What am I supposed to be learning? New to development, a little lost.

Hey guys, new to development just recently started at a developer from a no name brokerage a few weeks ago. From my POV I feel as a development associate I should be working on modeling then other aspects of development that are needed at a small developer. 

Currently I've been working on leasing up existing assets and some asset management, new deals looking into zoning and taxes for initial deals, seeing what we can build, working on rent schedules for possible tenants as well as asset management my first few weeks in but not getting a lot of underwriting/modeling experience. 

Is the considered the normal experience? I obviously want to keep improving and am learning about partnerships, different aspects of deals, but these guys also don't have the most experience around. I'm wondering is this sufficient enough experience or should I be learning more? Any of those currently in development that can chime in? I feel somewhat lost because there isn't a blueprint on what I should be learning since every developer is different, but then again if I'm at a large New York developer or nationwide developer they'd have a set program for those coming in with training. 

Comments (20)

Most Helpful
Nov 7, 2021 - 9:50am

Analyst 1 in RE - Comm

my first few weeks in but not getting a lot of underwriting/modeling experience. 

So, I'm not trying to be mean or anything, but why do you think (or where did you get the idea) that working for a development shop means a lot of underwriting/modeling? I mean how many "new" deals get a acquired in a year? Even in a large, institutional shop a team may only buy one or two new deals per year... thus... not that much to model all the time.... (clearly, you may have to explore many to get to one you can actually buy). If you have a lot of active projects or operating portfolio, you may pursue zero new projects in a given year. 

Everything you are describing sounds like normal operations of being a development associate at a smaller (or even larger) firm. Not sure why or what you expected to be so different. 

A final note, and this is more "speculative" (as all firms are different, but this is true at my firm which is a "larger" one nature).... modeling/underwriting is often a more "senior" task in a devco, something new associates are asked or allowed to do (as they don't know you understand the assets/markets well enough yet). Also, and this goes back to my above point, it is easily a task given to one person (possibly an associate/analyst, doesn't have to be). So, were you hired to do be the modeler/underwriter (this should have been clear while interviewing)? Or hired to do more dev. management tasks (like you are describing)? If they have someone doing the modeling, why would they just given to the new person? I mean, acquisitions/modeling/financial underwriting is not considered a "desired" task in a lot of devcos (most definitely the least desired amongst associates at my firm).

  • Analyst 1 in RE - Comm
Nov 7, 2021 - 10:29am

Yes, was hired for underwriting and the tasks I listed. In the job description it said underwriting potential new development projects. The reason I'm focusing in on it is because coming from brokerage I had no legit underwriting/modeling experience. It was all outside work building my own models which was a problem when I ran into interviews and they saw broker and assumed I had no clue what I was doing even though I put a lot of time and effort in and did.

So applying to this role my thoughts were I'd be getting legit underwriting experience on live deals. And it seems instead it'll be focusing on those tasks I mentioned without underwriting. It was clear in the interview and when I got here how it works is the partners come up with a majority of the assumptions and there is one more senior person who takes it from there with their direction. 

Nov 7, 2021 - 10:49am

So, given the above extra detail.... a big question comes up.... Are their deals to analyze and underwrite? I mean, is this a case of someone else doing what you believe you were told you would be doing or is this a case of the firm focusing on current projects/asset mngt and not in the midst of any active pursuits (meaning you will get the task once it comes up)? Either way, you have the right to talk to your manager/partners about it (note... if its only been a few weeks, and you are new to devco world, this may be a premature worry in all fairness).

Still, not sure if a small devco would ever be the kinda place I would expect one to really learn or do a lot of modeling/underwriting. As the needs/demands go, devcos are on the low of need of modeling compared to other buyside shops, and way down from sellside shops (in a general sense at least). 

What is your long-term goal? Are you not wanting to stay in development? For a development career, I don't see any problem overall, all things you are working on are legit experience for progressing in a devco. 

Nov 7, 2021 - 12:43pm

You do realize that it is normal that the first few weeks on the job are pretty much like this everywhere?  It is pretty common for new employees to have a light workload while they are being integrated into the workflow.  

  • VP in RE - Comm
Nov 8, 2021 - 9:46am

Modeling should be the bottom of the list. As long as you have a 20%-25%+ premium on development cost, the project is a go. It shouldn't be that complicated.

The models are meant to justify the decision, not a decision-making tool. You should be learning how to deal with the local zoning board, NIMBYism, how to get project approved, how to find sites - all these things are not done at your computer. If you go into development thinking you'll become an excel god, you're in it for the wrong reason...Yes the modeling piece is important, and you must understand how the economics of the deal work (what happens to promotes/incentives if the JV structure changes, how does different debt structure affect returns, how does one change in the 100+ assumptions in the model affect the deal). But all this comes with time and experience, and should not be the primary focus in your young career.

Good luck!

  • Analyst 1 in RE - Comm
Nov 9, 2021 - 2:54am

20-25% premium on costs, is that like saying we think it will cost $1mm in hard and soft costs to build this but let's say it's $1.25mm to have a cushion or be able to play around with how much equity depending on what we raise at the end of the day for us as GP's?

  • VP in RE - Comm
Nov 9, 2021 - 10:55am

You got it. 20-25% premium on cost means if it cost 1mm to build (total development costs - including hard/soft/interest reserves), you'd want stabilized value when the project is compelete to be at least 1.2/1.25mm. Assuming 2-3 year construction, this gets you about a 6-7 unlevered return and mid-high teens levered, may be higher, depending on debt/equity structure. Obviously, there are developments that will be homeruns and the profits are a lot higher, but 20-25% is the minimum you will need to even consider doing the project.

And yes, once you know the costs/stabilized values/all the dificulties to overcome to get the project off the ground, you can do this math on a piece of napkin, which is all one experienced developer would need to nod yes to a deal.

Nov 8, 2021 - 10:41pm

Seconding the other posters on the fact that modeling shouldn't be your main focus. It's good to have an understanding of how to underwrite a full model (speeds up the process of site acq immensely if you understand how a deal would pencil in a certain region and you can make better decisions on whether or not to move forward) but more often than not, you don't have to make that many changes to any existing model under similar circumstances to figure out if the math works.

Realistically you haven't been there that long to get the full knowledge base and it's probably good to get some exp. understanding the AM side of the business because it can clean up your decision-making process. If you are truly concerned about getting modeling experience, just pull some dev models from online and mess around with the figures and you'll see that it is pretty similar from deal to deal. 

Development is much more a jack of all trades type of position and learning about many aspects of the development process (even those post-closing) will just be helpful down the line with modeling being only one factor.

You're not really a born and bred, traditional aristocrat if you work hard enough to get into Harvard.- Prospie

  • 2
  • Analyst 1 in RE - Comm
Nov 9, 2021 - 2:52am

Appreciate the insight, I see the bigger picture now. As a comment below, reason I was stuck on it is because I was getting dinged in interviews for my modeling skills or not even getting looks because they thought coming from brokerage I didn't know it so it was an uphill battle to even get in front of people (ex literally sending them a 5 tab model I created after initial phone calls)

  • Analyst 2 in RE - Comm
Nov 8, 2021 - 11:51pm

You're only a few weeks into a new gig with a small developer working on zoning, taxes, lease up, and asset management and you're complaining? There is way more to development than playing in Excel. What you're learning is incredibly valuable work and stuff many people stuck in a modeling gig don't get exposed to.

Wait 3-6 months. If you're still not getting exposure to deal analysis than let the Principals know you would like to assist in any way possible on underwriting. Also, network with some brokers and have them send some deals that fit you're firms criteria and learn to mode yourself and show you Principals your own deals.

  • Analyst 1 in RE - Comm
Nov 9, 2021 - 2:50am

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