My parents invest in Multi Family (40 Units+) in NYC, but don't have the education that I will have once I graduate in May. I plan to get my MBA in a few years. However my ultimate goal is to create a real estate investment company that:
- Invests in Multi Family Residential buildings in NY (using investors money as well as my own and charge a management fee)
- Create a property management company that will then renovate these apartments and maintain them.
- Also create a division that develops multi million dollar custom homes in NY for HNWI
What do you believe is the best route to achieve this... Should I go IB and eventually move into PE or try to move into commercial real estate at a commercial bank and get a masters in RE at a top MBA program then move into Acquisitions?
Thank you in Advance
Why not work for your parents and leverage their contacts/resorces in the industry to get a head start on everyone else coming in fresh? Seems like you've already got a foot in the door???
There isn't really anything to work for in their business. My mother handles all the tenants, rents, and due dilligence process, my father does all the property management. I'd rather go outside of the family business to learn and get experience that I can then leverage to grow my parents business once they are ready to step aside and hand me the reigns.
You need to understand the different aspects of real estate and school will not teach you as much as you can learn working and school alone will probably leave you unprepared. I have a friend that was in a similar situation. He worked for about 6 months ato a CMBS shop and learned droves about real estate finance and analysis. Think of it as working behind enemy lines. I suggest you figure out your parents main source of finance (cmbs, life-co, balance sheet, etc...) and consider working there for a while.
Also, mfor investing and developing mult-million $ homes are almost entirely unrelatable
One member suggested working for a lender. That's not the best route. I'd argue it would only hurt you. CMBS is a waste of time for what you want to do. IB is also useless in this case.
The limiting factors to your success are: 1) granular experience of evaluating deals from a sponsor's point of view 2) experience in managing the transaction/due diligence process 3) running an efficient and profitable property management organization. most MF sponsors are just huge property management organizations. it's not the sexy part of it but it's the necessary day to day aspect of it unless you plan on hiring 3rd party management. 4) construction process - this entails numerous facets but let's keep it brief 5) capital raising
Not necessarily in the that order.
If you want to take a job with someone other than your parents you should work for someone that is actively closing on value-add deals. A big shop with a brand name will get you into a better MBA program (don't let anyone tell you different). A small shop will get you more hands on experience in managing the process from underwriting to closing and beyond.
So do you think moving into the Asset Management side then going into acquisitions would be a better route? I may have an opportunity to move into CRE at the bank that I am currently working at as well.
I'd start at a real estate development company. Probably one that specializes in multifamily. At a developer you can get the broader based exposure that will teach you to be a good owner operator... probably would avoid starting in IBD as that's not going to be hugely practical for you given your goals / position.
Someone may have already mentioned this (i admittedly only skimmed through the other comments), but you may want to look into local brokerage shops or small investment firms. Working in investment sales or debt placement will give you exposure to a wide range of deals and borrowers. Additionally, through debt placement you will see both how the borrower underwrites their transaction and how lenders view them. Since borrowers can get far lower rates from the agencies (fannie & freddie) right now, you probably won't get a lot of exposure to multifamily working in CMBS. You could also look into agency lenders. Wells agency programs are very active in NYC multifamily and lend to some of the largest REPE firms.
What would be the nuts-and-bolts requirements to start your own multi-family acquisition shop focusing on NYC assets? (Originally Posted: 12/18/2016)
This is a broad question, I know.
What would one need in place from equity, contacts, lender relationships, legal underpinnings (LLC, Insurance, Business License, etc) and beyond to launch a successful acquisition shop focusing on multifamily and ground floor retail assets in the nyc metro area?
I would say securing your capital is the most important thing to start. If you don't have the equity up front, you may miss some good opportunities when you are looking for opportunities
Appreciated.
Gotta agree with overtime. I have seen 1st time buyers close on a loan and property without knowing any lawyers, banks, title etc. You will need an equity source if you don't want to put down 25% of your own capital.
gold
Timing. If you're looking to start doing multifamily acquisitions in NYC, I hope you're waiting for the dip in the market to happen. NYC MF has plateaued and the cracks in the ceiling are forming. YOY rents are down and concessions are up. Unless it's a steal, I wouldn't touch anything MF there right now.
Find unsophisticated, stupidly wealthy investors who are happy with getting 3% returns.
Also find foreigners who live in countries with turbulent markets, they are always afraid of losing their money and are happy to park their capital in US gateway markets for slim returns.
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