Breaking into real estate development

[Termination]

Hello all,

This is my first post and thank you for having me. I'm a 28 yr. old with absolutely no experience in real estate (customer service background/economics degree) and my ultimate goal is to development real estate down the road. I would like to live in california and start my career there.

My biggest obstacle is getting an entry level position with a good firm so I can get some experience on my resume before applying to graduate school. My plan is simple:

Find an entry level job>Work for two-three years>Graduate school (contemplatin MRED vs. MBA, either part time or full time)>work 10-15 more years>develop property of my own>retire at 50>net worth:10.5 billion

Aside from networth, I'm pretty serious about the prior goals. Any suggestions on my career path? Your help would be greatly appreciated.

Thanks

[Hink]

Search for real estate within this subforum and you will find a lot of answers. I think in this economy you have to be realistic about getting a job. The MBA and MRED would both be great resume pieces. Unfortunately the development community is extremely stagnant compared to three years ago. There are opportunities out there, but they are few and far between.

If you want experience get in with local governments as a volunteer and understand the other side of the equation. Many times developers like to have people with municipal experience as they understand the system better. Good luck!

[mendelman]

Honestly, RE development is a very tough business and only the people at the top have any real job security and have come to it likely through extreme hard/smart work and likely don't have a degree in RE development.

This may sound mean, but in my experience getting a degree in RE development is a waste of time. Your best bet (and hopefully you're still in your 20s and without dependents) is to simply start your own development business/firm right now and get the training on the job and don't waste your precious dollars at some grad school that won't really give you the required real world experience you need in a cut throat business like real estate development.

Good luck!

[Cardinal]

This is one of the rare times I will disagree with Mendelman. Entering real estate development at this moment, as a developer, is impossible if you do not have the ability to self-fund your projects, and suicide if you do. Getting a degree is a good idea, and I would look to one that give you a solid background in real estate market analysis, real estate finance, and leasing. As for as a career path, I would look at combining commercial real estate brokerage with leasing. About ten percent of existing commercial property is vacant in this country, and there will be work involved in getting it filled. A good commercial realty firm (CBRE, NAI, etc.) will offer a wide range of services in addition to brokering. For example, they may provide market research, property management, and project management services. You will also get the opportunity to network with developers. In the process of school, work, and networking you should be able to pick up the knowledge you need in the time frame you laid out. As for earning $10.5 billion, you should hope for some extremely high inflation. ($10.5 billion in 2010 = $105,000 in 2040)

[mendelman]

Cardinal - I certainly defer to your experience and expertise, but I still think that getting the grad degree may be a waste right now.

Term's plan is to work enrty level in the field for 2-3 years then grad school. Well, I doubt there are any enrty level real estate development jobs open right now that aren't being taken by people with experience already.

Right now Term should be looking at small scale opportunties in an overlooked/underappreciated segment (such as low/mod rental rehab in good/stable locations). Yes, the real estate industry is in a depression and will take longer to recover than the rest of the consumer economy, but if Term has access to $$s, has sufficient will/drive and ability to provide sweat equity money and a self made real development/management business can be created.

I can just think of the small houses for sale in my former place of residence in Chicagoland. A very desirable NW suburb with many old/small houses that are getting cheaper due to the drop in the market and simply need someone to buy, fix and hold and would be a good bet in the long run. Real and lasting real estate wealth is through equity creation, not asset appreciation (as evidenced by our current national real estate market).

Bascially, I just don't see the point in spending money on a degree when that money could be used to invest instead and also take classes about development finance and such when actually doing it in the real world is the best classroom. Additionally, why get the degree and work for someone else that will work you to the bone and reap the benefits and at the slightest market hiccup will kick you to the curb. Given the extenisve hours one has to put into real estate development work, I would much rather do that on my terms and get the profits than beholden to someone else.

But that's just my opinion, what do I know?

[ColoGI]

o Search for real estate within this subforum and you will find a lot of answers.
o I think in this economy you have to be realistic about getting a job.
o The MBA and MRED would both be great resume pieces.
o Unfortunately the development community is extremely stagnant compared to three years ago. There are opportunities out there, but they are few and far between.

If you want experience get in with local governments as a volunteer and understand the other side of the equation. Many times developers like to have people with municipal experience as they understand the system better. Good luck!

This is how I see it as well, esp the underlined. For some reason, my master's alum is sending me lots of RE e-mails - there was a RE Institute there and AIUI most of the folks who went thru that program are still employed in real estate, altho I don't know if they are starving, living at mom's, spouse making all the money, or what.

And I don't see any decent turnaround for 3-5 years, and the folks who lost their jobs will be filling most of the openings first.

[The District]

I think your strategy is a good one--work first, then school. Most people that end up in MSRE programs are older than your typical MBA or grad student--going back as late as 35 is not unusual. In addition, you may find (as many do) that IF you can actually find a job in development, going back to school may become redundant or unnecessary, which is not a bad thing. However, finding a job may be easier said than done. I don't know what you're work schedule is, but if you have time during the day, I'd recommending trying to intern for a developer, even if it's unpaid for a few hours a week. It will REALLY help you make sure it's what you want to pursue school-wise. The mistake people make is thinking that a business degree like an MBA or an MSRE is an automatic meal ticket--it's not. You have to bring other skills or backgrounds to the table to get hired. In the case of development, work (or internship) experience is probably the most helpful in terms getting hired. So if you can't find a paying job, figure out some way to get some exposure to the development profession and go from there. Start with the work experience, then worry about the formal degree later.

FWIW, I have an MSRE (with a bachelor's in planning) and can be a good graduate degree for the right reasons--i.e., you've already got some experience in the development field but are hitting some sort of "ceiling". But getting an MSRE with NO experience first is NOT a good way to try to break into the development world.

I'd add one big caveat though--MSRE degrees are increasingly focused on the larger corporate development experience, not the smaller, entrepreneurial style of development. I think construction management programs are better suited for that. CM programs will include enough finance for that sort of development, but will largely focus on project management, writing contracts for plumbers and framers, etc. You'll need these skills much more than you'll need advanced finance courses if you want to start from the ground up. However, these skills are learned much more effectively out in the real world.

[cng]

Agree with most other replies here so far. I'm in California as well, and our development permits have decreased about 90% from the peak of the boom. We're averaging roughly 250 single-family permits per year, as opposed to 3,000 back in 2006. Commercial development is no different. The only guy developing around here has access to redevelopment funds and grants. Most of the applicants, developers, and engineers we deal with on a daily basis have lost work or are scraping by to survive. With that said, an entry level position in RE would be difficult--however, like someone else said, there would be opportunities in leasing... but as for straight development, perhaps try a non-profit developer, who may be using affordable housing funds to build. I may spend this time going back to grad school and taking financial feasibility, or other related classes... If you can be proficient with pro formas, someone will use you when things pick back up again.

[Cardinal]

Cardinal - I certainly defer to your experience and expertise, but I still think that getting the grad degree may be a waste right now.

Term's plan is to work enrty level in the field for 2-3 years then grad school. Well, I doubt there are any enrty level real estate development jobs open right now that aren't being taken by people with experience already.

Right now Term should be looking at small scale opportunties in an overlooked/underappreciated segment (such as low/mod rental rehab in good/stable locations). Yes, the real estate industry is in a depression and will take longer to recover than the rest of the consumer economy, but if Term has access to $$s, has sufficient will/drive and ability to provide sweat equity money and a self made real development/management business can be created.

I can just think of the small houses for sale in my former place of residence in Chicagoland. A very desirable NW suburb with many old/small houses that are getting cheaper due to the drop in the market and simply need someone to buy, fix and hold and would be a good bet in the long run. Real and lasting real estate wealth is through equity creation, not asset appreciation (as evidenced by our current national real estate market).

Bascially, I just don't see the point in spending money on a degree when that money could be used to invest instead and also take classes about development finance and such when actually doing it in the real world is the best classroom. Additionally, why get the degree and work for someone else that will work you to the bone and reap the benefits and at the slightest market hiccup will kick you to the curb. Given the extenisve hours one has to put into real estate development work, I would much rather do that on my terms and get the profits than beholden to someone else.

But that's just my opinion, what do I know?

I could modify my advice to say that grad school is not a bad idea right now - don't wait. As long as jobs are hard to find, sit out the recession (the real estate sector is still in recession) in college. Besides a masters program, though, you could consider other programs such as NDC (good for an intoduction, but not very detailed) or ICSC (focused on commercial real estate). These also lead to certifications that can help you out in the long run.

[Termination]

Thank you all so much for the advice. I really do appreciate it. It seems like I've been networking with so many people and I have yet to find any good leads to an entry level job in real estate. At this point, I'll be happy to work anywhere in real estate that pays a steady income. I'm currently out of a job right now with two children to support, receiving $200 a week in unemployment benefits.

If anyone can help me in my job hunt that would be greatly appeciated. I understand the job outlook is dismal but any help is better than none. Again, thank you all for your insight.

[ColoGI]

I could modify my advice to say that grad school is not a bad idea right now - don't wait. As long as jobs are hard to find, sit out the recession (the real estate sector is still in recession) in college. Besides a masters program, though, you could consider other programs such as NDC (good for an intoduction, but not very detailed) or ICSC (focused on commercial real estate). These also lead to certifications that can help you out in the long run.

I would add to that thought (mine too) is to take your time getting out, as IMHO there won't be jobs if you start next Sept and are done in 2013, as the market has to absorb all the folks who still want to get back in when building eventually starts again. Surely the oversupply of residential, the high comm'l vacancies (still waiting for that bubble, aren't we?), and the reduced earning power of households will offer a niche for someone with some creativity to make this happen.

And, I'd add, someone familiar with mortgage business (not the CDO cr*p) to help new buyers navigate the new normal.

[hipp5]

Surely the oversupply of residential, the high comm'l vacancies (still waiting for that bubble, aren't we?), and the reduced earning power of households will offer a niche for someone with some creativity to make this happen.

I'm not from the States so I'm not well-versed in the exact situation there so take this with a grain of salt. But, looking in from the outside my wild-and-crazy thought is that someone should be buying up all these foreclosed $750k homes that are now going for $250k, hunting down the original owner, and renting them back to them. I was reading on another post that 36% of foreclosures were on people who merely experience a drop in income. Therefore, there are people out there who are still making money and could perhaps afford rent on a $250k home, but can't afford their original $750k mortgage. The hook on this one would be that you're offering specific people a chance to return to their home, and thus giving them a lot of incentive to rent from you. Heck, you could plan to sell these properties back to these people once the economy recovers and they can get a mortgage again.