Hey guys, quick question-
I was talking with someone about the continued growth of the residential sector, and he mentioned an opening on the acquisitions side with one of his contacts. What's the upside in residential acquisitions? Is there any advantage when comparing it to commercial, or will it always be small beans in comparison? What kind of exit opportunities exist for this type of position? Thanks for any insight you can help me with.
By the way, this would be with a private home builder/developer.
What kind of product? single family home or like multi townhome type of stuff
What kind of product? single family home or like multi townhome type of stuff
Single family homes, across all price ranges (200k to 1mil+).
Early in your career residential land acquisition is fine. Develop your transferrable skills (financial modeling, broad understanding of real estate and development costs and drivers, understanding of plats, terminology, learning the major buyers/sellers/owners/brokers/county personnel in your area, learning the real estate underwriting process, etc.). So long as you are developing the broad transferrable skills you won't really be pigeonholed into residential land acquisition if you do a 1 or 2-year stint.
I think even in the last few years with the rise of the real estate master's programs it's even easier to avoid being pigeonholed. Make sure you learn your broad skills, get an MBA or real estate master's degree, and you're good to go.
As far as a long-term career in residential land acquisition, I think it's a REALLY narrow field. Very good money in it when the market is good, literally zero money in it when the market is down. If you want to work for the big boys then you're going to have to be geographically mobile throughout your career unless you get lucky. For example, the Washington, D.C. residential market for 30 years has been excellent and anyone starting in the business (residential building/land acquisition) in the 1980's had a nice, long career, but we're at a point now where we're literally running out of major tracts of land in the desirable and closer-in areas. Anyone just starting out wanting a long career in residential land acquisition in the D.C. area is SOL since the market is evolving into small infill re-developments. So your local market is going to be a major driver of the long-term quality of your career.
Good info. Thanks for your take. Anyone else have anything to add?
How easy is it for a homebuilder to transition into condos? Obviously that has the same problem of great money in good times, zero money in bad times, but it would offer an alternative to moving around the country to focus on "exurb" after "exurb" as, for example, DC area land dries up.
When I think of the biggest condo developers in MY city, none of them have come from a strictly SFH background, but I have definitely seen homebuilders do condos before in other areas, so I don't know if it happens more often elsewhere.
I would see this route not just as a potential alternative for someone who doesn't want to move all over the country but also as a likely possibility for the entire homebuilding industry as a whole. Maybe those guys don't drink the whole urbanization kool aid, but the trend of moving in-town is a real thing to some extent, at least for the moment.
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