Top Story
Recruit and Retain: How to Create a Successful Real Estate Start-Up
In the Bay Area, when one hears the term “start-up,” there tends to be an automatic association with tech.
On November 10th, ULI San Francisco convened a panel (Going Out on Your Own: Starting a Real Estate Business) of successful young real estate entrepreneurs to discuss how they decided to go out on their own and how they started their businesses. Ani Vartanian of Rubicon Point Partners interviewed Mike Halow of Premia Capital, an office building investor; Brian Milovich of Calvera Partners, an apartment investor; and Matt Baran of Baran Studio, an architect and developer.
The panel shared their stories and described the process of leaving their previous employment, setting up their own firms, completing their first transactions, and hiring their first employees. They spoke frankly about the emotional and financial challenges that entrepreneurs must overcome, as well as the uncertainties associated with growing a business and knowing when to make and sell investments. Several themes emerged in the discussion which were helpful takeaways:
Timing – All the entrepreneurs had started their businesses at the bottom of the recession in 2009/2010 and shared that this timing was extremely helpful in making strong investments and creating a good track record. Some of the panel started in this time period because they felt it was a buying opportunity; others because they did not have a job or fulfilling job. The panelists also shared that even at this time, it was hard to be confident that they were buying “bargains” and that they were concerned many times in 2010 and 2011 that they may have missed the market. In retrospect, several wished they had been more confident in their instincts then.
The first deal – With one exception, none of the panelists followed the traditional advice to go out on their own having found or completed a deal. Two panelists took over a year to find and complete their first deal, and the others started with small projects.
Preparation for Entrepreneurship – The panelists recommended that where possible, prospective entrepreneurs should attempt to build a strong network of lenders, brokers, construction managers, developers and others who will “go to bat” for a young new company. They also suggested knowing your weaknesses and having people in your network who can compensate for them.
Financials – None of the panelists started their companies with wealth, but they were able to bootstrap through their first year with their savings or by completing small projects. The panelists emphasized how they kept overhead low in the beginning in order to create maximum runway for themselves.
Partners – The panelists had different perspectives on partnership, with two panelists operating as the sole owners/directors of their businesses and two who have partners. They seemed to feel there was no “right or wrong” here – partners can help cover your weaknesses, help you be taken seriously and can get you through hard times, but an equal partner will also cut in half the personal profits from a project or the growth of the business.
Goals – The panelists had a wide variety of personal goals, but for several, a theme was that all wanted to work only on projects they enjoy, without the pressure of having to grow or maintain their businesses. One panelist noted that despite substantial financial success, his happiness level was similar now to when he started, suggesting that “success” is as much a psychological state as a financial one.
Story – A final theme that emerged from the panel was that each entrepreneurial story is unique. While the panelists shared many experiences and challenges, each followed his or her own unpredictable path with courage, diligence and patience.
Don’t have an account? Sign up for a ULI guest account.