Repositioning Your Business or Career

The reports coming from last week's Fall Meeting of the ULI point to a long, slow recovery, or as Ivy Zelman once described it, a "canoe" rather than a broken "W". The extend & pretend recovery will continue to force many builders and developers– i.e those without access to public money– to the sidelines for the foreseeable future. So, what happens when a talented management team finds itself blocked from their normal line of work? The answer: attack the issue the same as a real estate project in need of repositioning: develop new product and services to address the "new normal".

Perhaps the best example of this can be seen on Lakewood Real Estate Solutions new website. LRES is comprised of the former management team of Lakewood Homes, founded in 1990 by Buz Hoffman. For the last 20 years, Lakewood has been known in the Chicago market as an industry leader, offering superior housing product and thoughtfully planned communities. During their reign, Lakewood attracted some of the best talent in the Chicago market, the same talent that now comprises Lakewood Real Estate Solutions. When the recession and resulting credit crunch pushed them to the sidelines, they chose to leverage their in-house talent as a workout team, helping banks and institutional owners with distressed real estate assets.

That alone isn't necessarily headline news; after all, many professionals in our industry are trying to do the same thing. The differentiator in their case is a unified team with a proven track record, combined with a website that is simple and delivers a crystal clear message. We first learned about it when one of their first blog posts, "Buzzwords" arrived in our Inbox. The email announcement captured our attention for two reasons: it was clean and attractive, but also lent a positive feel to an otherwise discouraging business (workouts). We also like how they invested the time and energy to develop a professional, multifaceted website. Everything about it smacks of professionalism.

Whether you're a one man show or a team of talented people, you might want to consider doing something similar to what Lakewood has done. It will require some investment, but there are plenty of off-the-shelf products to quickly build something similar to what you see on Lakewood's site. A $1500 investment and monthly fee of $40 (for web hosting) should get you there. (Check out Adobe's Business Catalyst, a suite of services that in addition to web site development also includes blog posts and email campaigns.)

Before you balk at the cost, keep in mind that promoting yourself and your experience has never been more important. If the latest reports for a long, slow recovery are an indication, short term contract gigs might become de rigueur. A multifaceted site like this helps people find and learn about you. One other benefit– it lends greater credibility to your job search when you've been "consulting" for over a year (or longer).

Check out Lakewood's web site and feel free to post your comments; they would appreciate the feedback.

Real Estate Market Update- 9/2/10

"Are you seeing any improvement in the market?"

That's the most common question we hear from people lately– inside and outside the real estate industry. Here are some of our observations based on market data, first hand accounts and listening to OPO (Other People's Opinions). We don't recommend using this to re-balance your retirement account, but at least it will provide a glimpse of what we're seeing and hearing.

• First things first, without question we've seen an uptick in search activity this year. It's not surprising when you consider the meltdown of 2008-2009; it would be hard not to post a respectable gain. Regardless, our search activity for the four months of May to August was reminiscent of the go-go years of 2006 and 2007. We actually broke a sweat!

• Is this a sign of a recovery? Who knows. Our search activity remains confined to a small group of builders and developers who cleared the impairment hurdles or were lucky enough to sidestep legacy debt issues. In several of these instances, they are hiring in multiples: one client retained us on five searches YTD, another on four. It's been a long time since we've seen nine searches from two clients.

• "Confined to a small group..." could also read "which leaves a large group sucking wind on the sidelines". Some appear to be highly cautious and conservative, others paralyzed by the lending freeze that blankets our industry or from being boxed out on land positions by the big builders. How much longer they can withstand these challenges remains to be seen.

• Meanwhile, a hiring campaign has been underway at the regulatory agencies (FDIC, FNMA) and the subcontractors they work through (RAC's). For many in our industry, this could prove to be the safe harbor (employment-wise) while waiting for the storm to pass. We posted on these job opportunities (and how to pursue them) twice before. If you missed them, here are the two links: FDIC Part I and FDIC Part II

• Another common trend during market corrections is the rise of small start-ups. Weak employment motivates many real estate professionals to create their own opportunities, usually by banding with a handful of peers to offer turnkey solutions to banks, institutional owners or by raising seed capital to do deals under the new basis thresholds.

• One thing is becoming clear: to survive (prosper?) in our industry today it helps to have an alternate strategy. For some, that might be a Plan B or C... and some of which have yet to be defined.

FDIC Employment & Acquisition Opportunities

Similar to the RTC days, the best avenue for real estate professionals to secure gainful employment in the near future might be with the FDIC. To date, the Fed has given banks a long leash to curtail an onslaught of failures; hence, the "extend and pretend", "pray and delay" monikers. As the economy shows signs of strength, the Fed will begin flexing it's regulatory muscles and require banks to address the deals they've been nursemaiding for so long.

Until those assets are re-traded, no one knows for sure what the total impact will be. However, when you consider there's an additional $2 trillion of commercial real estate debt due to reset between 2011-2013, half of which is valued less than what is owed, it doesn't look good. Clearly, the FDIC is faced with becoming the largest REO owner and employer in the nation. So, if you're in the job market or looking to acquire real estate assets at great prices, get ready.

The Hiring Side- "We've Only Just Begun"

The FDIC is hiring. And, like the old Carpenters' hit, it's just the beginning. In addition to the FDIC, there are the 100+ third party contractors (known as RAC's) who have contracts to support the FDIC's asset management and disposition activities. Many of them will need specialized talent, too. Some of the candidates will come from banking, some from real estate, some from other industries altogether. To see a complete list of third party firms by industry segment, check out the FDIC Receivership Assistance Contractor list.

Applying to the FDIC for an opening is no slam dunk. A separate online application must be completed for each position. Don’t make the mistake of applying for one position thinking the FDIC will consider it for other openings, regardless how similar they might appear. You must submit a separate application for each position of interest. It’s time consuming, but necessary. Some tips on completing the applications:

• The FDIC uses a scoring system to determine fit with a position. It is important that the language in your resume and the your answers on the application match as closely as possible to the job description. For example, if the job description requires “entitlement” experience but you use the term "approvals" in your resume, it may not receive as high a score. Certainly, don't embellish; just make sure you’re speaking the same language. This might mean rewriting your resume to better match the each opportunity.
• A background check will be required on each application as well, but you can copy and paste much of the information to speed the process up. Park the answers (in order) on a separate document as you complete the first application, the go back to it on additional applications.
• If you have any prior experience with the RTC, banks or federally approved workout firms (RAC's), be sure to note that; it is considered a huge plus. Again, don’t assume the folks at the FDIC will recognize a company’s name and draw the right conclusion; instead, spell out the relationship, duties or role. Learn more about the application process.

The interview process itself is rather impersonal. Once your application has been approved for consideration, a brief phone interview is conducted with someone at the FDIC. Assuming the visit goes well, a conditional offer is made subject to final approval and completion of your background check. Don’t be surprised if you are formally hired before you ever meet the person who will be your supervisor.

Good news on compensation: the FDIC is paying market rates. Depending on the position applied for, qualifications and compensation history, the base salaries can range from $100-175k, plus bonus incentives and/or overtime. Each position has a defined compensation range (e.g. $105-125K). The initial offer will always be made at the lowest number; however, if payroll history is supplied demonstrating you are accustomed to making more than the low end, the local office has the option of increasing the offer by up to 25%

FDIC Careers posts positions currently available directly with FDIC offices nationally. Click on View All Vacancies to see the full gamut of needs. To search opportunities with both the FDIC and it's approved contractors, go to Indeed.com. Enter FDIC in What field and City or State in the Where fields.

The Buy Side: Acquiring Assets

The FDIC has a history of selling their assets at 94% of appraised value regardless of what the previous value of the asset was. Obviously, the key driver in the deal will be the appraisal. Given recent challenges in quantifying property values, this could be deal breaker for either side.

FDIClistings.com is a good site to start looking for potential deals. Prescient and the other asset managers have more than 1000 brokers that will list assets on behalf of the FDIC so look through local channels as well.

The Roseview Group works on various bank assets prior to the FDIC getting their hands on a bank. When they dispose of assets, they are interested in the following from a buyer: surety of execution, a desire not to be re-traded, an interest in not being nickel and dimed, a buyer that has a target asset in mind, and someone that will purchase without reps and warranties.

Asking for a list of all assets "for sale" is usually ignored. The RAC's get thousands of tire kickers and they ignore most of them. The surest way to get their attention is to have one troubled asset acquisition under your belt, and a specific new acquisition target or pool in mind.

NOTE: We'll continue to update this post with additional information so be sure and check back.