A Student of the Real Estate Game


A Day in the Life at a Boutique Real Estate Development Firm

Jan 28, 2016 | Career, Development

Over 2 years ago I published a post outlining a typical day for me at Atlas. Re-reading the post, it’s amazing how little has changed. Yeah we’re doing larger deals and my daily responsibilities have broadened, but every day is still filled with calls, meetings, and a million little projects. I enjoy the fact that each day is different and I have the flexibility to run with my own projects. It provides the opportunity to make a significant impact on the success of the firm and be involved in all aspects of a transaction. I love it!

The small firm environment is definitely not for everyone, however many thrive in that setting. A few months back I received an email from Ryan Spellman, who works for a boutique real estate developer in Omaha, Nebraska.  Although worlds away from NYC,  his day-to-day at J Development resonated with me and I asked him if he’d be willing to write a day in the lifestyle post. I love these posts because they provide a behind-the-curtain look into what it’s actually like working in the real estate business. If you think you’re interested in real estate development, this post is for you.

Enter Ryan:

I’d like to start by thanking Joe for the opportunity to share my experience of working for a boutique development shop. I stumbled upon ASotREG only a couple months ago and have greatly appreciated the informative and relevant content. I can particularly relate to Joe’s “A Day in the Life…” post as the diversity and unpredictability of his daily responsibilities is also true of my position as a developer. Whether it be investments or development, real estate is a dynamic field where success is based on your ability to react quickly and appropriately to changing circumstances. There’s always a challenge to overcome or an opportunity to take advantage of and, for me, that’s the fun of the game.

I work for a small firm in the Omaha, Nebraska metro area. I was born and raised in Omaha and I love that I now have the opportunity to shape its future. Developers get to create new neighborhoods, revive old ones, rehab hundred-year-old buildings, and construct new ones that will stand for the next hundred years. Omaha has seen a great deal of development activity over the past decade. The city continues to slowly creep westward with new suburban housing developments, while at the same time historic midtown arts and entertainment districts are coming back to life. Our downtown is also gaining momentum thanks to developers that have invested in the rehabilitation of our historic buildings as well as developing new construction infill projects focused on forming communities within the community.

Our firm is right in the mix of this activity. We have built a modest portfolio of multifamily, commercial, and mixed-use assets in the metro area while also providing our development services to nonprofit clients to create nearly 400 affordable housing units in our community. We’ve done several historic renovations and recently completed a new construction project for our own portfolio, a mixed-use infill project with 36 units and 8,000 sf of commercial space.

My job is to continue to grow our business above and beyond the strong foundation that our partners have worked hard to build over the past decade. That’s a pretty broad goal, and it encompasses a wide variety of day-to-day tasks to get us there. These include (in no particular order): identifying and recruiting investors, marketing our firm and assets, sourcing potential opportunities, doing analysis and due diligence on these opportunities, engaging a team of architects, engineers, contractors, appraisers, lawyers, and accountants to help assess these opportunities, developing relationships with other developers, investors, lenders, brokers, and city officials, managing these relationships, reading about the local market and staying on top of other developers’ deals, walking our properties and working with the managers to ensure they remain in top shape, negotiating leases, sales, and purchases for assets in our portfolio, coordinating subcontractors, researching local laws and ordinances, forecasting profit and loss for our business and our portfolio, analyzing investment returns, and drawing on the skills and knowledge I’ve developed to ultimately determine where the next best opportunity for us to earn a profit is.

Some days it feels like I’m trying to accomplish all of those tasks above, and more. Others are more relaxed (there is a lot of “hurry up and wait” in this business) and allow for time to focus on being creative, coming up with new ideas and strategies, and just thinking about how to add value to the business. Joe has talked about putting 5% of your time towards these endeavors, and I try to use these slower days for that purpose.

So with this background, I’ll take you through my first business day of 2016 and hopefully give you a glimpse into the development world. January 4th was a pretty typical day, a busy one, and being the first day of the year, provided a diverse slice of activity.

7:30AM – I start the day by grabbing a black coffee at a local shop where my wife is a barista before heading to work. It’s about a 35-minute drive to the office for me, so while she makes my coffee, I check some emails and take a look at my calendar for the day. I hang around for a while to read a couple interesting articles and blogposts I’ve emailed to myself and also skim through the local paper. We’re a local firm, and Omaha is more of a small town than a small city, so it’s important to know the recent events in the community.

8:45AM – I arrive at our office, which is located in a building we own. It was the first project that our partners did – a historic renovation of a building originally built in 1892 – and is located in an up-and-coming arts and entertainment district. I get my laptop hooked up and respond to several more emails. I then jot down a list of items to discuss at the 9:30AM update meeting with my bosses.

9:30AM – I sit down with the firm’s two partners to give them a brief update on our projects and discuss the upcoming week. Everyone is coming back from Christmas vacations so it’s a longer meeting than usual. We talk about a historic building in downtown Sioux City, IA that we have under contract. I have a meeting with a lender later in the week to discuss terms for a construction loan and permanent financing to renovate the empty building. We spend about 15 minutes going over the source & use pro forma that I’ve built and decide that it would be a feasible project.

We also discuss our need for a 1031 exchange property that we have to identify before February 2nd to defer a large tax bill from a recent sale of another property. There’s not much to choose from in the Omaha multifamily market right now and we would prefer an asset that’s already operating, rather than one that we need to spend additional money to renovate right away. After briefly touching on a few other items, we end the meeting and I get back to my computer.

10:30AM – We are selling a building in downtown Omaha and it’s currently under contract. I have a quick phone call with our broker to get his opinion on the likelihood of the deal going through. It’s contingent on the buyer controlling some adjacent land, and it sounds like they are making progress. I make a note to share this good news with the partners.

11:00AM – I was recently introduced to a broker that runs a nice business connecting investors with developers. We’ve spoken on the phone and exchanged a few emails, and now he’s just arrived at our office to meet in person. But first, we walk across the street and I give him a tour of our recently completed mixed-use development. It was fun to watch this three-story building go up and be able to see the progress every day from our office window. I take him through the ground-level commercial space that we recently leased to a local law firm for office use and then we take the elevator to see one of the apartments above. It’s a beautiful building and we are proud of the work we’ve done; I think it was a good way to start a meeting with a guy we hope will connect us with investors.

12:30PM – I head to lunch with one of my bosses to meet up with another developer in town. We have pretty good relationships with many of our so-called “competitors” and often look for opportunities to partner on projects. This particular developer is a commercial/retail expert and is looking for a potential partner to handle the housing component of a new mixed-use development that he plans for a great location in Omaha. I offer to put together some numbers for him and we let him know that we’re very interested in working with him. On the way back to the office, we stop at the prospective site to take a look, identify potential challenges, and start brainstorming ideas.

2:00PM – Back at the office, I call a friend of mine in Minneapolis. He works for a mortgage banker there and we’ve been working together to refinance one of our multifamily assets in the Omaha area. It’s been a long process but a great learning experience, and after giving each other an update, we agree that things are looking good for a closing date during the first quarter.

2:45PM – I get back on the phone to touch base with our property manager. We fully furnished and reserved the best unit in the new building across the street to rent out on Airbnb and she just finished moving in a tenant that will be living there for the next month. This has become a bit of a trend for local developers and I can see why, as we’re able to charge nearly double the market rent (if you broke it down to a per night basis). Plus, we get to keep a nice place for our own use if there’s an event in town or somebody just needs a weekend “staycation.” It sounds like our new tenant is settled in and has even posted a picture of the room to Instagram, a nice piece of free advertising for us.

3:30PM – After getting off the phone and sending a few more emails, I sit down with one of our partners to discuss a potential project in an Omaha suburb. Together, we call a couple contractors that we’ve heard about that have good reputations for getting projects done on time and on budget. We want to get an idea of what their projects are coming in at per square foot so that we can make better estimates for this suburban apartment project. We also discuss the possibility of a nearby private university utilizing some of the apartments for student housing. I take a mental note to contact the university and gauge their interest. If its something they are in need of, a master lease agreement could be a great way of mitigating some of our risk on the project.

4:15PM – The last thing on my calendar for the day is a meeting with an architecture firm in downtown Omaha. They did the design on our recently completed mixed-use building and now we’re looking at some concepts for a second phase right next door to that project. As they walk us through their ideas, I pay close attention to square footages, number of units, and parking capacity. I jot down a few notes and do some quick analysis to get a rough idea on project cost and income. Just like its neighbor, I think this project will be a great success. We thank them for their work and decide to take some time to discuss the different concepts internally before making a decision and moving forward.

5:15PM – I walk across the street from the architecture firm to a hole-in-the-wall bar for a drink with the partners to finish up the day. We do another quick update, and then discuss our goals and strategy for 2016. We talk a bit about work but try to take this time to relax and have some fun. After a couple of beers, we wish each other well and go our separate ways for the night.

On the drive home, I keep an eye out for new developments and activity around town. I’ll often take the long way home just to scout potential opportunities or check up on somebody else’s project. Though the workday is over – and I hardly consider it work at all – I have trouble putting things out of my mind and find myself constantly thinking about how I can add value to the business and help it grow.

The rest of the evening is spent with my wife and family relaxing, exercising, and all of the other activities of daily life. I’ll end up opening excel and running a few numbers later on to see if an idea that popped into my head is feasible, and also responding to a few after-hours emails. I’ll also call my friend in Minneapolis again to see what deals he’s been working on lately and get his opinion on a few of ours. Before bed, I’ll read a couple articles and blogposts, and make some progress on the book I’m reading (currently On the Brink by Hank Paulson about the financial crisis).

So there you have it. My first day of the new year was a busy one. Not all of them are like this, but most follow the same pattern of having no pattern. As I look back over my day, I feel the need to emphasize the importance of networking and building professional relationships. I realize what a big part of my job this is, and it’s also one of the reasons why real estate feels more like a fun hobby than just another job. Getting out and interacting with others, learning their stories, and working with them towards a common goal is a great way to spend your day. If you’re interested in real estate development, I hope this post has been of some value to you, and that you’re motivated now to continue pursuing that interest!