I'm looking to make a career transition from Real Estate Development to Real Estate Private Equity. Although I enjoy Dev. the Bay Area market is notoriously difficult to operate in, and the deals take eons to complete. I have been drawn towards to financial aspects of the industry, which for development is really just 1 of 100 things you need to have an understanding of to be successful. I was lucky to have gotten the job out of college, and have been working for the company (regional office of national MF developer) for 3.5 years, wearing many hats (as most developers do), but have not had a chance to develop my quantitative and financial modeling skills, as the heavy lifting in that area was taken on by the national capital markets team. I am of course familiar and comfortable with the basic proforma underwriting to a YOC, but relied heavily on template models to run the cash flow analysis for IRR, Equity Multiples, waterfall's, and other metrics.
In my search, I've circled Acquisitions positions as targets, given I've had experience dealing with these groups running due diligence on our deals and found their roles and perspective to be interesting. Having gotten a few interviews, I've found that without the quantitative skill set most groups are not as willing to take my bait. I'm now considering positions in Asset Management for well known and respected groups, thinking that I could build up my quantitative skills and potential transition to an Acquisitions role.
If I'm looking to build a career in Real Estate Private Equity, is this a sound approach? Are there any other positions/sectors that I should be looking at as well?
Bumper cars
so many threads on this exact topic.
see plenty on getting into REPE but none about how development could help you get there
Just shot you a PM. Happy to grab coffee or beers and talk through it.
Out of curiosity, why do you want to switch? I don't mean to be insulting, and I have a huge bias (as a developer), but working in the "financial aspects" of the industry sounds like an incredibly short term goal. What is your long term ambition? There is a lot more room to make money, to be your own boss, to build your own projects, on the development side. And frankly, the skills you'll continue to learn as a developer will be far, far more valuable down the road than leveling up your financial modeling abilities.
IDK, maybe this is my aforementioned bias flaring up, but the odds that you (or anyone else) manages to start a successful REPE firm are so miniscule as to be nonexistent. On the flip side, it's not crazy to think that you might find a deal that makes sense and raise some equity to execute on it, and get on the road to having your own development shop. And I assume that being an owner/GP/having significant carry is the goal for anyone involved in the RE industry.
Not insulting, this is helpful insight. I think what you landed on in your second paragraph "On the flip side, it's not crazy to think that you might find a deal that makes sense and raise some equity to execute on it, and get on the road to having your own development shop." is certainly something I've considered as a long term goal.
One of the biggest hurdles I believe I would face as a Developer is getting my deals financed. My thought is getting experience on the PE side would give me experience in how these groups approach deals and how successful assets are created and managed long term.
All that said, I could be perfectly happy staying in REPE, betting on myself and getting lucky to land at a spot where that carry is provided.
Thoughts?
My gut reaction is that working for a REPE won't give you much exposure to how smaller developers raise equity. By their very nature, REPE has to be doing larger deals, because it doesn't make sense from a time or effort standpoint to deploy capital in small equity checks, no matter how lucrative the deal may be. So you'll get a lot of experience in how larger or more established developers raise money, but maybe not a ton of exposure to the hustle of a smaller or local developer needs to go through on their first couple projects.
Again, take this all with a grain of salt. My feeling is that REPE, for a bunch of reasons, seems like a sexier and more lucrative job, especially early on in a career. But its easy to get locked into that career path, and then where do you go? I actually know a bunch of folks who worked for large debt funds, or in REPE, and in their mid-30s tried to transition into building their own business and found it much more difficult than expected. You can be a total rockstar at buying and re-positioning Class A assets, absolutely the best in class, but if you go out on your own, it means nothing, because no one is giving you the capital to buy high 8 or 9 figure assets. Whereas, if you prove early on that you can execute on a $10mm, it's not hard to leapfrog your way up to doing that $100mm deal after a few transactions.
Agree. I am at a pretty large PERE firm where there is a small development arm. I am far removed from the equity raise aspect of the work. Our funds are $1-2bn in size. Really contemplating the next 5-6 years of my career and where it will be better spent. Considering getting on board with a more local/regional developer where I can be closer to those aspects which I am currently far removed from.
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