Last week, Atlas Real Estate Partners co-founders, Arvind Chary and Alex Foster spoke to a packed room of Columbia University MSRED and Business School students. I have a slight bias, but I thought it was one of the more engaging real estate talks that I’ve heard, and based on the sheer number of questions asked and students who hung around afterwards to chat, I think the audience agreed.
When I was in grad school I listened to a number of high-profile real estate entrepreneurs speak. They’d discuss their latest mega-project and provide some high-level advice to young real estate professionals, but something was missing; I wanted to know what it was really like being an entrepreneur. I didn’t care much about what it’s like to build a downtown high-rise or work with large private equity funds. I just couldn’t relate.
I wanted to know what getting started in the entrepreneurial world was really like. Alex and Arvind covered how they did their first deal ($2M deal), raising money with no track record, and obtaining a loan with no balance sheet.
However, what I found most interesting was everything they learned over the past four years going from two grad students sharing their friend’s office to building a $400M portfolio.
Here are some rough notes from their talk:
- Get a partner
- Provides different personalities and strengths
- Enables you to bounce ideas of each other
- Facilitates quality of life and taking breaks while other person covers
- Don’t be Greedy
- Take smaller pieces of the pie and focus on the long-term partnerships
- Get lucky/timing is everything
- Talent and hard work are essential, but there’s nothing like getting there early and being pushed ahead by the powerful trends in demographics and taste that follow
- Reputation is everything.
- Always do what you say you’re going to do and help others not because you believe it will indirectly benefit you, but because you can.
- Closings never go smoothly
- Prepare for the road bumps with lender, equity, title, seller, etc.
- Share in fees and promotes, to align interests
- It’s all about relationships
- Always keep in touch with old co-workers, friends, and classmates. When we were starting out we got in touch and met with 300+ people we had met over the years. They were the ones that helped us raise money, find deals, find service providers, office space and at gave us good advice. Keep meeting with those people as the company grows and try to facilitate intros which will be beneficial to the people that helped you out.
- Have a good attorney
- You get what you pay for – don’t skimp
- You need an attorney looking at all of the “what ifs” and protecting your interests while you focus on the business issues.
- Reverse Financial Engineering
- When numbers look too good, beat them up. It’s better to be conservative and beat your projections.
- Leave room to refine your model in due diligence
- You always need and will spend more money than you think
- Beef up capex budgets and reserves
- Avoid capital calls
- When pitching investors, presentation is half the battle
- Tell a story with the presentation
- Find investors that need you
The overriding take-away from talk is that no matter how smart you are, going off on your own hard. It takes a good partner, great timing, and a lot of luck.
What do you think?