Long time lurker here and thought I'd post some experiences I have had in real estate development. Thought it might be useful for those from non-finance backgrounds or even those on the LP side.
A little about me:
-BA and Master's from top 10 schools. Did engineering then architecture. Didn't study much. Drank a lot of beer and partied a lot. Had a sub 3.0 GPA.
-Worked in architecture for several years (mainly as a designer for mixed use projects) and in 2008, the market forced my hand (all architects were going to get laid off or have their hours cut back a lot) and through a family friend got my first job in RE as an analyst at a family office was getting ready to buy distressed assets in the incoming downturn. It was super interesting. The owner of the company had a lot of connections to local regional banks and I would filter through all kinds of projects (mainly in-construction condo projects) to see what kind of value was out there. We ended up closing on some smaller condo and land deals that made a killing 5 years later. But then again that time was like shooting fish in a barrel.
-Started MRED program at top 3 school. Dropped out. Again never was interested in school. Did make some good contacts that I work with today.
-Since then have worked mainly in RE for almost 10 yrs. I have done a variety of things, worked infrastructure development (mainly energy), asset/ development manager for a retail portfolio, and now the asset manager for a corporate office/ industrial portfolio. My CV looks pretty weird. I hear 'interesting' a lot. The good part is I can quickly look at just about any project and make an assessment.
-My end goal is to be on my own as GP. In the last 3-4 years I've been increasingly busy on the side. I have been working on a couple small value-add deals, in aggregate, $7-8 million project cost as GP and various consulting gigs that are referred to me through my network.
-The larger deal that I am working on, once we exit, theoretically should provide an exit from the corporate world.
-Once I am on my own, I probably will continue with an extension of what I am doing now 50% consulting and 50% development (value-add/ ground-up).
Projects I target:
-I'm generally agnostic on asset type. Except hotels. I don't know anything about hotels.
-I like projects with hair or distressed projects. High vacancy, terrible tenant mixes, deferred maintenance, contamination, absentee/ incompetent owners are great. Sometimes buying stuff from government entities is good too. If you had all of these, that would be my dream deal.
-As of now, not a huge fan of value-add multi-family. Just too many people in that space. Retail and industrial are more interesting to me.
-Also very interested in projects/ land that can be rezoned. The city code might say it is something but I might get intel from the respective city or their planning office that they would entertain a change. Say for example, industrial to mixed-use residential.
-Two reasons why I like these kind of deals is my cost of capital is high and considering I haven't scaled up to a lot of projects, I need my time to be worthwhile so I target higher return projects even they are more brain damage. Also considering where we are in the economic cycle, I want that buffer in case shit hits the fan.
Thoughts (I wish someone had told me this earlier):
-Earlier you start doing your own deals even if very small the better. Having deal experience is critical.
-Network very aggressively but selectively. I have a long way to go to build it properly but my network is more of an ecosystem with very different purposes for different people. I have a spreadsheet that I regularly refer to to manage my communication. Some people are in regular orbit, some are further out. Some people are my homies that I will meet with any time they want to grab a beer.
-Figure out what you are good at but more importantly figure out what you aren't good at and plug that gap or partner with someone who can. Development isn't rocket science but there is so much shit that can go wrong. And it just takes one thing to torpedo a deal.
Anyways, feel free to ask anything.
Do you want a 1 on 1 mentoring session with me? Here's my mentor profile - click here.