Is formal education (particularly RE development graduate certificates) better than hands on/ real world experience? I have done a couple rental properties, flips and wholesale deals and would like to move towards commercial development. Would it be better to spend my time on some formal education or simply do more flips to gain more practical experience / knowledge?
If you had to learn how to fly an airplane. Would you:
A - Get in, take off, and learn by doing?
B - Take formal training and get a formal license
C - Learn from someone else with experience
I don't think more flips will impact your "readiness" for commercial development. Try to find a program/investor who can teach you that, so you can get hands on experience, from someone with development experience. Good luck!
The jump from flips to commercial development is big. I would recommend working for a commercial developer so that you can see all that goes in to it. You may have the opportunity to invest alongside them, or you may decide to go out on your own, or you may decide to stick to what you're doing!
Hope this helps,
@Alexander Kempf I would recommend both if you have the time.
Becoming a developer requires vision and leadership skills as well as technical aptitude.
A formal education can be valuable as you will need to educate yourself on the space one way or another prior to just jumping in but nothing can take the place of the experience gained by doing deals.
Your options for obtaining experience are to continue your investing activities while educating yourself, hire a mentor to help you do a deal, passively invest in a development project and learn along the way or get a job working for a developer.
Development is risky, difficult, time consuming and requires thick skin and a lot of capital but it is very rewarding in a lot of ways not just financially.
You asked a great question and ultimately one that only you can answer.
Practically, education can give you 70% of the functional knowledge you need to make an investment, but the other 30% will be learned by you taking personal risks and getting involved in the market.
@Ellie Perlman (comment above) is starting an education program for real estate investing that you might consider exploring.
Neal Bawa runs MultifamilyU -- excellent resource for building a multifamily network.
@Kyle Mitchell has a podcast that discusses multifamily projects ... consider checking out his company, Limitless Estates
Hands on experience always wins in my book, but learning corporate strategies, finance and other education can never hurt your edge. Commercial development is in a league of its own, which I think working for a company or person in the beginning can definitely help out with the trial and error phase you will definitely go through. You need deep pockets to get into ground up development, as well a healthy construction background. Again, I believe a school can never teach you what hands on experience does for you.
If you can do both: education and actual experience, you will be in a much better position to understand what you are doing versus just jumping into a specific RE investing niche without having the necessary education to understand what you're doing. It could a certificate program or doing a degree online or in person part time.
You will want to learn from others doing commercial development. Whether that is through formal coaching, classes, mentorship, fellowship, employment, etc is up to you and your learning style. However, I would suggest finding ways to get real-world experience where you can lean on someone else's expertise.
Also, development can be interpreted a couple of different ways. Do you mean buying commercial properties and renovating them or ground-up construction?
Given the complexity and technical acumen required for commercial RE development, you will need to learn from others.
You have the the baseline interest in real estate along with experience in residential RE. Your learning should be a continuous process throughout your life/career. Learn through multiple channels, formal and infomral. Read, network, do... rinse and repeat!
A great read is the "4 disciplines of execution"....put together a plan where you have an achievable objectives of commercial RE development. Develop 2-3 key timebound goals, identify both lead and lag measures to get you there, and then implement accountability.
Another great way I've found to learn is to participate as an LP on syndications. By communicating with general partners, and joining the investor calls, you can ask questions, review the strategy, financials etc. Its a fantastic way to learn. If you are not an accredited investor, you can perhaps identify a commercial development crowdfunding deal through crowdstreet or otehr platforms. Look for projects that interest you, assess their materials, and then consider putting some of your own skin in the game as passive investor. Best wishes!
Be careful about sample bias.
If most of the replies come from people with limited commercial experience or from people who only went down one path, the answers will reflect their bias rather than be the best path.
If you go on LinkedIn and search for people who are doing what you want to do, you can find out a lot more about their background, degrees and other details.
@Alexander Kempf formal education is one of the stepping stones in your real estate carrier, you have to make sure that you’re educating yourself with great, relevant content on multiple platforms, podcasts, books, meet ups , seminars, mentors, Youtube, etc. there are many ways you can get educated, but the best education is walking the deals, talking with brokers and sellers, underwriting the deals, etc.