Real Estate Professionals are above all else Entrepreneurs

Joe Stampone Start a Career 19 Comments

I actually wrote this post a few months ago, but was hesitant to publish it. After giving it some deeper thought, I believe this to be true.

In my first blog post ever, I said “real estate is a great business and career because of the people.” Working in the business for the last 3 years, I’ve been able to witness this firsthand and can confirm this to be true.

Specifically, what’s really unique about real estate professionals is that almost all of us have an unrelenting desire to run our own deals one day. Real estate professionals don’t get into the business because they want to be lifelong employees, they want to be entrepreneurs.

While everyone is different and the path to entrepreneurship is in no way linear, I’ve witnessed a trend among the new groups that we’ve been partnering with; it’s a team of 2-4 partners in their 30’s who previously worked for large, well-respected real estate shops. They were great employees, but hit a point in their career’s where they knew the ins and outs of the business and deal making, established a robust network of potential investors, and had good access to deals. They passed up the opportunity to advance within their company and headed off on their own to begin building their real estate empire equipped with everything they need to run their own deals.

Their time at the large firm afforded them the opportunity to gain all the skills they needed and to build the reputation and network necessary to launch their own firm. Real Estate PE funds, development firms, owner/operators, brokerage houses, and lending institutions are filled with smart young people with aspirations of creating their own real estate firms.

This notion alone creates a field of people with an insatiable hunger for knowledge, a penchant for networking, and passion for innovation. Across all aspects of the real estate spectrum, the people you’re working with are likely vetting a start-up idea or in talks with a couple buddies about launching their own shop. While they’re executing their day-to-day business responsibilities, they’re determining how the people around them may play a part in a business venture down the road. This creates an incredibly unique working environment.

From what I’ve witnessed, real estate professionals above all else are entrepreneurs waiting for the right opportunity and timing to go off on their own.

What do you think?

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  • Pat Browne

    Well said, Joe. One of the great aspects of a career in real estate is the opportunity to become an entrepreneur and build your own platform. I know of several real estate groups made up of younger people in the industry who had great experience at a larger firm and left to launch their own venture. My own experiences & goals will hopefully lead me down that path, too.

  • Pat Browne

    Well said, Joe. One of the great aspects of a career in real estate is the opportunity to become an entrepreneur and build your own platform. I know of several real estate groups made up of younger people in the industry who had great experience at a larger firm and left to launch their own venture. My own experiences & goals will hopefully lead me down that path, too.

  • Mark McPherson

    I agree and would add that, from my perspective, a lot of it has to do with learning how to assess risk and make imperfect deals. Compromise is an art. Entrepreneurs must be comfortable doing this, and commercial real estate naturally teaches these skills. Closing deals boosts confidence as well, further cementing entrepreneurial chops.

  • Benjie Moll

    Joe, I certainly understand where you are coming from with this article, but I think it is important to remember that for every person that is leaving one of these blue chip real estate PE shops to start their own shop, there are 10+ associates and VPs eagerly waiting to fill their shoes. That’s not say that working at large real estate PE fund is not entrepreneurial, but the risk/reward of starting a real estate group is certainly not for everyone working in the industry. I think that one of the reasons we have seen an exodus from the big funds is because of where we are in the real estate cycle currently; real estate has become an inherently attractive asset class (especially compared to other assets and with inflation seemingly on the horizon) and therefore raising money for the first deals has become much easier, so anyone with an entrepreneurial has left. That said, there are many real estate professionals that I have met that love working on the large, sexier deals that only those at large shops have access to (and love the stability, lifestyle and potentially large paychecks that those funds offer). Most of the guys who have spun off on their own are doing deals below the institutional threshold (certainly not as sexy)!

  • Benjie, great comment, much appreciated. I think one of the biggest misconceptions is that entrepreneurship is the road to riches. The fact is, that most guys who go off on their own, don’t make as much as they could as an employee for someone else. Not only do they forego income, they come out of pocket for many expenses.

    Being an executive at one of the blue chip shops is a great career. For me, it’s hard to relate to that mindset because I want to create and build. Going off on my own or working for an entrepreneurial shop is the only way for me to satisfy that passion.

  • Pat, thanks for the comment. I think most guys have the mindset that you and I have. That’s what makes the business great. Your full-time job and entrepreneurial aspirations are really one in the same – you need to build a great reputation among the people you work for and work with and that’s only done by doing great work day in and day out.

  • Hey Mark, well said. The best way to learn the business is to work under smart seasoned professionals. These are the types of guys these blue chip shops are filled with. I appreciate the comment.

  • Dids001

    Joe this is a great discussion point.

    There are a number of ways you can look at this but ultimately it comes down to the makeup of individuals. I agree with you that there are a number of professionals who enter the principal side with the intention of one day running / owning there “own” deals. That thought is a motivator for the entrepreneurial individual. However there are a number of pieces that need to fall in place to make this work and a large one in that is the ability to raise capital. Not all individuals have the resources, connections, desire or ability to necessarily raise capital which in itself prohibits them from going out on there own. Why they may possess exceptional skills they may be very comfortable in working in a larger more stable environment where they can put these to work most efficiently.

    I agree with Benjie’s point about the type of deals people want to work on is also a driving force behind where they work. If you are interested in large scale projects eg commercial office, shopping centers, casinos etc, its rather difficult to pull this off in a two man band! There are plenty of people that work in large PE shops or large scale development or ownership companies that are very attracted by the work and remuneration they receive without all the added stresses and responsibilities of running a company.

    One of the attractive areas of real estate ownership is to have a stake in the deal without necessarily owning a company. Especially in smaller private operations key employees can either have the ability to invest or even be provided equity % in deals and this is something I believe is highly attractive to young professionals coming through the ranks. This gives the employee the feel and motivation of being an owner and entrepreneurial without all the added stresses that come with running a company.

    Remember we are only talking about the ownership side here. There are so many other areas in real estate that are required, equity partners, debt finance, title, brokers etc. Where one lands in real estate, on which side and in what form ultimately always comes back to the driving motivators of the individual. The great thing about the industry is that it welcomes all forms with all different desires!

  • Adam, extremely well-said, you make some great points.

    With regards to raising capital, I agree; not everyone has the desire or ability to raise capital. However, I wouldn’t let a lack of connections stop you from going out on your own. An entrepreneurial-minded person with access to good deals and ability to execute will be able to raise capital. Additionally, with the emergence of crowdfunding and ability(soon) to raise capital online from unaccredited investors, the way people raise money for deals is going to change.

    Generally speaking I think it’s the sheer number on entrepreneurial-minded people in the business which makes it so great.

    Appreciate the comment, mate.


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  • Billy

    Joe – great post and topic.

    I don’t have a lot to add, just some questions for thought.

    With regard to the relationships providing access to capital – one thing that jumps out to me is the transition from large institutional deals to smaller deals below the institutional radar. A lot of the investor relationships they have built in the past may not translate into funding for deals given the shift in strategy. In other words, the investors they worked with at a blue chip fund may not be interested in doing the smaller deals they are doing on their own. Are these shops working on the same deals they were at their funds or are they typically dipping below the institutional threshold and getting capital from new sources?

    The same concept above applies to sourcing deals. Wouldn’t a guy who was doing big institutional deals likely need to source deals from smaller, regional and local players, brokers, etc. when he branches out on his own?

    On a different note, when you see these shops of 2-4 ex blue chippers, are they typically all from the principal side? Do you ever see guys from investment sales? Property management? Lending?

  • Hey Billy,

    Thanks for the comment. When doing smaller deals you will be going the syndication route, so the investor relationships I’m referring to are with high-net worth individuals (HNW). Good professional relationships with PE guys and other institutional equity sources can open up doors with HNW guys.

    Sourcing deals will have some overlap. Although some brokers work exclusively on institutional deals, they have guys within their office who cover the smaller deals. Other guys such as debt and equity brokers often see deals that span the entire spectrum.

    To answer your final question, I typically see guys from the principal side, but it’s not uncommon to see brokers, debt guys etc. start their own shops. I say it all the time, but I firmly believe there is no linear career path in real estate.

    Thanks or the solid questions, let me know if there’s anything I can help with.

  • Julie

    I am so glad you wrote this post. Many people think that getting a degree or certification immediately provides them with a career–in real estate, this couldn’t be farther from the truth! A successful realtor is one who works incredibly hard–having the drive and entrepreneurial spirit to really sell homes, connect with clients, and build relationships with investors and other industry professionals do not immediately come with a license, they must be earned. Some work harder than others, and of course some might have more luck than others, but yes, real estate professionals are basically self-employed entrepreneurs.

    Really love that you talked about this! Thanks for sharing your real estate knowledge. 🙂


  • BruceREFM

    Hi Joe, great post. I don’t agree that everyone wants to jump ship, but I do think that everyone wants to have some entrepreneurial element to their role. Being an entrepreneur outside of one’s organization requires an intense, lasting dissatisfaction that can absolutely only be cured through jumping ship. Not everyone is that dissatisfied with the status quo, and that’s perfectly fine! After all, the entrepreneurs need top people to execute on the vision.

  • Bruce, great comment, I couldn’t agree
    more. I have many friends who are smart people and great employees, yet have no
    desire to go off on their own. There’s nothing wrong with that; they’re going
    to be very successful executives one day while not having to deal with the challenges of being an entrepreneur.


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