Co-Development and Mentorship

Transcription

1 Co-Development and Mentorship Philip J. Schultz Managing Partner Horizon Develop Build Manage

2 JAMES GRAASKAMP -UNIVERSITY OF WISCONSIN The successful real estate deal is nothing more than a series of crises tied together by a critical path.

3 TOPICS OF DISCUSSION Education Mentors Internships Co-Development/ Joint Venture Public/Private Partnerships Solo Development Keys to success Risks and Rewards

4 Horizon Story Horizon Develop Build Manage was established in Three operating companies: Development, Construction, and Management. Headquartered in Madison, WI. 130 Employees. $80 to $100 Million Revenue Over $440 Million in Development and $1 Billion in construction Over 6,000 multifamily units developed and constructed 2,400 units in property management in WI, IL, and IA Largest builder of indoor waterparks in the US

5 PHIL SCHULTZ 32 years in real estate development 1985: City of Milwaukee DCD (7 years) 1992: Wheaton Franciscan System (6 years) 1998: Horizon Develop Build Manage (19 years)

6 EDUCATION ACRE ORAL AND WRITTEN SKILLS MATH SKILLS: EXCEL HIGHER EDUCATION: UW REAL ESTATE REAL ESTATE SALES LICENSE ONLINE TOOLS: GOOGLE EARTH, LOOPNET

7 MENTORS WHEDA PROGRAM 2006 LIMITATIONS PROACTIVELY SEEK AND SCHEDULE DO YOUR HOMEWORK ASK ABOUT AND LISTEN TO THE STORIES ASK FOR ADVICE RESPECT THE TIME: START AND FINISH EXPRESS THANKS FUTURE EQUITY INVESTMENT

8 INTERNSHIPS EXTREMELY VALUABLE PATH TO EMPLOYMENT WINDOW TO THE PROCESS SOURCE FOR REFERRALS EXPOSURE TO A CAREER PATHS

9 Co-Development Joint Venture Reach an agreement before you start working Fee split based on risk, reward, and experience. First deal: 5-10%, Second deal: 10-15%. Funding pre-development follows fee % and Guarantees Be organized, take notes, and complete tasks timely Don t be beguiled by large fees: they are gross revenue

10 Co-Development Joint Venture What partners and investors want. An accurate personal financial statement Liquid assets of $100,000 to $500,000 or more New worth of $1Million to $5Million or more Good credit score A clean legal record or an explanation

11 Co-Development Joint Venture How do I get there?? Take the long view: 15 to 20 years Build a base of knowledge Start small but in growing markets Purchase a home that will appreciate in value Obtain a line of credit on your home but guard it Become the subject matter expert Do what you say you will do Your reputation is everything Spread the risk with other partners

12 Public/Private Partnerships Non-profits, CDA, HA They are looking for strong experience and guidance So partner first with an experienced developer Transactions tend to be more complicated Approval process is more complicated Non-profits often have assets but not always Clear division of duties and responsibilities is critical Remember your fiduciary responsibility Public partners have different motivations

13 Solo Development The risks are high: 100% You must be able to handle high stress You must have endurance and optimism Strong sense of control in face of adversity Action focused in demanding times Agile problem solver Ability to influence others Ability to balance stress with private life

14 KEYS TO SUCCESS Take the long view: it is a career Enjoy what you do. Learn the business first Establish long term relationships Never burn the bridge Invest in appreciating markets Diversify risk via partnerships Save as much as you can Prioritize and plan Set your goals and write them down

15 Risks and Rewards Personal guarantees Pre-development funds at risk Long term operating risks: cash calls Tax credit risks: credit delivery, cost overruns, etc. Market risks and lack of diversification Lack of liquidity Long term real estate ownership can generate wealth Cash flow returns Favorable tax treatment

16 Good Success QUESTIONS? Phil Schultz