w Ricky above. Thinking strategically, this is really about the firm's ability to weather a storm. So examine their balance sheet, corporate structure, and liquidity position. If they are buckling down à la EQR and have a strong plan for the next cycle, then I say take the job.
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