WHY would you do banking when you could...

there is RE banking...

RE doesnt look too fun once the subprime fallout occurred

Well I'm not talking about RE banking now am I. And being a broker is a lot different from developing hundred million dollar luxury sky rises, which is still going strong in many places around the world.

Seriously bmwhype you are one of the most useless people on this forum. Somebody with some semblance of intelligence and insight please contribute.

Easy, children.

I have several friends that are analysts for developers. It's tough to compare apples to apples with analysts in NYC because they are all based in the MidWest, but with reputable developers. They make significantly less than analysts at banks, but their lifestyles are much better. The real earning power obviously lies in venturing out and doing your own projects with your own equity. The problem is that many real estate developers that are fairly new will often have personal liability involved with their projects. For example, banks often will ask for personal balance sheets on your personal finances and conduct rigorous background checks to ensure that you have the liquidity to make them whole and that you've never declared bankruptcy (either through your corporation or personally). Sure, there's alot of upside there, but there's also a lot of downside. If you take on a few projects and they go South, the banks can force you into personal bankruptcy and if they're feeling particularly malicious they can go after your home, boat, cars, etc.

So to answer your question yes, real estate developers on the whole live a better balance of work and lifestyle than those in high finance, but there's other forms of personal risk involved.

The negative I can think of is that a lot of the top RE firms make you be a broker first before you can do development.

Thanks a lot GameTheory. I was just rolling in our family friend's 750i this weekend. This guy is the absolute man, you know the fat type who smokes fine cigars non-stop and tells hilarious jokes and invites everyone out to his house in Nantucket. So I decided to look into his profession a little, and I came across this article. Do you think an analyst in a top NYC, SF, Boston (hell, even Dallas) firm would pull ~100k a year?

"I was just rolling in our family friend's 750i this weekend. This guy is the absolute man, you know the fat type who smokes fine cigars non-stop and tells hilarious jokes and invites everyone out to his house in Nantucket."

Is this supposed to be impressive? Just sounds unhealthy.

Though at your age, I think it is commendable that you research the professions of people you admire.

Haha thanks, and yes, he is quite unhealthy. My mom was all concerned for him because he's having some surgery or another and he's just laughing about how he might die in a couple years because he drinks too much wine and never exercises...anyway I don't aspire to have the same personal habits, but he is rolling in it and is always in the best mood, loves his job, and seems like he vacations once a month...

Given the wild swings in the market place, I cannot begin to speculate what an analyst is making these days. When I was a summer at a real estate PE shop, analysts were making about a 100k and leaving at 6PM everyday.

And this family guy is an analyst? Or are you comparing him to a MD level figure?

If the later I think they're even remotely compensated on comparable basis even on a $/hr implied rate. Furthermore, if he's making bets with his own capital you have to think that as more of the PE arm of the bank and that's another ball game.

Most Sr Assc+ guy would not consider driving a 7 "living the dream." Owning a Golden Express might be different ;)

I am good friends with a very senior real estate banker, and we discuss his work frequently. My view centers around risk. Depending on the structuring of the transaction, bankers can take on very little risk, while, as someone else pointed out, the real estate developers can stake their own and their family's personal wealth. The big developments you see are done by very large corporations, and imagine working there you'd learn well about the business. The financing these guys get is just huge, ranging from the $10Ms to $1Bs. Conversely, there are the small guys (think one or two guys) who are getting out there. The most reputable banks don't want to touch them, but other banks still finance them.

I would think working for one type of firm versus the other would greatly impact what you learn. With the big firms, you're talking high finance. With the small firms, you're talking peanuts. If your interest is in real estate, I imagine you'd learn a lot, albeit in different areas, at either type of firm.

As a banker, firstly you assume practically no risk compared the companies you're dealing with. If a company goes bust, you actually get to learn more through restructuring as a banker. The variety of transactions you see is also greater. And while I'd think that you would generally work on a similar scope of deal sizes, it'll be a wider scope than working for the real estate developer. Finally, through valuations and due diligence, you will be learning a lot about real estate as a banker as well. So my view is that you learn more and get paid more by being a banker, and if the industry and the risk interests you, move into the industry side. In fact, enough experience in the banking side would position you for a high position in the real estate firm (my friend, for instance, turned down a C-level position because it didn't pay enough). I do think, however, that if you are particularly entrepreneurial and can stomach the risk, you would have more fun as a developer.

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http://ibankinglife.blogspot.com

First, Hardbanker you are an absolute idiot, that is one of the stupidest comments I've ever read and your username is awful. Second, that anecdote about our family friend was not the main point, but either way he has a Nantucket house, and multiple luxury cars and he's not even at a known firm, much less the real estate equivalent of a bulge bracket (He is the head of the group though).
Its obvious that being up there in the ranks is HUGE money (see: Donald Trump, Kushal Pal Singh etc.) but I was asking about insight to the entry level.

Thank you ibankinglife, GameTheory and others for your useful comments. Anybody else?

not sure if this is useful, but i'm going into RE banking and one of the VP's was telling me his story during the interview process. he left RE banking for a development firm and ended up coming back 2 years later because he liked banking better. he said the variety of work was more interesting to him. i wonder if it was the pay that lured him back.

man..you're a hostile little guy.

A family friend went the other way, switched from being an exec at a RE development company to being head of the RE banking group at one the BBs. I spoke to him about it very briefly and he mentioned what others have already said....definitely interesting and entrepreneurial but risky so he traded that for almost never seeing his kids.

Analysts for RE development firms make a let less as compared to banking. Expect $40K-$60K with little or no bonus. Hours are definitely less than banking, 40-60/week at a given firm. Exit opps are certainly more limited and different. Hope this helps.

Additionally, bankers seem to be some of the more risk averse, high-acheiving people out there while developers enjoy the high risk/high reward environment. Most times, being a developer requires that you put up your own colatteral, thus risking your own house and posessions.

Real estate is a great business to be in, but it's one of those things that you truly have to enjoy to really be good at. There are too many people out there who live and breathe the business and tend to be the most successful.

Investment banking whoops RE development any day.
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http://modernyuppie.blogspot.com/
The musings and antics of a Meathead college wrestler turned asset backed securities trader.

Thank you untitled 123.
To mykyta, sorry haha, I'm not usually such an ass, its just some of these people just post mindless garbadge while we're trying to learn, contribute and discuss...

bankerchic, that is reallllllly low, are you sure about that? That's kinda disappointing but thanks for the input.

Anybody else have any experience in RE development or have anybody close to them that can provide insight?

Thanks

I'll give you numbers for a mid-size real estate firm some of my friends are working for;

1st year - 50K + 10K-15K (bonus depending on performance)
2nd year - 57K + 15K-23k
This is where the big jump comes because this is usually the point where you've committed yourself to them instead of leaving for some other firm;
3rd year - 70K + 25K-35K
4th year - 80K + 40K-50K
After this point, I don't know what the numbers look like, but once you reach an executive level, I hear your income will be around 500-600K. Remember this is for a mid-sized real estate development firm.

Thanks a lot indian-banker. Maybe I'll do an internship with the guy and see how I like it, otherwise I'm planning on sticking with finance.

Indian-Banker, are these numbers for a mid-sized RE firm in NYC? I can confirm my assumptions for Chicago, but I would guess New York will be a bit higher.

It is a great business, very cool people and interesting work. Would love to be in development someday but I realize that nothing compares to the exit opps that banking gives you right out of college.

For example, I have a bunch of friends who work for a top commercial RE banking shop (think Chase or BofA) and they are always saying that they wished they would have put in their two years of i-banking. The experience you gain and the contacts you make are invaluable.

Then again, I suppose if you want to be in development sooner than later, commercial RE banking could be a great choice since you work directly with a lot of local developers to finance their properties. Just a thought.

The best advice I could give you is find what you enjoy and pursue it.

No, this firm focuses on the south. They do stuff in Florida, Georgia, North Carolina and a bit of Texas and Louisiana.

Oh well, I guess 60k is ok down there...there are some flashy NYC companies like Tishman Speyer that probably pay ~100k for analysts. http://www.tishmanspeyer.com/

Nope, Tishman along with Jones Lang Lasalle and the big names paid their analysts $48-$54K a year with the possibility of a bonus < $10K. You have to realize that there are very few jobs that pay like banking. Other groups within banks such as asset management and private banking will be less than i-banking but higher than any corporate job you will find or any in real estate firm as a first year analyst for that matter where you'll be lucky to top out at $65K.

Here's the deal, you want to make >$100K your first year out of school? Bust your butt and get yourself a banking job and be willing to sacrifice a lot of sleep and your social life for a few years.

From your other post thought it seems that you want the money without having to work 100 hour weeks. Unfortunately there are very few jobs that will pay you a lot for putting in regular hours. Sales & trading will pay you on par with banking for working 12-14 hours, 5 days a week. You will find a similar deal with hedge funds.

Here is my two cents: find an area that you enjoy within finance or whatever subject for that matter. Realize that you'll be paid in finance more than most of your buddies in their various other fields, if that makes you feel any better. Trust me, if you hate the work you do as an i-banking analyst, after a few months you won't care what you're making. The truth is that the most successful people (and those that make the most money in their field) are good at what they do because they enjoy it, not just because they were in it for the money.

While this is being discussed, can anyone shed light on entry pay to development/acquisition real estate coming out of b-school?

Is it extremely difficult to gain entry with no prior work in the industry? I would think it wouldn't be tougher than getting into finance with no financial experience.

I've been doing a lot of research on this and it seems much if not most of the hiring for firms is done from b-school rather than undergrad. I don't know about salaries.

Screw it I'm sticking with the PE track. I was really debating talking with our family friend about an internship next summer in RE development but I don't want to turn down my PE intern offer, which is ultimately what I'm more interested in anyway. Maybe I'll shadow the developer at his office for a few days or something. Thanks everyone for helping me clear that up and keeping me on track haha. How dare I consider something other than finance!

Don't know if this helps the OP much, but I had a number of friends who went into RE development out of b-school btw 05 and 07. They all went to firms that really only recruit from top 5 or so MBA programs. They told me first-year associates usually pulled in between $125,000 - $150,000. That does increase over time, but at nowhere near the rate of finance.

In REPE it is possible to make almost as much as in buyout (and sometimes more, as we've seen with Blackstone).

The short answer you guys are looking for is that if you're working FOR a developer, you're not going to make pots of money the way people in M&A do. But if you ARE a developer, it's just another one of those areas where you are staking your own money, and there's high risk but high reward. Like being an entrepreneur.