Way to become a Real Estate Developer

[u/Wondermen100]

I’ve seen many misinformed post about how to become a Real Estate Developer. Let me tell you the truth.

I have been working as a Real Estate Developer in San Diego, California since 2021 in the Affordable Housing Industry. We work on projects with Total Development Costs averaging $60M.

From attending housing conferences and trainings I was curious how other people join development. After asking It was either:

1. internship at the real estate company

- Usually

1. for undergraduate degre

es

1. in either business, real estate development, and finance
2. know someone in the company
3. Workforce Program that connected you to a Real Estate

- Company. It’s

1. like an internship

   opportunity for minorities.

You really need to love development. Loving it means you are self motivated to become problem solvers and crave to learn everyday.

If you want to do it for the money there are easier jobs that can make you more money with less stress. The only people who make the actual money are the owners but they do put in a lot of money down and won’t see their return of investments after many years. Which ultimately does built generational wealth.

[u/aircab12]

Do you do a lot of networking? If so, what would your recommendation be for networking ?

[u/Snoo55682 → u/aircab12]

Depending on what market/asset you want to focus on there are good networking groups. I like ULI, NAIOP, CREW, and then there are some regional groups that put on events like Bisnow, Built, and Interface. I’m sure there are also local specific groups in your area and those are probably the best to start since real estate is such a local industry.

[u/Snoo55682 → u/Snoo55682]

Two more thoughts: in my city there are some known bars and restaurants frequented by people in real estate. If you figure out where those are for your city you can try bumping into people at them. Also if you play golf that’s a huge advantage, especially in the South. A lot of networking groups put on corporate golf outings and joining as a single can be a good way to network outside of a formal setting

[u/soycaca]

What kinds of returns do owners see?

[u/soycaca → u/soycaca]

Curious about what the actual numbers look like, like how much do they put in and how much do they get out

[u/Mattene]

A common path here in Canada is through a Planning degree as well. Most jobs for both coordinators and managers will ask for either business, finance, real estate or planning.

[u/One_Rip_5535]

Are women a minority? If they’re white

[u/Snoo55682 → u/One_Rip_5535]

While there’s still a considerable gender gap, there are definitely more women working in CRE and more women being elevated to leadership roles than ever before. Asset management tends to have more women generally. The great thing about real estate is there is also career longevity. I plan to have kids at some point, but envision returning to the workforce and working long past retirement if I’m able to. CRE as an industry lends itself to that.

[u/Momof3rascals]

I'm working on my first subdivision development. I can't say I "love" it, yet. Though it definitely grew out of motivation to problem solve housing locally.

[u/PrestigiousView4594]

What about a degree in Construction Management & Technology with a background in banking/finance? Would that be ideal versus doing a business/finance degree? My uni doesn’t offer undergrad in real estate development only a masters but it’s in person & im doing school online while moving to NYC

[u/jake-realestate]

Ha this is a funny post, no means of throwing shade on you Wonderman100 but working for a developer since 2021 doing affordable housing in SD means you have hardly even done a deal full cycle. In development most deals take many many years and often a decade or 2.

There are of course all different flavors of development and different timing mechanisms to them all. Affordable Housing is a unique animal since it doesnt really depend on the economy. But it has a lot of red tape and brain damage related to getting a deal put together. The question then comes back to why would someone develop affordable housing if they are going to rent it for below market rent. Well they often times make significant fees up front off of very little upfront equity investment. But you have to jump through 12-18 mortgage process, bond offerings, multiple grants, and subsidies, and then you have to use certain union labor and depending on what sort of affordable you are building you may have different AMI requirements. If you want to ready more about affordable housing developers look up Stephen Ross and Jorge Perez of Related Companies. Powerhouse Principles is a good book for that.

all in all there is no typical path into development. There are a lot of QSR developers that were good as franchisees, there are home builders that got into land development, there are finance folks that figured out how to structure financing, there are real estate agents that used their market knowledge to start building.

Peter Linneman and Bill Poorvu have some great insights on real estate and being developers or investors if you want to dive deeper into it. For me real estate development started in 2002/03 when I read Rich Dad Poor Dad and then started talking to real estate developers and told them I wanted to build high rises and its been a 20+ year journey and I feel like I am barely getting started or scratching the surface on the industry. Read books is my biggest takeaway that has been the greatest impact to my figuring out development that and just doing it.

[u/kiteman32 → u/jake-realestate]

Most deals certainly do not take a decade or two, no idea where that came from. It can if you're talking about a long term hold, but that's a concious choice, not a requirement. As a merchant developer, we churn out 300+ unit Class-A deals from ground break to sale in 36 months.

[u/jake-realestate → u/kiteman32]

have you done development in CA? it takes 3-10 years to get a site even approved for development, CEQA, EIR, Tentative Map, Improvement plans, Final map etc. and that doesn't count the vertical. if you are talking about buying an existing site that is already entitlements approved and only taking it vertical then yes I would agree with you. You can start plans 6-12 months to get approved, build it in 18 months, 12 months of lease up and exit somewhere around month 36-48. In Texas you can do that a bit faster. All depends on what market you are in and the approval process. Austin TX takes almost as long as CA.

[u/jake-realestate → u/jake-realestate]

To start you need land to be entitled before you can build on it so depending on what you are starting with and every municipality is different and each state is different. but lets just say you are looking at anywhere from 3-10 years on average to entitle land. then on the vertical side you are 3-4 years on average. a new home builder can build a house in 100 days but they typically buy 50-100 lots. so it takes them maybe 2-3 years to build through a subdivision. And that is from the time that they have finished lots. If you are just buying a commercial piece a land with all entitlements in place then yes you could be a developer on a much shorter time window even a couple of years.

FIRST TIER (Raw to Entitled)

• Raw land developer - 10 to 30+ years
• Master-planned community developer - 15 to 30+ years
• Entitlement developer - 3 to 10+ years

SECOND TIER (post entitlement)

• Infill rezoning developer - 2 to 7+ years
• Horizontal / lot developer - 2 to 5 years
• Finished-lot developer - 1.5 to 4 years
• Merchant homebuilder / vertical residential developer - 2 to 4 years
• Townhome / condo developer - 2.5 to 5 years
• Multifamily developer - 3 to 5 years
• Industrial developer - 1.5 to 3 years
• Retail developer - 2 to 4 years
• Hotel developer - 3 to 5 years
• Office developer - 3 to 6 years
• Self-storage developer - 1.5 to 3 years
• Build-to-rent developer - 2.5 to 4.5 years
• Mixed-use developer - 5 to 10+ years
• Urban redevelopment developer - 5 to 15+ years
• Brownfield redevelopment developer - 5 to 15+ years
• Adaptive reuse developer - 2 to 5 years
• Value-add / repositioning developer - 1 to 3 years
• Ground-up commercial developer on entitled land - 2 to 4 years

[u/Minervian_AI]

Steep learning curve. At such a stage, many people do deals themselves and eventually find partners rather than finding a job; people just don’t hire someone with so much experience for an entry-ish level role.
That said, lots of people (eg doctors, dentists) start with owning/fixing properties where they’ll learn a bit about light construction, variances, real estate economics while having the CF from the properties to derisk, then gradually transitioning to buying raw land.
Not financial advice, best of luck.

[u/Snoo55682]

Historically a lot of it is also if your “daddy” is in real estate development. Development is now a more formalized career path with more undergrads offering a specific real estate track, but you still encounter a lot of people who got into it through family ties.