2. Find a Partner

Multifamily development, ownership, and management are such cumbersome processes that it's often hard for even the most experienced executives to go it alone. They need partners, for both financial support and management expertise. If they're less experienced in the business, these needs become even more profound.

Jeremy Green, a principal in Urbana Development in Miami, knew this before he got into multifamily. Green always wanted to be in big business, even while he was working for CBS SportsLine.com during the late 1990s. When the technology business began to struggle, Green started searching for an alternative field, eventually choosing the apartment industry.

Jeremy Green and his company, Urbana Development, are building Aria, a 78-loft project, in Miami. The project is expected to cost around $24 million.

Jeremy Green and his company, Urbana Development, are building Aria, a 78-loft project, in Miami. The project is expected to cost around $24 million.

The only problem: He had no real estate experience. To bridge this gap, he found partners who knew the industry well. "Any area where we lacked expertise, we found someone with that expertise," Green says. "If you don't have experience, you have to affiliate yourself with someone from the industry and leverage the experience and market knowledge of your partners."

The expertise of your partners also can help you decide whether you want to manage your own properties, develop, or buy. When Perrin, a principal of Trillium Residential in Phoenix, decided to leave his job as president with Mark-Taylor Residential in Phoenix, he partnered with David Dewar, Jamie Dawson, and Ken Losch, who were well-versed in development and financing and construction, to form Trillium. Combining their skills with Perrin's management expertise tilted the company toward a strategy that included those three things. "Having the management base and knowledge helps you underwrite new development deals," Perrin says. "It also helps you provide economies of scale on the development side to all the properties you are managing."

The best way to arm yourself against the risks of moving into a new area is to find people familiar with that niche. Allen is doing this with a 188-unit project in Pasadena by partnering with BRE Properties, a REIT in San Francisco and an experienced multifamily construction company, and David Worrell, a local developer plugged into the political network of Pasadena. BRE is a big company that has the expertise to handle construction, leasing, and property management, while Worrell was much more familiar with the local government and community leaders than Allen. "It has been very helpful in getting the project approvals from the city to have him with me," Allen says.