Addressing the lucrative real estate industry, this book helps determine whether a career in real estate is the right choice and reveals how to get started in the field.
|Publisher:||Urban Land Institute|
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About the Author
Stan Ross is the chairman of the board of the University of Southern California Lusk Center and a life trustee of the Urban Land Institute. James Carberry is a professional writer.
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The Inside Track to Careers in Real Estate
By Stan Ross, James Carberry
Urban Land InstituteCopyright © 2006 ULI â" The Urban Land Institute
All rights reserved.
A Real Estate Career: The Big Picture
Like many people, you may not realize that real estate is so J much a part of your life. Think about it. You live in a house or an apartment. You shop at malls, buy food in supermarkets, and have your teeth cleaned in a professional building. You work in an office building. You stay in hotels or at a resort. You eat in restaurants, attend the theater, have season tickets to a sporting event, work out in the gym, belong to a tennis club. Maybe you keep some of your paraphernalia in a public storage facility.
You are a constant user and perhaps even an owner of real estate. But have you ever considered real estate as a career?
This book is designed to help you answer that question. It is intended to help you decide whether you want to pursue a career in real estate, as well as to help you learn about the many career opportunities available — so that you can consider the available choices and decide on a suitable career path. You can find a very meaningful and fruitful career in real estate if you start by determining how your skill sets, strengths, goals, and desires match the various career opportunities that are available. Career planning is essential, whether you are in school, fresh out of school, or at midcareer. Some people — not only students, but also people with 20 years of professional experience — do not give sufficient thought to career planning.
While The Inside Track to Careers in Real Estate is intended mainly for students and professionals in the United States and students and professionals from other countries who are interested in studying or working in the United States, the increasing globalization of real estate suggests that more career opportunities in real estate are becoming available to students and professionals worldwide. Thus, this book also looks at opportunities for American students and professionals to work outside the United States.
This book is about careers in the private sector. It does not cover government sector careers, although the public sector at the city, county, state, or federal level offers interesting and rewarding career opportunities related to real estate development. To be sure, many private sector real estate career paths can be enriched by public sector experience with, for example, a city planning and zoning department. Such public sector experience can increase your value to private sector employers by giving you, for example, firsthand knowledge of how the project approval process works.
What Is Real Estate?
What is real estate? According to the investorwords.com glossary, it is land, including the air above it and the ground below it, and any buildings or structure on it. But real estate in a broad sense is not merely property. It is also an industry made up of thousands of companies producing products and providing financial and property services, an investment class, and a highly regulated enterprise.
Development is the part of the real estate industry that produces a multiplicity of products, the most common of which include office towers and business parks, shopping centers, warehouses, hotels, single-family houses, townhouses, and apartment buildings. These products are created by developers and construction contractors working with architects, investors, and consultants in a variety of specialties. They may be built and held for long-term investment, or they may be sold to investors or ultimate users. Decisions to create these products are primarily driven by the market — the households, the businesses, and the other entities that buy or rent space.
A Mix of Businesses Centered on the Use of Land
Thousands of companies large and small develop, build, buy, own, rent, lease, manage, and sell properties. Their scope of business may be local, regional, national, or global. The development and management of properties is a complex undertaking that involves a host of service-providing businesses as well, including brokers, asset managers, facilities managers, project managers, lawyers, and many others. Like developers and operators, these service providers may operate on many levels, from local to global.
Real estate is, like stocks or bonds, an important asset class for investors. Pension funds and other institutions as well as small partnerships and individuals invest billions of dollars in real estate every year, either through direct investments in properties or through indirect investment vehicles like mutual funds or real estate investment trusts (REITs).
A Highly Regulated Enterprise
In most places, the development of property is subject to building codes, zoning and subdivision codes, environmental laws, planning laws, and citizen participation requirements. The zoning and entitlement process for a large residential subdivision or a commercial project is often complex and protracted.
Why Choose Real Estate?
People have gone into real estate by accident, design, or necessity. Some real estate professionals have started fresh out of school, others at midcareer. Some have come from liberal arts undergraduate programs, others from graduate programs in real estate, and others from a variety of careers, such as teaching or high technology.
To help finance his studies for a doctorate in psychology, James Chaffin worked as a real estate broker in Hilton Head, South Carolina. Today, as president of Chaffin/Light Associates, he builds resort and recreation communities, using his grounding in psychology to assure that they meet the quality-of-life needs of his market.
Some planning classes at USC's School of Public Administration had sparked Richard DeBeikes's interest in real estate development, when, in his senior year, he flew to the USC/Notre Dame game. On the plane he was seated next to Jerry Jamgotchian, an executive at Ernest W. Hahn Inc., a shopping center developer and owner (which was sold in 1980 to Trizec Properties). As a fellow Trojan, Jamgotchian offered DeBeikes an opportunity to intern at Hahn, and thus started him on a career in real estate. Later, DeBeikes became a junior partner, in the Halferty Development Company (Jim Halferty is another USC graduate), running its Irvine, California, office; and eventually he opened his own firm, DeBeikes Investment Company.
A history major in college, Larry Webb became a teacher for a few years, and then decided that he wanted a different career. He began his real estate career with a consulting, marketing, and research firm that gave him an opportunity to learn about real estate. He went on to work for various homebuilding companies, and today is CEO of John Laing Homes, one of the largest private homebuilders in the United States.
Why do people choose to go into real estate? The reasons are numerous. To some people its appeal lies in the challenges and opportunities for entrepreneurship that it offers. To others, the idea of building something and the durability of buildings are important. Still others look forward to the opportunity to help shape the urban environment or to engage in public issues. Its monetary rewards (commensurate with the risks) are not unimportant.
There follows a list of common reasons that real estate professionals give for their choice of career.
Developers like to build. In fact, they tend to have a passion for building, for applying their imagination, talents, and resources to the creation of buildings. They like building something of value, whether it is a massive mixed-use project like London's Docklands; a large-scale planned community like Irvine, California, or Columbia, Maryland; a standout skyscraper like Chicago's Sears Tower; a small-scale office building, shopping center, or apartment project; or single-family housing.
Alan Merson was fascinated by buildings and construction from a very early age. That interest led to a career in construction, and today he is a vice president of Morley Builders, a private, employee-owned construction company in Santa Monica, California.
Darryl Brown also had an early interest in development. When he was in college, he and a friend were driving through a neighborhood when they saw a piece of land they thought would be perfect for development. However, they had no money and no development experience. But their instincts were right. Brown checked out the site several years later and found that it had been completely developed. Today he's housing director at West Angeles Community Development Corporation, a church-affiliated community development corporation in Los Angeles.
To Feel a Sense of Accomplishment
Developers who are passionate about their work take great satisfaction in seeing what they have created. Wade Cable, president and CEO of William Lyon Homes, a home-builder, likes homebuilding "because you have a sense of visible accomplishment. You start with a raw piece of land and in the end you have produced a home for a family." Smedes York, president of York Properties, a family-owned, full-service real estate business in Raleigh, North Carolina, says that he takes pride in driving by projects his company has developed. Bret M. Nielsen, vice president for leasing and acquisitions at Caruso Affiliated, a Los Angeles-based developer, is fascinated by how developers can turn empty land into tangible assets, much like an artist can turn a blank canvas into a painting.
Because Real Estate Is Durable
Commercial buildings and homes are built to last, often for decades. And with recycling, upgrading, and remodeling, their useful lives can be further extended. In a fast-changing world, the durability of real estate appeals to many real estate professionals.
Because Real Estate Is In Demand
Real estate, like any other business, goes through cycles. Demand for office space or shopping centers fluctuates with changes in the economy and other supply and demand factors. But beneath the cyclical shifts, demand for real estate will grow in the long term, based on continued growth in the U.S. population and the economy. With population and economic growth comes added demand for places to live, work, do business, shop, lodge, congregate, and play.
This was clear to Jona Goldrich when he moved to California in the 1950s. Crossing the state border, he noticed a billboard that proclaimed: "1,000 people are moving to California every day." With his mind made up to go into real estate, Goldrich started the trash collection business that financed his first investment, an apartment building. Today he's the CEO of Goldrich & Kest Industries, a multifamily and commercial property acquisition, development, construction, sales, and management firm based in Culver City, California.
To Be Challenged
Whether real estate professionals are developing a project, acquiring a property, obtaining and structuring financing, managing a property portfolio, negotiating a lease, or engaging in many other kinds of activities, the work is challenging. The idea of challenge attracts many professionals to real estate. They are drawn by the opportunity to find solutions to complex problems. Or by the multifaceted nature of a real estate career, as Joshua Steiger, a principal of Cantilever Capital, a firm that invests, develops, and manages a private portfolio, puts it: "There are many facets to developing, owning, and managing real estate, and the hardest part is making sure everything is working smoothly."
Because Real Estate Offers Variety
Real estate professionals have the chance to work with a variety of clients and customers. These may include large corporations and small businesses, large retail companies and small retailers, pension funds and other institutions that own real estate, the owners and managers of multifamily properties, and single-family-home buyers. Real estate also offers a variety of work. No development project, real estate transaction, or property management assignment is exactly the same as another.
Because Real Estate Offers Opportunities for Entrepreneurship
Real estate has a long history and tradition of entrepreneur-ship and easy entry. While some real estate practitioners say that there are not as many opportunities for entrepreneurs as there were in the past, the opportunities are there — and will be in the future. Bill Shoptaw, CEO of The Shoptaw Group, an Atlanta-based multifamily investment and asset management company, explains the attraction of being an entrepreneur: "I wanted to take control of my own destiny instead of working for someone else. The risk and excitement of entrepreneurship have kept me in this business."
Because the Rewards Are Commensurate with the Risks
Real estate offers monetary rewards commensurate with the risks that individuals and companies are willing to take. Entrepreneurs can realize very attractive returns from their investments in projects they develop, which usually are financed not only with the entrepreneur's capital, but also with equity from investors and a high level of borrowing. An entrepreneur must understand the risks and be prepared to invest his or her own capital in the business. Working for a real estate company in a position that offers a competitive salary and compensation package can also be highly remunerative.
To Help Shape the Urban Environment
People have been drawn to real estate by the opportunity to join, work with, or advise real estate organizations whose projects, buildings, and portfolios of real estate assets have far-reaching effects on the urban environment. It is buildings — office buildings, civic buildings, shopping malls, industrial buildings, apartment buildings, and houses — that make up the bulk of the fabric of cities and towns. Buildings are also important cultural symbols. It is buildings and their role in determining where people live, work, shop, and play that, to a considerable degree, determine the economic vitality and quality of life of cities.
Because Real Estate Affords Opportunities to Participate in Civic Enterprises
Many key public issues of the day — including urban revitalization, growth management, affordable housing, economic growth (business attraction and retention), and environmental protection — are in large part involved with real estate. Real estate professionals have the opportunity to become major players in land use planning and growth management efforts, in urban revitalization programs, and in environmental stewardship. One form of participation in civic enterprises is public/private development partnerships. The number of such partnerships between the public and private sectors is growing. They are used to execute a variety of projects, from the conversion of decommissioned military bases to private use; to the privatization of airports and other public facilities; to the development of office, retail, hotel, or housing uses in conjunction with public facilities such as convention centers, sports stadiums, or mass transit stations.
Because Real Estate Affords Opportunities for Public Service
Many real estate professionals work for organizations — nonprofit or for-profit — that provide a public service. These include organizations that build or buy housing for low-income families or elderly people; that build and operate shelters for abused children or homeless people; that buy or develop space in inner-city neighborhoods for startup businesses; that acquire, preserve, and rehabilitate historic properties; that buy, clean up, and redevelop environmentally contaminated properties; or that advise and assist building owners in the use of energy-saving technology. Two nonprofit examples are Architecture for Humanity, a New York-based organization that has helped design and build housing for Kosovo refugees and mobile health clinics in Africa; and Common Ground Community, a housing and community development organization that focuses on innovative solutions to the problem of homelessness in New York City.
Real Estate's Surprising Breadth
As a career choice, however, real estate sometimes seems to be overlooked. People in a career-planning mode — college and university students, recent graduates starting out in the job market, and professionals thinking of a midcareer change — tend not to have given the same thought to real estate careers as to careers in law, business, finance, or other fields. And even those who are thinking about real estate tend to be unaware of the breadth of the real estate industry and thus not fully aware of all the career possibilities.
Excerpted from The Inside Track to Careers in Real Estate by Stan Ross, James Carberry. Copyright © 2006 ULI â" The Urban Land Institute. Excerpted by permission of Urban Land Institute.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents
Chapter 1 A Real Estate Career: The Big Picture,
Chapter 2 A Look at Development,
Chapter 3 A Look at Real Estate Investment and Ownership, Financing, and Services,
Chapter 4 Career Paths: What's Right for You?,
Chapter 5 On the Inside: Real Estate Jobs,
Chapter 6 On the Inside: Becoming an Entrepreneur,
Chapter 7 Education: The Foundation of a Successful Career,
Chapter 8 What Do Employers Want?,
Chapter 9 Finding That First Job,
Appendix A Resources on Real Estate and Careers in Real Estate,
Appendix B Glossary of Selected Real Estate Terms,
Appendix C Is Real Estate for You? A Questionnaire That Can Help You Decide,
Most Helpful Customer Reviews
This book is a must read if you: -Are in college and want to matriculate into the real estate industry after graduation. (read this now, so you can get the right internships, take the right courses, and know if real estate is something you'll even want to do or even can do) -Are recently out of college, and want to know what path to take. The industry is specialized, so if you want to be an analyst vs a broker, you need to make sure you set your path right from the start. Breaking across specialization barriers is tough. -Are in the industry already, and want to move up the ladder onto the next thing. -Are applying to MBA schools: you should know the paths in the industry, so your essays dont make you sound like you have not put thought into the MBA process. --- About me: I am a real estate analysis at a private firm with investments in $2B in real estate. I used this book to help write my MBA applications to top-7 MBA programs.