I’m nearing the end of my fourth quarter in the program and am taking finance and operations classes. The course content continues to impress me with how applicable it is to my profession as a project manager for a real estate development and construction company in the Washington, D.C. area.
In multifamily real estate development, we evaluate properties for their best potential use and then decide a course of action to create an asset using a mix of debt and equity capital that will generate future return on investments.
1. Buy or Sell?
This is often the million-dollar question for real estate developers (not to mention many other business managers), and the MBA@UNC finance course has provided me with the valuation tools to make this kind of educated business decision. Professor Jennifer Conrad’s lectures and case studies focus on what future cash flows look like between multiple assets and how to discount them back to the present value in order to compare them side by side. She discusses how to factor in growth rates, evaluate return on investment (ROI) and forecast earnings based on a number of financial modeling techniques —as well as myriad other critical topics, including stock and bond valuation.
Oh, and did I mention I just took the midterm? Yes, all of this information was taught in the first few weeks of class. I came into this program with very little financial management skills, but at work I already am forecasting future monthly cash flows and realizing what they mean in today’s present value of money.
2. Evaluate Your Cash Position
“John, we need to capture an eight-cap in this property.”
“Hey Bill, did you hear re-fi rates are in the twos?”
I have to be honest, as an engineer I had no idea what this mumbo jumbo meant two years ago. Thankfully, with help from Professor Larry Chavis in economics and now Professor Conrad in finance, I have not only adopted this industry jargon into my vocabulary, but I’ve learned what they mean to the industry and the effects they have on business decisions.
I have also come to understand the impact of borrowing money to fund a project, which has been a great help in the workplace. For real estate projects, there are often years of planning required to break ground on a new property or for property transactions to take place. Within those years are countless hours running numbers on factors like interest rates, debt-to-equity ratios and break-even points — just to name a few. Now that I can understand and implement financial indicators like these, my value to the company has increased and this has opened doors to working in a bigger capacity.
3. Delivering the Goods
Outside of financial management, MBA@UNC has also provided me with insightful lessons in operational efficiency. Because the real estate industry includes the construction of buildings, the efficient and effective delivery of a newly constructed building is a science also covered in business school. Professor Wendell Gilland teaches the operations class and so far has delivered lessons in schedule and inventory management, as well as quality control.
Delivering a newly constructed building on time, within budget and of acceptable quality to the client takes an enormous amount of planning. In Professor Gilland’s class, we have discussed preventing raw material delays from holding up a project, keeping value-engineered materials from detracting from quality, ensuring price inflation of materials does not add to the overall cost, and working to keep underperforming processes from holding up the overall project schedule. These are all topics that I have been able to implement immediately into my everyday job.
Most business schools offer courses that teach their students the best management practices relative to any industry and MBA@UNC is no exception. Only instead of having to quit my job and lose two valuable years of experience during this remarkable economic time, MBA@UNC allows me to log out of my weekly classroom, pull up a spreadsheet and apply the training I just learned to my profession — all in real time. How’s that for efficiency, Professor Gilland? That’s the Carolina Way.
About Dustin Kinney: Dustin is a project manager for a privately owned multifamily builder/developer based in the Washington, D.C. area. He earned a B.S. in civil engineering from Penn State University and complemented his undergraduate degree with minors in leadership development, entrepreneurship and real estate. Dustin completed an executive real estate program at the RE3 Institute of Real Estate in Washington, D.C. He joined the MBA@UNC community in January 2012 after being inspired by the program’s innovative delivery in championing a virtual learning environment.