Real Estate Development Analyst Compensation

Hello all,

I am currently an undergraduate senior with an offer from a top-tier, multi-family developer based in a large city with a hot market; however, my boss has asked me to come up with a compensation plan I would be pleased with.

While I do not want to offend my boss by asking for too much, I would like to make a decent living. Would asking for $75,000 with milestone bonus potential (close of escrow, breaking ground, etc.) be fair compensation?

Please let me know your thoughts. I really appreciate any advice that is given. Thanks in advance.

Brad

 

Do you have any statistics that you can use for leverage? My business school has an undergraduate career services center that produces average salary statistics & average signing & bonus potential. Maybe reach out to some friends that have offers (maybe even in AM or acquisitions.. anything that you can use for data points will be helpful).

My first job out of UG had set compensation packages, so I couldn't negotiate or throw a # out there. You are obviously in a different position. Personally, I think $75k base is too high for someone coming out of UG for LA / SF (and for sure too high for san diego). I would think somewhere around $60k base + 20% bonus potential would be fair.

 

Thanks for the advice, Gentleman. I will be sure to check with the career services center for average salary statistics.

I would like to note that this company in question is a high-profile developer with a very lean firm and I have been specifically requested by a development associate to join his team. In addition to this, the firm also only deals with high profile, luxury apartments; the typical basis for an apartment complex is somewhere around $80MM. I would be working on 3-6 deals or potential deals at a time, and the firm will have about 9 active deals in escrow/under construction when I join.

With this being said, does this change your conclusion of 60K plus 20% salary speculation? Or do you still believe your estimate to be somewhere in the ballpark? Thanks in advance.

 
bradcummingham:

With this being said, does this change your conclusion of 60K plus 20% salary speculation? Or do you still believe your estimate to be somewhere in the ballpark? Thanks in advance.

Someone mentioned comps, so here you go. This is data provided by RETS associates - a head hunting firm that typically focuses on California real estate companies, so this is pretty much exactly what you are looking for.

http://www.retsusa.com/wp-content/uploads/2014/10/Financial-Analyst-Sur…

0-2 years experience = $58k - $79k + 12-17% bonus 2-4 years experience = $75k - $83k + 15-20% bonus 3-5 years experience = $84k - $93k + 24-28% bonus 4-6 years experience = $94k - $103k + 27-31% bonus

Note that analysts with "guru" level abilities in ARGUS & Excel (including JV waterfall modeling) have base salaries that are $15k higher.

Some shops have different meanings for the development analyst title. Are you more of a "project analyst" who manages X development? Basically work with architects, engineers, property mangers, & have more of a hands on approach within the entitlement process; essentially managing the project. Other shops a development analyst can work on acquisitions and underwrite deals; more hands off from a brick and mortar prospective. You should clarify exactly what your work will be & expectations on work-life.

 
Best Response

What type of hours are you looking at? Are you going to be working ~50 hours/week or 70+? That would steer my decision greatly. If it's going to be IB analyst hours I'd go for the $75k range in SF/LA. If it's more normal hours, steer downwards. I would assume that if they're a top tier development firm they'd have some analysts already so I'm a bit surprised that they want you to throw out the first number. There's not wanting to negotiate against yourself and then there's just kind of a douchiness in getting a kid right out of college to throw the first number out.

As for bonus, just shoot for annual bonuses and not based on milestones. For one thing as an analyst your comp shouldn't be based solely on them because you just won't have control over deals and timelines (not that your bonus won't be affected by overall company performance though) and depending on how active the developer is those events can take a lot of time and happen relatively infrequently. And if you base your bonus milestones on things like close of escrow, breaking ground, etc, they're all cash outflow events for the developer (unless somehow they get fees from investors based on those milestones) and you don't want your discretionary bonus check to be written when lots of other money is going out the door.

 

See if you can get comps. RE folks love comps...

Can you ask the associate who recommended you what their ballpark is or is he the one making the offer? Now that I think about it $75 base is probably on the high side. If it's a lean entrepreneurial org you may want to push the bonuses higher.

In any case congrats. It's tough to get into development and it sounds like a good gig.

 

$60,000 + 20% is really, REALLY good in real estate at the entry-level pretty much anywhere outside of NYC. REALLY good.

With that said, it depends on how badly they want you. If they need you on board ASAP and have plenty of cash to spare they could throw literally any dollar figure at you (or accept any dollar figure you present).

IMHO, a high-profile developer is likely to pay you less rather than more, so I don't think that boosts your comp potential because of that. However, we are definitely in a real estate boom market--it wouldn't surprise me if this boom starts pushing up salaries. Lots of production and limited qualified personnel.

If it were me I'd ask for $69k plus 20% bonus and I'd be extremely happy if they countered with $65k + bonus.

 

I agree with the base salary in the low $60s. For someone just graduating and going into development that is the number I see on average. Development firms do not pay as much for entry level positions as invesment banks.

If you demonstrate your worth over the next two years, your compensation will then reflect your value to the firm. Asking for too much now just creates an entitled attitude and does not give your employer room to increase your compensation later.

 

Kind of as an aside, I wouldn't sit on your laurels. When I say we are in a boom market, I really mean a bubble market. Presumably you're not starting this job until at least May (7 months away). While multifamily is less cyclical, frankly, any rise in interest rates or hiccups in the economy could cause the commercial real estate market to bust. I'm not calling it to bust in 7 months, but 7 months is a looooong time--a lot can happen. So if I'm negotiating comp with a real estate developer this is my main sticking point--tomorrow isn't guaranteed. I need to be compensated for the risk.

I also wouldn't hold it against you if you got yourself a back-up offer somewhere else...Questionable ethically, I guess, but you never know in this business.

 

Good points. The DC area has always been notoriously over supplied with talent in many fields so that can push comp down. My mom used to say that was the case even in the late 60's/70's. It doesn't make sense because resi RE is pretty pricey but I suppose with enough lobbyists and lawyers at upper triple digit hourly rates the market can support it.

And I worked in SF right in the middle of the first .com boom so very few people wanted to work in boring industries like repe because they didn't have stock options in pets.com. We saw how that turned out.

But I'm still surprised RE salaries are as low as they are. Maybe my heads been stuck too far up the PE worlds ass for too long but I would have thought average comps were higher.

 
Dingdong08:

Good points. The DC area has always been notoriously over supplied with talent in many fields so that can push comp down. My mom used to say that was the case even in the late 60's/70's. It doesn't make sense because resi RE is pretty pricey but I suppose with enough lobbyists and lawyers at upper triple digit hourly rates the market can support it.

And I worked in SF right in the middle of the first .com boom so very few people wanted to work in boring industries like repe because they didn't have stock options in pets.com. We saw how that turned out.

But I'm still surprised RE salaries are as low as they are. Maybe my heads been stuck too far up the PE worlds ass for too long but I would have thought average comps were higher.

Let's put it this way--REPE is definitely my end goal in a few years. :)

 

I think most people miss the point when it comes to RE salaries. The head guy at my firm only makes like 250k, which is low for his years of experience, but you cannot compare to IB for a few reasons. One is that the hours in RE are significantly better. The other is related the exit opps. I can tell you countless stories of analyst moving up to VP spots and starting their own investment firms with partners. There is so much investor capital out there for RE, that once you get experience, its not extremely difficult to capital raise. This is what my goal is after I get a ton of experience.

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TeddyTheBear:

I think most people miss the point when it comes to RE salaries. The head guy at my firm only makes like 250k, which is low for his years of experience, but you cannot compare to IB for a few reasons. One is that the hours in RE are significantly better. The other is related the exit opps. I can tell you countless stories of analyst moving up to VP spots and starting their own investment firms with partners. There is so much investor capital out there for RE, that once you get experience, its not extremely difficult to capital raise. This is what my goal is after I get a ton of experience.

I missed this post earlier, but YES. My boss is the top guy at our firm--he's brilliant and has a ton of phenomenal experience. Every week he finds new ways to make the owners more money. I'd bet with bonus he doesn't make more than $250,000 per year, but he works FORTY hours per week--including an hour lunch. 9-5, 1 hour for lunch and gone for the day. Never works weekends. THAT'S the big difference.

But as you said, his compensation doesn't do justice to the upside. He's used his knowledge and contacts to construct a budding real estate portfolio that will basically pay for his kids college and will make for a wonderful retirement at the age of 50.

So when you're comparing IB to real estate, you have to ask yourself if that additional 20-25 hours per week of work is worth double the pay. For some it is, for others it isn't.

 

As others have mentioned definitely use as many comps as you can. Pull from RETS, Glassdoor.com, and contacts who work in the industry for salaries and bonuses. Make a spreadsheet that lists out the firm, title, salary, and bonus so you can show it to HR/the guy who's hiring you (if you feel it should be shown). I would also go a little higher than your target salary when you start negotiations, obviously, as they'll probably come back at you with a lower number. No point in shooting yourself in the foot and going with $60K only to end up at $55K... Personally I'd go with $70-$72K plus 25% bonus and see what happens. You'll probably end up at $65K and 20% which ain't half bad for someone straight out of UG. I have 2 years experience, work for an international development firm, and am not all that far off the numbers I noted above. Good luck!

It is what it is.
 

Just as another data point, here's what I was offered. I had 2 years of experience as an analyst in CRE lending at a MM bank, so relevant experience, but not direct development experience, so I don't think a first year analyst out of college would be drastically different. We use different titles at my company, but my position would probably be comparable to a senior analyst or associate role at other firms (I do more than just financial analysis). I also am not in a primary market, but we develop all over the nation. I was offered 55k with bonus being anywhere from 0-50% based on our performance. I was able to negotiate that up, but that was probably mainly due to having 2 years experience in a related field/position. From my research, it seems like the range is anywhere from 50k-80k base, with the lower salaries typically having a higher bonus potential.

In addition, I turned down an offer for an analyst position at another firm which was a boutique firm that did value-add, not ground-up development. The offer was $60k + 40% bonus paid quarterly. It sounds like the numbers being discussed here are pretty accurate from my experience and others in the industry I have talked to. Like most others have said, real estate has lower salaries, but it is somewhat easier to take the experience and apply it on your own projects whether it's self-funded or with investor money - that's where the real money is made.

 

For a UG Sr. do not ask for more than you need. $75K is too high for SD, too high for OC and might be close in the SF Bay but still pushing it. I have always had good success in conveying an interest in learning the business and rising in responsibility (comp. then is inferred). Convey that you want opportunity. Lastly, I would say it is very odd for a person of your tenure, none, to set bonus milestones. While it may work for you, it may also work against you, escrow/due diligence could get put on hold, same with permits/breaking ground... I would shoot for getting $65-75 depending on the market, a target bonus of 15-20%. Then go learn, grow, become an expert and the money will follow. Don't get greedy when the company who intends to hire you is as busy as they are.

Best of luck,

DK

 

http://celassociates.com/prime/wp-content/uploads/2012/04/CELAssociates…

Looks like the top acquisitions executive for office/industrial sectors is $230,500 as the median base with the top regional executive getting $254,500. Seems like the $250,000 is in line.

Maybe I am wrong, but in my time in real estate, I have not run into many individual owners that have portfolio's generating $10M in revenue per year. If they do, there is a good bit of overhead.

 

I think based salary of $100k plus tiered bonus structure say 10% of base depending on firm/team performance plus 10% based on individual performance. What do you think? This is what the analysts I work with get paid here in Australia. Someone with 4-5 years experience is looking at base of $140k-180k with a similar bonus structure.

 
cvslane:

I think based salary of $100k plus tiered bonus structure say 10% of base depending on firm/team performance plus 10% based on individual performance. What do you think? This is what the analysts I work with get paid here in Australia. Someone with 4-5 years experience is looking at base of $140k-180k with a similar bonus structure.

I don't know about you guys, but I'm moving to Australia..

 

Wanted to revive this thread since I have a similar question to the OP. I have had a few development internships, an advanced degree, other somewhat related real estate and other employment, and have a couple offers from development companies (one is a national player, the other more of an emerging local company) in a major market (non NY/SF). Both have made me make the first call for salary negotiations for a development associate role. I'm thinking of shooting for ~75K. Sound about right? I know development salaries can vary significantly from firm to firm and depending on experience level.

 

FryVBender Are you applying/interviewing for associate or analyst roles? If associate, are other associates at these firms MBA grads and have 3-5+ years of experience or often just 1-2 years (or even just out of undergrad)? If it's the former $75K is definitely too low as that's what analysts make (high end of base) at big national/international development firms (a la Hines, Tishman, etc). However if the title of associate doesn't match up to the same title at other big firms then you may be fine at $75K. How many years out of undergrad/how many years of work experience do you have? Many associates who come from MBA programs or get promoted from analyst usually make $110-$130K base, depending on market, experience and firm. Feel free to PM me.

It is what it is.
 

Bump on this topic.

Wondering what a realistic comp would be for someone with ~1 year of CRE experience and 2+ years of overall work experience. This is for a Multifamily Real Estate Development Analyst Role in a major market.

I was thinking 65K + 10-15% bonus. Would love to hear opinions of people who know more more than I though....

 

Development salaries are probably going to be all over the board. If you read through a few other threads in this sub-forum you'll notice that real estate salaries are not consistent from company to company, sector to sector.

My first job out of college was for a large developer and it was for a similarly low salary. You should assume the salary will be low if you aren't bringing tangible skills to the table.

 

What would be the exit opps for an assistant project manager position at a mid to large developer in a metro area like Los Angeles (say focusing on affordable housing projects)? I also imagine the pay for a relatively inexperienced candidate would be $60k.

 

I'm currently an acquisitions/development analyst for a big shop (Hines, Tishman, Related) on the West Coast and compensation is pretty good. I'm two years out of school, bumped around investment advisory and consulting for about two years before landing where I am now. Base is $75K, bonus is 20%, plus a 401K match so all in it's about $95K.

As people have mentioned previously it will definitely depend on the city you're in and the size of your shop, and to some extent your experience but not necessarily. I came in with a strong understanding/interest in real estate but hadn't been underwriting acquisitions or doing Argus...

@"tengleha" In regards to preparing for interviews, really just focus on learning about the company, what types of deals (size, property type, location, distress level, etc) the do, and who your colleagues will be. As long as you can talk intelligently about the firm, development, and real estate in general you should be fine. They make ask you a few pointed questions about cap rates, where we are in the cycle, etc, but as an analyst they just want to see you're smart, love real estate, and are easy/fun to hang out with. Lastly, DEFINITELY ask the interviewer about a recent deal they found interesting or challenging...it will get them talking and really turn the interview around on them. People love to talk about themselves. Hope that helps!

It is what it is.
 

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