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Thread: Career in real estate development [was: I want to be wealthy]

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    Career in real estate development [was: I want to be wealthy]

    Is real estate development the right way to go?

  2. #2
    Cyburbian Cardinal's avatar
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    Ask any of the developers I have worked for who have recently had projects foreclosed by the bank. There is risk in anything.
    Anyone want to adopt a dog?

  3. #3
    Quote Originally posted by Cardinal View post
    Ask any of the developers I have worked for who have recently had projects foreclosed by the bank. There is risk in anything.
    But were they already wealthy? I'd be perfectly content with making 1 or 2 million a year or so. I don't have to be the next multi-billionaire or anything. To accomplish this goal, is residential or commercial the way to go? And is there a lot of money in the field? Thanks.

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    NIMBY asshatterer Plus Richmond Jake's avatar
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    Quote Originally posted by mcmuRPhy View post
    ...... I'd be perfectly content with making 1 or 2 million a year or so. I don't have to be the next multi-billionaire or anything. ......
    How modest and considerate of you. After all, the world doesn't need anymore billionaires. (RJ, eating a slice of cold leftover pizza for breakfast.)

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    Cyburbian mike gurnee's avatar
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    Invest in lottery tickets.

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    Cyburbian
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    For what it's worth, I had a conversation with a homebuilder/developer the other day, who was adamant that, while one can make a living in homebuilding, there's no money in developing lots. The only motivation to do it is because one needs to have lots to build houses on.
    Proudly spending today building the dilapidated housing stock of the 22nd century.

  7. #7
    Quote Originally posted by RichmondJake View post
    How modest and considerate of you. After all, the world doesn't need anymore billionaires. (RJ, eating a slice of cold leftover pizza for breakfast.)
    Snide comments from mediocre debbie downers aren't necessary.


    To everyone else: Almost all of the rich people who aren't athletes/actors/entertainers are involved with real estate. What are they doing?

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    Cyburbian MazerRackham's avatar
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    Snide comments aside...most people on this forum have made it our lives to protect our communities from being raped by people who are just trying to make 1 or 2 million bucks a year.

    That said, there are ways to develop land responsibly. Do it correctly and I don't think any of these "debbie downers" would deprive you of your opportunities to become wealthy. Our experiences tell us that most land developers are only interested in the money making part of development, not responsibility to their community.

    Also some advice...If you care about your credibility on a forum, it is not prudent to be bitchy at someone with over 12,000 posts on that forum.
    "The devil bought the key to Branson. Drives a backhoe and wears a gold chain." --- Jay Farrar from the song "Barstow"

  9. #9
    Quote Originally posted by MazerRackham View post
    . Our experiences tell us that most land developers are only interested in the money making part of development, not responsibility to their community.
    People want to make money rather than sing kumbaya and grill hot dogs with the neighbors and their children? What a shock.
    Also some advice...If you care about your credibility on a forum, it is not prudent to be bitchy at someone with over 12,000 posts on that forum.
    Not here for credibility. Try the argumentem ad populum on someone else. It doesn't work on me. I don't give a damn if he's the founder of the site.
    See bold. .

  10. #10
    Unfrozen Caveman Planner mendelman's avatar
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    muRPh,

    You need to tone it down. If you are coming wiith these questions, you obviously have no experience in land development (developer or regulatory side).

    Go buy a forclosed house. Fix it up. Rent it out. That's how you begin.

    But be prepared to have that property (and tenants) run your life.

    Real estates is not easy.
    I'm sorry. Is my bias showing?

    Let's not be didactic in this profession, because that is a path to disillusion and irrelevancy.

    Six seasons and a movie!

  11. #11
    Cyburbian Plus
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    Quote Originally posted by mcmuRPhy View post
    If you care about your credibility on a forum, it is not prudent to be bitchy at someone with over 12,000 posts on that forum.

    Not here for credibility. Try the argumentem ad populum on someone else. It doesn't work on me. I don't give a damn if he's the founder of the site.
    How to respond to that ?
    Oddball
    Why don't you knock it off with them negative waves?
    Why don't you dig how beautiful it is out here?
    Why don't you say something righteous and hopeful for a change?
    From Kelly's Heroes (1970)


    Are you sure you're not hurt ?
    No. Just some parts wake up faster than others.
    Broke parts take a little longer, though.
    From Electric Horseman (1979)

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    Cyburbian MazerRackham's avatar
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    Wow...I guess you told me. First, those of us who are gathered around a campfire singing kumbayah are more likely to be having veggie burgers than hot dogs. Second, we feel our ideals are more important than money (with limitations, of course). If getting rich were our aim, we wouldn't be doing what we are.Third, if you'd just look at the top of your page you'd see that Cyburbia is "The planning community" not the development community. If you'd like to have development advice and not planning advice, perhaps such a developer's forum is what you should find.

    Remember this, many of us have a professional code of ethics to which we are bound. That code states that our responsibility to our community is our foremost responsibility. You obviously have an entrepreneurial spirit, capitalize on that and do whatever you can to make the life you want. Just play by the rules and exercise responsibility over your thirst for profit. That is all I would ask. Take that for what it is worth.
    "The devil bought the key to Branson. Drives a backhoe and wears a gold chain." --- Jay Farrar from the song "Barstow"

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    Super Moderator kjel's avatar
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    Quote Originally posted by JNA View post
    How to respond to that ?
    Don't let the door hit you in the a$$ on your way out?

    mcmurphy you don't happen to look like this do you?

    "He defended the cause of the poor and needy, and so all went well. Is that not what it means to know me?" Jeremiah 22:16

  14. #14
    Quote Originally posted by mcmuRPhy View post
    See bold. .
    Moderator note:
    ~Gedunker
    mcmuRPhy, as you can see, our users seem to think you are a bit of a troll. I have to agree. This is a warning, either get with the program or you are gone. Permanently. Get it?

  15. #15
    Cyburbian Cardinal's avatar
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    Quote Originally posted by Cardinal View post
    Ask any of the developers I have worked for who have recently had projects foreclosed by the bank. There is risk in anything.
    Maybe I was not clear enough with this. Many people have made fortunes in real estate. Just as many have lost them. In the past few years some of the most respected names - big and small - have lost big, turning over properties to the bank or going under completely. There are long-term structural issues with the market that will make it very difficult to develop anything in the near term, and buying existing properties at fire-sale prices is still unlikely to provide much return as you can no longer expect to retain, much less grow equity, commercial or residential renters can be hard to find, and depreciation means nothing if you are already losing money. So NO is your answer. Development and real estate - either commercial or residential - is not a path to wealth. This is especially true to somebody with no prior background in the industry.
    Anyone want to adopt a dog?

  16. #16
    Cyburbian TexanOkie's avatar
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    There is no way to become wealthy (if you weren't born into it, marry into it, or some other avenue that is largely chance, such as winning a lottery) that does not either involve risk equal to the wealth potential, or involve an insane amount of strenuous work (such as the lawyer/corporate business route).

  17. #17
    Cyburbian ursus's avatar
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    Quote Originally posted by Cardinal View post
    There are long-term structural issues with the market that will make it very difficult to develop anything in the near term, and buying existing properties at fire-sale prices is still unlikely to provide much return as you can no longer expect to retain, much less grow equity, commercial or residential renters can be hard to find, and depreciation means nothing if you are already losing money. So NO is your answer. .
    I think I'm seeing this on the ground very clearly. "Spec" building is gone. Stand-alone buildings for the tenant themselves (especially outfits that self-finance) are the only thing keeping me busy right now, and bigger projects all want to subdivide commercial properties instead of master-plan them. The private sector is re-thinking things quickly and the rest of us in the public sector are trying to adjust as well. Cardinal right on the money, as usual.
    "...I would never try to tick Hink off. He kinda intimidates me. He's quite butch, you know." - Maister

  18. #18
    Cyburbian
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    Quote Originally posted by TexanOkie View post
    There is no way to become wealthy (if you weren't born into it, marry into it, or some other avenue that is largely chance, such as winning a lottery) that does not either involve risk equal to the wealth potential, or involve an insane amount of strenuous work (such as the lawyer/corporate business route).
    I partly agree with this. Over the past 2-3 years I have seen increasing studies that also factor outright luck to wealth. That luck may include being born into it, taking some risk and striking it rich, or simply being in the right place at the right time. Wealth could also be equated as long-term financial stability that may (or may not) lead to more money over the length of a career.

    I don't see the point of throwing a dollar amount of $1-2 millon as evidence of wealth for a number of reasons. I need to see arguments backing up that number. Can wealthy still be $500,000 or $750,000. Do you consider yourself wealthy if you have that in a year, or if you are making steady progress towards that goal over 20 years?

    Developers come and go. It is high stress boiler room environment in good times and bad times. It is a career of many spikes up and down. If you draw a trend curve through these spikes, it might generally move slowly upward over a 30-40 year career, although there is never any guarantee. I am not a developer but I have worked with plenty of them as a planner, and several, but not all of them, look at their sucess in smaller 1,2, or 5 year increments. Their focus in this past decade was to buy up land, improve the land with houses, commercial, retail, etc. and maximize profit margins, whether there was a demand or not.

    Local governments (cities, towns, counties, etc.) approve these developments. They issue bonds to basically borrow the cost for the cost of improvements and public infrastructure. As the real estate bubble burst several years ago, many of these local governments defaulted on their bonds. We are all going through a painful process of recovery right now: planners, developers, cities, etc. We have our own path towards recovery that is far different than the national economy. Ours will take longer. Development will resume, money will eventually SLOWLY start trickling back into coffers, but that is several years away. This is a learning experience partly about our borrowing abilities, including developers and municipalities. When development DOES come back, I think far fewer local governments will have the stomach to go on a mindless shopping spree and approve developments without spending more time and attention on development proposals. There are also countless incomplete developments that have been abondoned or are still on the drawing board that were left over before the bubble. Everyone is scaling back.

    If you really are focused in wealth, however you define it, I think you may want to consider occupations that don't require extensive schooling, and will always be in demand. Look up the Occupational Outlook Handbook from the Bureau of Labor Statistics. I can't say which career is the best. I don't think there is one. However, some provide more financial stability over the course of a 30-40 year career. Unfortunately that doesn't include planning or development. It might also include boring, unglamorous jobs that really don't pay huge dividends at once but over the course of a career.

    Hope this helps-
    "This is great, honey. What's the crunchy stuff?"
    "M&Ms. I ran out of paprika."

    Family Guy

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    Cyburbian JimPlans's avatar
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    I agree with what people are saying here about the current state and near-future prospects of real estate development. I would like to add some thoughts which are overgeneralizations but still, I think, capture the essence of what I observed during the boom.

    Many developers, both large and small, were people who were very good at leveraging investments. They had a knack for taking a small amount of their own money and obtaining large amounts of funding from other sources, and ensuring that they received a percentage of profits that were greatly in excess of the percentage of risk that they took (in monetary terms). In short, they were hustlers, but most investors accepted this as long as they made a profit and didn't have to do the hustling themselves.

    They also seemed to live their lives in the same way. They drove a fancy car, but it was leased in the name of one of their companies. They may have lived in a large house, but they were only there until they could sell it for a profit, then they moved on to the next house. They seemed wealthy, but often it was paper wealth, not cash. Their lives lacked the stability that most people desire, but these were people who had (in my opinion) an unusually high tolerance for risk and instability. From the outside, they looked very successful, but in reality they were riding a wave. Once that wave broke, the ride was over.

    So, to the OP I would say that there is always a place for risk-takers, but right now real estate isn't it. Try hedge fund management, or gaming the commodity exchanges, or some other speculative financial instrument. Anything where you get to invest other people's money and take your fee off the top, no matter how well (or badly) that investment performed. There's a reason why financial industry profits went from 10% of all corporate profits in 1950 to 45% in 2002.

  20. #20
    Cyburbian
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    Real estate development takes nerves of steel. It is a very up and down business and is affected by some many different external forces. Every developer I know -- and I know a lot because they are my client base --, has been down as much as they have been up. You can't be in it just to make a lot of money because you won't. It is one of those businesses where you have to love the hunt more than the kill.

  21. #21
    Cyburbian Tobinn's avatar
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    Quote Originally posted by mcmuRPhy View post
    But were they already wealthy? I'd be perfectly content with making 1 or 2 million a year or so. I don't have to be the next multi-billionaire or anything. To accomplish this goal, is residential or commercial the way to go? And is there a lot of money in the field? Thanks.
    If we're bidding, I'd be happy making $500K/yr.

    Seriously though, it seems to me that getting into real estate development is about as risky as getting into the stock market. You'd better have nerves of steel, unlimited Tums and innate cut-throat attitude.

    With regard to a previous post highlighting the apparent wealth of real estate developers - I concur.

    One anecdote: When I was a public sector planner there was this guy who owned one of the last undeveloped lots on a barrier island, in my fair City, on the Gulf. He had a development order and everything but kept putting off developing the lot (this was back in the late 90's). Eventually, he let the approval lapse then came back to get it reinstated and even a little plumped up with additional height, etc. The LPA was willing to extend the original approval but no more. Long story short - he held out so long he lost his financing, site approval, company, home, wife, health, company and the property. Last I heard (seven years ago) he was living in a rent-by-the week fleabag motel facing divorce. For all I know he's dead now. All because of greed. Doing the right thing - building what was agreed and approved by the City would have resulted in a nice profit for him and maybe all the difference in the world.

    With regard to another previous post regarding, what I like to call, the Planner's Prime Directive (To do the greatest public good) - I agree, this is probably the worst forum in the world to get advice or moral support for ways to screw the system at the quest of personal gain.
    At times like this, you have to ask yourself, "WWJDD?"
    (What Would Jimmy Durante Do?)

  22. #22
    Cyburbian The District's avatar
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    Quote Originally posted by mcmuRPhy View post
    Snide comments from mediocre debbie downers aren't necessary.


    To everyone else: Almost all of the rich people who aren't athletes/actors/entertainers are involved with real estate. What are they doing?
    Reducing their tax liability. Real estate in the United States is an pretty well-sheltered form of investment when it comes to taxability. Hence, people with income that they wish to protect tend to go for an investment that will allow them to avoid taxation as far as it is possible to do so.

  23. #23
    Cyburbian Veloise's avatar
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    Quote Originally posted by Tobinn View post
    ...this is probably the worst forum in the world to get advice or moral support for ways to screw the system at the quest of personal gain.
    Dan, new leader in the Cybub Motto Contest!

  24. #24
    Cyburbian
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    I'm thinking about long-term trends.

    The ULI as late as 2009 was caliming that mixed-use and infill were weathering the storm better than other developments (particularly exurban development). With an additional 100 million people to join the U.S. population by 2050; the retirement of baby boomers; different housing choices among millenials; the continued importance of transit and transit-oriented development; and Obama adminsitration effots ot link HUD, USDOT and EPA, I see opportunities in development. A recent article predicted there might even be a housing shortage in 4-5 years as production has stalled. Further, there are predictions out there from Calthorpe that we will need more small-lot housing (and, one would assume, townhomes) for new households.

    I would challenge the notion, expressed, that developers are just out to get a buck, while the public sector serves the "common good." Maybe I'm just naive baout development and cynical about government, but I think there is a lot of good to be done, if one chooses, thru development.

    We've all seen and heard about the "stereotypical" developers. But equally I've met progressive developers and firms - Rose Developers, Forest City, etc. Many of them are adept at public-private partnerships and may be interested in density, green development, mixed-use, cohousing, urban agriculture, brownfields, infill, historic rehab, all sorts of things that do, indeed, sell in the right market. Some incorporate affordable housing, again leveraging public-private partnerships. Some of these developers serve on ULI, on planning commissions, and try to implement progressive legislation. Even some conventional local-yokel developers start to do innovative things.

    On the other hand, in the public sector, I've seen many examples of reactionary planning. A few: staff forbidden from bringing vital information to decision makers; upgrading revenue projections and downgrading infrastructure cost projections to make a particular pet project look sensible; commissioners who see their job as to "protect" neighbors from density or connectivity rather than implement comp plan goals; zoning update committees who consciously sought to exclude moderate income, seniors and other "udnesirables" from upper-middle class neighborhoods, while guaranteeing so much parking that everyone would be spared the inconvenience of walking; zoning update committees with no public (only developer) representation; organizations that are so afraid of politics that they don't implement best practices (even in 'progressive' cities); and myriad other examples that you can fall into if things are not ethical, professional or if decision makers are not well-informed. I've been told to accept that the public sector regulates, and the private sector innovates. Admittedly, none of these are examples of high-performing organizations ...

    So I believe one can be progressive or reactionary either as a developer or in the public sector. I guess its where you feel comfortable and effective. As a developer, you'll think less about the big picture, except if you volunteer for committees, etc. But you might - might - get to do neat projects.

    Also, in my LIMITTED experience, some developers are the savvy risk-takes described here, while others enter development by getting the training in school and joining a developmet firm (good luck these days - I would guess these companies are pretty lean now).

    That said, it sounds like the OP is in it for the money ...

  25. #25

    Be careful

    Nowdays, when real estate market is down, investing big money as developer you can face problems that many developers face at the moment, they poured big money in the investments and the market is weak and sales in not good so they pay big money to the banks on the account of interests.
    Think twice.

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