I'm new to real estate investing, but have unique opportunities in my career to get an advantage over other investors. I have been working for a civil engineering firm for a short time in Austin, TX. Working here has helped me develop some good relationships with people at the City of Austin. I've dealt with some developments, permits, obtaining CO's, etc. I don't have much experience yet, but I have an opportunity to work with a home builder as a construction manager now.
There is advantages to each job for real estate investing. Starting into real estate I feel like the homebuilder can directly benefit me now by developing relationships with contractors and learning how to build and repair homes. However, the engineering firm allows me to learn what it takes to be a real estate developer from dirt (the risk worries me).
Has anyone been through something similar? I'd also like to hear from each side (civil engineers and construction managers) about the advantages you gained from your career. Also, what do you wish you would've learned sooner?
@Eli Howard As a construction engineer I can say that both have their benefits. I'm new to the investor side of the business and have been investin for less than a year. I think it really depends on what you want to do. If you're interested in the BRRR strategy then working for a CM company would be extremely beneficial. If you're wanting to do more developing or new construction it sounds like the CSA firm may be where you should stay.
So i guess, it depends. Hahaha. Best of luck in your choice.
So my initial goal with my education was to ultimately be a real estate developer. Then, like most newbie investors I read Rich Dad, Poor Dad and began to learn about limiting risk and realized I could build significant wealth using strategies other than developing. I really like the brrrr strategy, it seems like a great method. Thanks for your opinion, I think that's the way I've been leaning in my decision.
I do not do either things. I am an investor, principal commercial broker nationwide, and a real estate developer.
Development will outpace that residential BRRR stuff. Development being risky depends on what you are doing. It's all about TIMING and CYCLES.
I like the smaller STNL single building projects. I get a lease committed to before closing on a property and then construction begins. The tenant is long term and credit quality. Then you can hold for decades with a long term loan if it is not the right time in the cycle or sell to a hold investor and keep growing and recycling capital into more projects.
I have been licensed since 2004 so saw the last downturn. Where developers can get into trouble is where they are building a big project like a Publix shopping center or big mixed use development where you are not profitable in a big way until the end of the project. So it could be a grand slam or take you under. What happens is the bigger projects tend to be built in phases. Over time the next phases construction and labor costs can rise and then expected exit sale price or lease up rates can fall. That can take a profitable project to breaking even or losing money.
I saw one developer with a Publix one time build out and had lease up projected for 20 sq ft. Instead when economy went down he had lease up of 15 a sq ft and was only 50% occupied. He treaded water for 7 years before leasing up and selling off to develop again.
For some developers it's about ego and showing off what they developed etc. or that they could successfully do a project of that size. I am happy to do more volume with the smaller projects that are profitable going in and have multiples of those. The market changes and I can simply hold for high cash flow until the next up cycle where timing is right to dispose of the asset.
That's great advice Joel and I hope to reach a similar point in my real estate investing one day. I think it'll take a few years before I reach that level. I'm networking with a couple of brokers in my area already, in the hopes to get there.
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