RE Pay…Looking for advice
Here’s my situation - appreciate any advice. I work as a development analyst for a medium sized shop on the east coast making 100k (2 YOE).
I’ve been having a tough time lately comparing myself to friends in IB / starting salaries in big law that are literally 2-3x what I’m making.
I enjoy development and love the entrepreneurial side of it which is where I’d like to ultimately go. That being said when does development pay/RE in general start to pay similar to other jobs (tech,finance,law)? Do you have to go out on your own for any chance of high salaries? For example a partner in big law could pull in $3m+\yr - is that even realistic in RE?
One thing to ask, did you attend a Target school/Internships/Advance degree/Hours to compare to them/Professional Certs (Think CFA/CPA/CFRM/QIY)
First big firm - Law, they have no life and have a law degree as well as I'm sure insane internships while attending law school.
IB they are probably working weekends and many big IB's require CFA track or MBA track from a target school, amazing internships, or the person networked really well. They also most likely will be working 60-80 hours a week.
It's about balance if you like what you are doing and are making six figures you are in a different field....You probably get more hands on and learning rather than being a COG at big firm. You get a WLB.
That said knowing what peers in your field and elsewhere are making is great for negotiation, but it's comparing apples to oranges.
If you want to stay in RE and collect top level dollars as a junior your best and safest bet is mega funds.
Do you think later on in one’s career it starts to even out against other industries?
There are no guarantees in life. I will say that if you are a senior level deal person and you work for a strong developer in a strong market, for the most part you will be comped handsomely. Unfortunately, there’s no guarantee that either of those things will happen for all of us or even most of us.
I feel this as well. I’m going on my 3rd year in RE. Lots of roles offers are insanely low (30-60k Analyst 1) in a city like Dallas. I literally took an interview the other day and they offered 65k plus bonus and wouldn’t say what the bonus expectancy was. What a joke. I’m making right at 100k now and don’t see many folks at the firms I’ve worked at living large at all.
Seems like the only folks who make money in RE own their own shop or struck it big in the RTC days. How do you ever make enough to do a deal on your own? Who knows. I don’t see people too far above me living any different than I am currently. Also, it’s impossible to follow the footsteps of any of the big guys in RE since their story always starts like “It was the savings and loan crisis when we got our first deal with 0 money down, 110% loan, bought a $50m hotel portfolio, and had any capital we needed from some random guy we didn’t even know looking to invest in RE for the first time. Then we went on to buy a $10B reit we didn’t know what to do with etc”. I don’t get it.
Makes me think I need to get an MBA and change paths try to get money then come back later.
I feel Dallas underpays in general as it’s assumed the COL is very low (my guess). My company is pretty NYC centric and the folks there make a fair amount more than the Dallas people.
There are some very high paying CRE jobs in Dallas for young people, but there are also a ton of low paying shops that only develop / buy locally.
Would you mind listing a few of the higher paying shops?
There are a countless number of RE players that will underpay and hope some schmuck forgoes pay for “experience”. You need to steer clear of these places because there are shops out there that will value talent and the work you put in (think “mega funds”). These firms will pay you as well as traditional high finance, law, or tech would at basically all levels. That being said, they’ll work you to the bone.
If you’re not willing to make the move and/or put in the effort required by these top jobs, then no, you’ll likely never make as much as an employee in RE vs the rest of finance, law, or tech. If you have a problem with that, you can always try to pivot.
Short answer is you’ll likely never be paid as much as a W2 employee at a RE shop compared to your IB/law/tech counterparts. Only way to overcome this gap is to move to a top firm, go out on your own, or pivot to finance/law/tech.
I agree with everything you said except the idea that you're a shmuck if you accept low pay for experience. It's often worth stomaching the low pay for experience you couldn't possibly get anywhere else given your background, especially in this market. Sure - if you can command market pay, don't take on a job just for the experience unless you value that experience that much more. If you can't command market pay for the role/experience you want, take what you can get and leverage it until you can get paid fairly for experience you also find valuable.
idk most guys low balling for the "experience" aren't even considered sexy to your resume anyways
I share your sentiment overall. However, I will say most of my friends in IB or PE are either working themselves to the bone where they do not have time to take care of their mental and physical health and quite frankly do not have time to spend the money they make. Also, in most of those fields especially at top tier IB and PE shops, there are alot of politics involved. It is either up or out in those fields. Same with law.
Development is arguably the most intellectually stimulating business in real estate. Being able to put together pieces of the puzzle is a huge learning school both for business and even personal life. Learning to underwrite a deal, raise the money for the deal, negotiating and hiring third party consultants, managing those consultants, managing investors, learning a little about construction will allow you to be a better business person. You can go out and start your own development firm or start a side hustle that is unrelated to real estate. I would say working for a Hines, Brookfield, Greystar, etc is one way to make similar bucks to the fields mentioned or working for a small development shop that has deal flow, is well capitalized, and has an opportunity for you to truly growth both professionally and financially. These opportunities take initiative, networking, and trust. Worst case you get a MBA in business experience.
And then after underwriting, financing, and closing the deal on your own, and securing hundreds of thousands of dollars in annual revenue for the firm, you get paid $100k and ownership tells you there’s no bonus this year because the market is in the toilet.
This is actually a true story 😂. RE is full of schmuck owners that sell you on a dream to get you in the door and dangle a non-existent carrot to enrich themselves. Then when it comes time to pay you your just due they lowball you or re-trade you on comp.
You’ve been warned.
Damn CBREIM doing yall like that too?
Im in land Acq at a top home builder and have more deals under contract/closed than my boss and the team bought total last year and got a $1,000 bonus at the end of 2023 on $60+ mill in placement just 6 months in. 🤡
Ignore title but I am Analyst 1 at a MF. Pulling in $220k all-in.
You can make the big bucks in RE by doing your own thing and getting carry on deals.
I interned at a small development shop (8 person team, <$1B AUM), and the partners were pulling in $3M+ per year easily
Damn, how many partners at the firm? Were they merchant developers and what product type?
What city, and what MF firm? Can name a handful to stay anonymous
3 years ago I had a buddy at BX real estate tell me he made $200k for his 1st year FWIW. He stopped talking about money after that.
Cap. Not even BX is offering that in NYC
CRE values hunters bar none. You can sit and complain that you are undervalued or you can keep meeting people and see what happens.
I started in a major market making ~$100k working ~60 hours a week. Got bumped to associate and pay rose to $150-175k depending on the year.
Now in a smaller market making slightly more with way lower COL and 40 hours a week. Find a niche that is doing well and follow it or grind til you get promoted then leave for higher pay. If you are Dallas I guarantee you can find higher pay than $65k base. Easy to get frustrated at analyst level, I remember being there. Be patient at your job and grind for that first promotion, everything opens up from there.
$100k year 2 with an analyst title isn’t that bad. East coast is vague so maybe if this is NYC it’s low. Join a mega fund/“REPE” where you work 15 hours a day if comp is the end all be all and you don’t care about WLB. Yes you don’t make as much as big law, IB, or PE in the earlier years of your career but it scales up when you get carry. Also you don’t need to bring as much personal capital to the table when you do your own thing as you might think if you have a development skill set and are actually the guy who can get it done and knows how to execute. People will back you and after a couple wins maybe you can put more skin in the game and get more passive eventually if that’s what you want. Some brand name big name shops pay high salaries but you get rich on the carry as you’ve likely heard. Given it’s interesting work, you gain experience basically running a business, and can potentially get rich if you hang in there long enough, oh and work like 40-50 hours a week, not the worst career. If you want to be able to brag to your friends at 25 that you make as much as them even though you barely see each other then yeah maybe switch careers.
I tend to agree with OP and it is frustrating, especially as you watch your peers in other industries progress. In hindsight, I might have gone the REPE route post B-school, then waited until I had a decent amount of capital to switch to the development side. If my wife didn't have a relatively high paying corporate job, working for a developer in a HCOL city would be really difficult financially.
I am also in a West Coast market, and feel like real estate in particular doesn't adjust compensation based on city. At associate level, I'm getting paid what a development associate at Hines was getting paid in 2019. Doesn't feel great. Sure - there are more theoretical opportunities at promote etc., but cash is king, especially when you have a family.
This industry consistently under pays, especially on the Developer/Owner side, unless you are at a mega fund. Despite development being extremely difficult, with acquisitions/investment people having roughly the same skillset as their PE counterparts, they are paid 1/2 as much if they're lucky. It makes no sense. It just depends which path you take initially and what your pedigree is. If you are not siloed on the Developer side and get to see all angles it does put you in a good position to start your own shop if you're okay with the risk, but that does NOT justify low pay, nor does it guarantee you will make it on the other side. Starting your own shop will require a lot of money which you likely wont have given your years of shit pay. This carry nonsense is such a facade, I had millions of dollars in "carry" and then got laid off and poof its gone. Maybe it exists on the fix and flip value add guys who made a quick buck the past couple years but I don't know anyone who has made any relevant money on carry. Executing a development deal also takes many many years, and most developers end up holding if its doing really well. Lots of smoke and mirrors.
I don't know what it is but it sucks. I enjoy working in the industry, but I don't think its going to change.
Preach! Just know you are not alone.
One day we will get our just due
This is the truth and I don't know why too.
I started in development and loved it, but always wondered why are less intelligent/sophisticated/"can't actually run their own deal" LP's were making 2-3x more than me. I realized it's just so asymmetric there is no point in trying to figure it out, so I joined them! Now I am 4x what I was making in development (actually)
That said, I don't find myself ever hiring someone w/o development expertise, it's just so much more detailed versus running a model
Is the pay disparity between GP and LP really that big? Do you find the LP side less interesting than your previous role?
Your friends in IB and law make more than you do, but they also work way more hours is my guess.
It is worth pointing out as well that if all you care about is maximizing your salary as a 24 year old, then no shit you shouldn't be in real estate. Someone asks this question every couple months and the answer is always going to be the same - if salary is your primary concern, don't work in CRE. If you actually like CRE and want to have a career, then by all means welcome on board. But it's insane to sit here and complain that you're making $100k + bonus + benefits as a mid-20 something year old, while your friends are making 200k. I mean, if someone working as a janitor at Arbys posted on here about how they're making nothing while their friends in real estate make a lot, no one would give him the time of day. Finance and real estate are not the same business, and it simply isn't appropriate to compare pay across different industries. Compare your salary against competing firms.
And as always, real estate is lucrative when you own it. Banking is a pyramid with the tip more or less cut off, and real estate is a pyramid with a (relatively) broad top tier. You won't get rich working for someone else without significant carry. But there is a reasonable upside case which trumps just about anything that you'll find in banking.
Telling to me that the minute we hit some softness in the market, there are 3-4 trending posts a week about people who want to get out of the industry. Tells you everything you need to know about why real estate is a really lucrative path for the people who stick it out for 40 years.
Amen.
People are stupid. People on this site are in some ways even more so, because they assume they're smarter than they are. Which is why you have people comparing IB to RE and asking why they should stay in RE when they could make more money elsewhere. Anyone who doesn't understand that the purpose of life and a career isn't to maximize earning potential at age 26 probably doesn't have the long term vision or patience to succeed in real estate, anyway.
People keep making this comparison but it’s about fee streams..developers get paid development fees. Development fees are nowhere as large as AUM fees charged by PE firms. Even REPE, except a select few, are much smaller. A PE deal may be $100M but an institutional RE deal would be $35M. My point is - less AUM = less fees = less pay.
To be more clear, development fees are higher than asset management fees on AUM (we charge 4% on most project cost for example, which ends up being ~6-8% of invested LP capital). It’s just you have a lower capital base.
Idk how other firms operate, but we aim to cover 100% of OpEx, etc with dev fees so that any promotes/incentive fees are pure profit to the firm/principals
What do you mean you cover opex with Dev fees?
The salaries in real estate will rarely match up to the salaries in finance. If you compare your salary to your friends in IB/PE, you are always going to be disappointed. Here's my pitch for real estate: by the time you are 60, you will have a significantly high net worth than any of your friends in IB, your work life balance will have been much better, and your career will have been much more interesting. But for all of this to be true, you can't be just an employee. That doesn't necessarily mean you need to start your own shop, but it does mean you need to find ways to end up in roles where you have significant ownership opportunities. The good news is that comp in real estate is almost always a mix of salary plus carry once you get into senior positions. Or start your own firm. In every medium size or larger city in America, there are hundreds of people who have become tens of millionaires because of real estate. Not too many other industries can say that.
There is literally no guarantee of this and I wouldn’t listen to this advice. I would work in development for maybe 2 more years and pivot to different industry where you can make money and invest on your own. Ownership stake is just as political as some of mega fund roles others have talked about.
I'm not necessarily talking about carry in a REPE fund, which, yes, could be more political. But the vast majority of ownership opportunities in real estate are merit based and not dependent on how brown your nose is. There are significantly more ownership opportunities in real estate than there are in finance.
And I wasn't implying that it was guaranteed. Most people aren't going to get there because most people don't have the talent / drive/ whatever to get there. But I doubt that same person is going to fall into a $500K/year job in some other industry.
Depends where one works. My base is the same as my vanilla PE friends. Smaller bonuses though. But junior comp seems to be more related to AUM per head than anything
Brokerage pays the most as a younger guy. Once you get into your 40s+, that's when generally speaking you have the opportunity to participate in a some sort of ownership in the deals/funds of your firm. Salaries in general in RE are always going to be disappointing.
This is cap. IF you are on a top team then yea brokerage pays very well at the analyst/associate level. The vast majority of people are never going to be on top teams. I have plenty of friends who are working at JLL/CBRE in brokerage and make way less than their peers.
Stop giving out broad shitty advice
There are plenty of brokers in their mid-thirties in every city in America that clear 7 figures. that generally doesn't happen on the principal side. I'm not referring to early 20's analysts.
Sounds like you need to make more higher achieving friends.
My experience generally in real estate is you need to put in a few years to prove your worth after which comp can start going up considerably
megafunds will pay high salaries out of the gate but they are brutal political places to work. You will learn how to make PowerPoints and useless charts while getting manhandled by your boss (who is returning the favor for getting manhandled by his boss) but you won’t actually learn that much about how to build and operate real estate if that’s what you are interested in. FYI I have worked in acquisitions at both a megafund (as the gen zs like to call it) and a fundless sponsor
Are your bosses just as rich as your friends bosses in PE and big law? If yes then you can get paid just as much as them it’s just a different comp ladder to get there. If you like your team and see yourself their long term, keep grinding, learning, adding value, giving back to your team and advocating for yourself at bonus discussions and the money should start coming.
Alternatively, start to network. As an analyst / associate you have more optionality in the job market than you will likely ever have again in your career. Everyone and their mother’s uncle wants a spreadsheet monkey with 2 years experience. Take advantage of it
At a megafund. can confirm this is exactly accurate.
This board massively underrates commercial banking as a RE career. The work life balance is second to none. Is it annoying dealing with bank bureaucracy? Absolutely. But not as annoying as working on a weekend, ever. And you can make real money.
How much money?
300-500k as a good RM. if you play the politics right and run a group at a bank of any size, that can double or triple. And nobody works past 5:00.
Can I PM you about this topic? Thanks, just interested in this side.
Sure, of course.
How many black people have made it to this position with so called “politics.” Not trying to be condescending just want to know how realistic my odds are. Just based on what I’ve seen doesn’t look it good and my odds would be just as good as going out on my own tbh.
I totally get that it’s pretty nauseating for a minority to put in time in CRE, it’s the most disgustingly white male country club dominated industry I can think of, but if you can stomach it banks are dying for diversity in the C-suite and on boards.
Im a debt broker and I’m 35 years old. Up until age 29 I thought working for a real estate PE fund and earning carry was “the ticket” and the way to make a nice living in real estate. I worked for a large, name brand fund from age 26 to 29 (up until 2018) and came to realize carry is bullshit. It’s a carrot that procipals dangle to retain higher quality employees. There’s no guarantee you get carry and even if you do, no guarantee those promotes are ever realized. Guess how much the carry from all those 2020-2022 deals is worth today? ZERO.
As I said I went to the broker side when I was 29. Took a draw salary, lived in a cheap apartment, made $200k when I was 30, $300k when I was 31, $700k at 32 and $1MM+ at 32-33, and $500k last year. Yeah the last few years were gangbusters and the market sucks now, but it will come back and there will be plenty of years ahead where I make way more than I should.
It is extremely difficult to make more than a few hundred thousand as an employee in real estate. You either need to be a broker that generates commissions - whether it’s brokering debt, selling triple net deals at Matthews or leasing office space in Milwaukee….OR be a principal that puts their own money at risk, begs lenders and investors for capital, buys good deals and executes on the development or business plan.
In real estate you either have no base salary and massive upside OR a decent base with pretty limited upside. Same is true for any other industry. The lawyers that make bank are the partners that bring in clients, not the associate turning around loan docs at 3am.
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