Last fall, I spoke to a real estate class at my alma mater, the University of St. Thomas. A handful of students emailed me afterward, seeking advice on starting their own real estate firm. Their biggest hurdle is finding investors; even if they find a great deal, they don’t have the network of high-net-worth individuals needed.
In reality, there are countless examples of real estate founders who started with no network and created massive real estate firms. In today’s newsletter, let’s explore the most common paths to starting a real estate business with no wealthy family or connections to rely on.
Seek Out A Job That Prioritizes Experience
For a 20-something with big entrepreneurial ambitions but no access to investors or $, I recommend applying for a job in real estate. Be very picky about what type of role you take on. The goal is to work at a firm that can offer you as much real estate investing experience as possible. At this point in your career, experience is worth far more than the money you will make.
You want to pick a job that places you deep in the action on large real estate deals. The goal is to witness how the top operators find, underwrite, and transact deals. In addition, there’s an art to choosing which markets and neighborhoods to invest in, and you want to learn the art. Syndicated real estate deals are complex, and before you start your firm, there is a ton to learn, including investment structures, loan options, construction management, property management, etc.
What specific jobs should you seek out? When I assess the largest real estate firms in the Twin Cities market, the founders often started in one of these 3 roles:
Commercial Real Estate Broker Brokers get constant exposure to the top operators in the market and have massive earning potential. They frequently underwrite deals and discuss deal metrics with very smart investors. They also discuss market conditions, debt availability, and investment strategies with experts daily. Lastly, real estate brokers establish valuable connections with buyers and sellers that can evolve into future partners or investors.
Analyst or Asset Management Analyst or Asset Management positions at established real estate firms can offer tremendous experience. Bonus points if you work your way up the ladder to higher-level roles in the firm. Make sure you choose a company that closes multiple deals a year, executes on its business plan, and receives glowing reviews from investors.
Real Estate Attorney Whether it was their initial plan or not, real estate attorneys often become great real estate entrepreneurs. They work closely with buyers and sellers in large transactions, gaining investing experience along the way. During law school and amongst colleagues, they also develop extensive networks of potential investors and partners.
Time To Leverage That Experience
Now it’s time to take the next step. You chose a career path carefully, and after 5-10 years in the trenches, you have the experience and pedigree investors want to see. Working alongside top operators has set the example of how a dynamic real estate firm should be structured and conduct business.
You started with no network but have formed many connections over the years. It’s time to leverage that network for investors, partnerships, financing, etc. Build your investor list by reaching out to your favorite buyers, sellers, lenders, attorneys, etc. You’ve gained their trust over the years. Bring them a juicy enough deal, and you’ll be surprised how many want to invest.
PS: If you are employed at a real estate firm that offers equity, don’t overlook the prospect of building your fortune with them. Employees who receive equity in each deal can build incredible wealth.
Final Thoughts
Establishing a successful real estate firm without an initial network is entirely achievable. Aspiring real estate entrepreneurs can build the necessary skills and connections by seeking out roles that provide direct exposure to high-level deals and key industry players. Whether you choose to work as an analyst, broker, or in another related field, the key is to immerse yourself in the industry, learn from the best, and leverage every opportunity to form relationships. Over time, these efforts will pay off, enabling you to attract investors, identify profitable deals, and ultimately create a successful real estate firm.
-Ben Michel
Ben Michel is the founder of Ridgeview Property Group, an investment firm specializing in acquiring multifamily real estate. Register Here to be notified of available investment opportunities.