Prop Mgmt to Dev, have read it's not ideal path but can Dev's give insight

abc1324's picture
Rank: Orangutan | 263

Hi Everyone,

So long term, in the next 10-15 years (just graduated) I want to have my own dev shop. I've read numerous forums on here and talked to others who recommend the analyst/broker, MSRED, dev route. Can some developers here share their thoughts on another path. I'm considering looking at property managers, not in the sense of go fix this light, but more from the finance perspective understanding the numbers behind what it costs to upkeep a property. I feel this would give me an advantage in terms of knowing the real costs and drivers behind numbers in 2-3 years vs an analyst who worked for a broker and works on models. While I understand excel is important, wouldn't this avenue give me a unique skill set getting to know the costs of running a property at a top Prop Manager in a big city. My thoughts are I could use that, while also working on my excel, meet developers this way and get a rolodex of GC's, concrete, electrical, etc over the 2-5 years I'm there then bring this to a big/small dev saying I have this exposure and am hungry willing to learn and skip the grad school route to get to dev?

Can any developers shed light on their thoughts here? I understand Excel is essential, but at the higher levels it's more about knowing drivers which I feel some prop mgmt companies will give you. The real costs associated with soft/hard/and reoccurring costs associated with a property and get a real understanding of it while meeting key players as well.

Comments (5)

Feb 8, 2019

Not a developer, but I'd say its a pretty big stretch to say you will have an advantage on an analyst in brokerage, acquisitions, lending, const. mgmt. Understanding one property's "costs and drivers" doesn't give you much breadth to how everything else operates. Definitely creative thinking to think that way, but if your end goal is development. You are undoubtedly much better served doing construction mgmt, lending, acquisitions or brokerage.

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Feb 8, 2019

I think you need to read up more on what property managers do.

PMs are not dissecting hard/soft costs of that extent if even. They are not dealing with any redevelopment or major reposition costs other than repairs/maintenance that would be associated with it. The true costs knowledgeable guys are going to be your construction managers and your estimators. Both much better routes to Dev than PM. An exit opp more logical form PM would be AM at an owner/operator.

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Feb 8, 2019

Great thank you, CRE seems to encompass what you said. Thanks for the advice.

Most Helpful
Feb 8, 2019

Lots to unpack here. As a preface, I'm speaking in terms of multifamily property management. Office may be a bit different.

  1. You are very much overrating how much direct financial influence a property manager has. Most of the time, a regional manager or asset manager is responsible for maintaining a property's budget. Obviously the property manager decides how much General Admin costs to spend, but if they're spending too much on free K Cups it's the regional and/or asset manager's job to reel them in. As with everything in real estate, I'm sure some property managers manage their budgets a lot more than others, but you would be taking a big gamble here.
  2. Remember that even in the best of cases, the only knowledge of numbers you'll learn and know are operating numbers, not capital numbers. This may help you at some point in your development career, but only if you're at a firm like mine where the DM acts as a defacto AM because the company doesn't want to pay an AM. Operating expenses are important, don't get me wrong, but instead of memorizing them you can also look at previous deals your firm completed and/or talk to brokers to get an idea of what number should be budgeted for each category.
  3. It will not be particularly easy to network with developers as a property management employee. I would know - I unwittingly became one. The property management team is "the staff." Some ownership groups treat them more like "the help." Even regionals get talked down to. You will be thought of, not by everyone but by some, as a different caste of person. That is why I was so fired up for this guy who went from a leasing consultant to an analyst. (You should talk to him by the way.) It's a hard transition to make. I failed at it and ended up spending almost six figures on a degree to pull it off.
  4. That also reminds me that you will most likely not even step into being a property manager. You will probably get hired at most as a leasing manager, but maybe even a leasing consultant. Those people make $35k a year + like $100/lease commissions and may get half off rent to live on site. It's not glorious. Leasing consultants and leasing managers usually don't even talk to developers/owners beyond pleasantries at site visits.
  5. As others have alluded to, I think you need to do your research on what property managers (and developers) actually do. Property management has no idea what development hard costs are. A lot of developers hand off an asset to a AM team as soon as the project gets a CO and never see it again during lease up. If you want to take an alternate route to development other than being an analyst at a brokerage shop, I would recommend construction. What I wouldn't give for a year or two of PM experience in my background, if for no other reason than to be able to speak more intelligently on a job site.
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Feb 8, 2019