One of the most common questions I receive from readers is about what to study in school in order to become a real estate developer. Here’s one of those questions:
“Thank you so much for your insight into the real estate development process! I was wondering if you could do a post on what educational degrees you think would best prepare someone for a career in real estate development?”
I’m not surprised that a lot of aspiring real estate developers have this question on their mind. Compared to many other career options, the path to real estate development has traditionally been pretty informal. It’s much less structured compared to other professions such as law or medicine.
But as the real estate industry continues to institutionalize (transition from rich families to institutions), I’m sure we’ll see recruitment become more structured as well.
Already the MBA and Master in Real Estate Development (or some other permutation of that degree) have become — for many large real estate organizations — the prerequisite to getting in the door. So if you’re looking for a simple and safe answer, just get one of these degrees.
To more fully answer this question though, I thought I would just share my own strategy for getting into real estate development. Because at the end of the day, there’s no one way to become a developer. Lots of people start out in other industries, only to fall into real estate later on.
The way I started was by first identifying the skills that I thought I would need as a real estate developer and that I felt employers would be looking for. And I assembled this list by going on lots of informational coffee meetings with developers to make sure I was headed in the right direction with my assumptions.
In the end, this is more or less what I decided I needed to know:
Planning: An understanding of local planning policies, zoning, and so on. For this one, it’ll help if you can pick a particular place and commit to learning it (which is what I did with Toronto). There are a lot of local particularities that you’ll need to grasp. Real estate is very much a local business.
Finance & Economics: The ability to understand markets, build models, and crunch numbers just like a banker. That was my goal before I got an MBA. This includes discounted cash flow analyses, net present value calculations, internal rates of return, and so on.
Sales & Leasing: There are a lot of people who think that this is the best way to start in real estate (particularly on the commercial side). Learn the nitty gritty of leases and deal negotiations and then figure out where you want to be in real estate. Because at the end of the day, development projects are only viable when you have sales and/or signed leases in place.
Design & Construction: This was the easy one for me because I was coming from an architecture background. I could “read plans” and I didn’t need to convince people that I understood how buildings worked and how they were built. Instead, I needed to convince people that I had all the other skills.
And I knew this because that was the feedback I received my informational coffee meetings while I was in architecture school. One CEO (of a large publicly traded REIT in the US) told me flat out: “I need to feel comfortable that you can negotiate and that you won’t fuck up the numbers.”
And that stuck with me. I realized that I had an image to shed.
To round out my skill set, I decided to specialize in real estate in my first masters and then get an MBA. And given the chance, I would do it the same all over again. But even if you don’t have the opportunity or inclination to do that, there are a lot of other things you can do to shore up your knowledge base.
I took a number of ARGUS and Excel classes to learn how to build robust real estate models. You might be surprised at how much you end up learning about the real estate business by doing that. I also became involved in organizations like the Urban Land Institute and started going to every real estate panel I could find. And before committing to doing an MBA, I even thought about taking some accounting classes at a local College.
So my point is that I think you should identify the skills and strengths that you have today and then figure out some way to acquire the missing ones. Go buy a real estate textbook. Take an online class. Go to industry events. Do whatever it takes to round out your skill set so that you can sit in front a prospective employer (developer) and tell them that you’re able to create value for them and their organization across every facet of the development process. That was my goal when I was trying to get in.
Of course, those aren’t your only options.
You could also just work your way up by taking any job with a real estate developer. One of my closest friends did exactly that and today is doing incredibly well with no formal training in real estate or even a related field. You could also just go out and buy your first property and have a go at it. Many great fortunes have been created by doing exactly that.
Either way, real estate development is an exciting business to be in. It can often be hard to get your foot in the door given the size of most development teams, but if it’s truly what you want to do and you work on acquiring the skills, I think you’ll eventually find your path.