developer, how to approach him?

Question

Hi,

There is a developer who is creating a large complex with 1/2/3 bedrooms within 10 miles from me.  I want to approach him and ask him if I can learn from him maybe on the weekend or evenings as I currently work full time, how would I ask him this.  I was thinking of saying, "hi, my name is Al and shake his hand.  I see you are doing something great for the area.  I have an interest in properties and hopefully one day I can be in your shoes doing something like this.  Would you like to go to Starbucks and have coffee as I wanted to ask how you do this and if you don't mind I would like to work for you free and shadow you and learn how you do this, what do you think". I know the worst he can say is no or I am busy etc etc.  Please share your thoughts on this as my goal is within 10 years I want to stop the rat race and have a passive income of over 6 figures a year.

Jason Hsiao · Answer

Bring him a deal, ask for his opinion and analysis on it, and offer him equity or portion of the deal if he helps you through it. That's how I got started. If he says no ping me, I'll take a look.

Karen Margrave · Answer

We've had people want to do this with us, and we've always said no. Why? Unless someone is set up to have an apprentice or intern and have planned it as part of their business strategy, it would just be one more thing to fit in and figure out. If a developer were going to have a person like that working with them, it would be someone that could be there when they are needed, early morning to days end, Monday through Friday and could bring some value to the project.

If you really want to learn the business, then start learning! There's a multitude of blog posts, podcasts, forum posts, etc. on BP that you can read, listen to etc. When you're in a position to do so, work on a rehab. If your true desire is to be a builder or developer, then get yourself into a job where you learn the business.

I'm not trying to discourage you, but you need to understand that so many people see the houses developers/builders build and think they want to do this too. To really grasp what we do you need to be there day in and day out and learn all of the various phases of a project.

I will also tell you that I'm always willing to spend time with people talking to them on the phone, letting them come visit the jobs, walk through our house, etc. and share anything I can to help them along. I never think it's a waste of my time, or that I should get paid for it, even though people have offered. So, go talk to the developer, tell him you admire his work, and ask if you can look at his project.  Tell him you'd like to get into building someday, and ask him how he got going, etc. Maybe he'll share some of his knowledge with you, lessons he's learned. If you're ever in Orange County and we have a job going, I'd be happy to show you around! Good luck.

Michael P. · Answer

1.  Understand if he is developing something on that scale he is insanely busy.  Even 5 minutes is worth hundreds of $$ to him in terms of time.  I would personally pay the guy $1000 an hour for his time, and I would guess he would politely say no thanks.  Yes, he makes well into the $1000 an hour range.

2.  You need millions of $ or insanely wealthy backers to do something on this scale.  Remember that when you are talking to him.  This is most likely a very seasoned and wealthy person.  Time is the most valuable asset to him.

3.  Unless this guy is just very nice and believes in karma I don't know how you can reasonably approach him.  I do like the way Jason has recommend though, that is the most reasonable way to get your foot in the door.  If he says no, ask him what type of deal he is looking for.

4.  If you think shadowing him or working for him will work, ask him what is the most annoying aspect of this right now for him, then offer to do that.  Once again more than likely time is his most valuable asset, how can you save him time.

5.  Do you have a service you can swap, for example maybe you are an awesome programmer.  Maybe you can build amazing landing pages or websites.  Offer to trade knowledge.  $ is of no interest to this guy but I would wager knowledge is.

Account Closed · Answer

Hi All,

Thanks for the suggestions.  I spoke to the developer assistant as the owner was not there and he said the developer has been in the business for 10 yrs.  In addition, he uses investors money to fund the project.  I told him about my goals and said I would be happy to work for free to learn and he refereed me to their website.

It shows people who do this or buy multifamily (apartment complex) generally use others people money to raise the funds; hard money/ family or friends.  But the part I don't understand is, he does not sell the apartment individually as that does not happen in Los Angeles.  I know he will be renting it out and after a year he can ask the bank to appraise it and get the money back for the investor and pay them off and keep the complex for himself and keep the HOA and rent (I think BRRRR strategy). Am I correct in my understanding of the process?

If someone can help me with the maths that would be great.  So if he gets hard money lenders at 12%, which I think is high, how does he manage to make his payment to investors, would he not be short on a monthly basis, thus the whole project will be a loss?

Account Closed · Answer

Again, thank you for all the advice I really appreciate it.  I meant large apartment, over 100 units.

Account Closed · Answer

when you say bring him a deal, but I am not at the investing stage yet, I am trying to save as much as I can, I was just trying to understand his process and how he does it

Jason Hsiao · Answer

Account Closed if he's using investor money he's most likely going the equity syndication route, at least that's what I would do so I don't have to put up so much capital on my own and lower my financing costs. In general, he'll participate as the GP, charge a fee for acquisition and management, give the investors a preferred return (8% is what I see most commonly). If he achieves above that preferred % then he participates in profit sharing as well. When he exits, selling to an insurance or some funds that want the stream of cash flow he pays back the investors.

Apartment construction and lease up timeline is too long for hard money to make sense.

Carlos Altamirano · Answer

hello Account Closed

I think you're approach is fine! Don't over think it.

Introduce yourself. Tell him or what your goals are as they relate to real estate. and tell him WHY. He or she too was once an amateur, and a great real estate investor would see themselves in someone asking for advice. Good luck!

Jason Hirko · Answer

Account Closed I would define for the folks on here what you mean by a 'large development.' I have a feeling some of the people on here are thinking you are describing a guy building a skyscraper. When I got started I thought the guy building 3 spec homes at a time was crazy successful. So with that, I'll assume he's doing a 100 unit complex and not making $1,000 an hour. I will also say that even a smaller time developer isn't going to be able to explain very much to you in the time it takes to drink a free cup of coffee. The best way to learn, and how I learned (and keep learning) is to find a deal, and find a partner. If you stay in it for 1%, or even just your name on it as a junior developer and you get to be involved from start to finish (even if that just means being copied on all the emails back and forth), you'll be so far ahead of the game.

And don't say you can't find deals. It costs zero dollars to take a potential deal and idea to a developer.

Luka Milicevic · Answer

Account Closed Ask to buy him lunch or coffee. That's it. Once you get that tell him you will work for free etc.

I haven't met a developer/investor that did not want to make time for me before I ever had a deal. You might have to wait for them to find time but again, I haven't met anyone that said no when I asked them to lunch or coffee.

developer, how to approach him?

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