Where do you live in NY and what do you pay in rent as a Jr. / Sr. HF Analyst?
Currently working in PE making ~$300-325k and moving over to a HF job where they have signaled comp to be in the $400-500k range (and if I perform well I guess further upside from there).
I'm in my late 20's (spent 2 years in army so older than most of my classmates) and have been living with my best mate in a 2 bedroom in the UES where I pay $2k a month. Due to COVID, he will be moving out and I have to decide if I downsize to a 1 bedroom in my building or try something new by moving to a totally new area. I was initially thinking Brooklyn (Williamsburg? Dumbo? BK Heights?) or potentially doing an even crazier move by going to Hoboken to save the ~4% / ~$15-20k city tax which can be put towards a nicer / larger apartment (don't really care about "going out"). I considered West Village / Tribeca but most apartments look like shoe boxes and I don't really care for the "vibe" as a key priority.
I'm generally pretty frugal but with COVID allowing my new firm to likely partially work from home, I feel I should at least live in a place big enough to not feel like a shoebox and also have an easy 30-35 min max commute into Grand Central area for days I work out of the office.
Is $2500 rent too frugal for someone earning $400-500k? What is "normal" / range you've seen for rent as % of total pre-tax comp? I know it's a personal decision at end of the day with regards to both location and budget, but wanted to poll others in this forum who are in a similar position (i.e. not asking for the PMs making 7 figures or the banking analysts making <$150-200k a year). It seems you can get a nice 1 bedroom in luxury buildings for $3500-4000 and nice studios for $2500-3000 in current market FWIW.
As you said, a personal decision and you want to factor in your lifestyle, any other debt, etc. But when I was at that income level I felt very comfortable at $4-4.5k a month. Your base/bonus split will also matter, as you don’t want to feel like you are out of cash every month, but even with a $200k base you should still be ok at that level as long as you don’t have lots of other obligations.
With WFH I would highly recommend getting a place you like. Something comfortable and close to the area you want to be in.
1st year analyst making abt $180k, but I have this side thing that makes ~200k so total annual around ~380-400k pre tax. I pay $3k a month in rent, which I think is reasonable. If you're in the 400-500k range, I feel like $5k a month is pretty reasonable.
Just curious, how large is the HF, and would you say it's a top SM?
What do you do on the side that earns you so much $?
Rents out his parent's condo.
I'm in a similar position (as are many friends / others in network). As others have said, it is ultimately a personal decision that will come down to your own preferences / situation (for instance, single or not). With WFH, I would recommend a place you really like. Additionally, I know that PE can be a stressful job, but the stress that comes from markets (re: constant P+L / news / events) at HF can make having a place you really like that much more of a positive / stabilizing force in life.
I wouldn't necessarily say that $2500 is too frugal, because it comes down to personal preferences. That said, I would also say that you do not need to feel guilty / irresponsible if you spend up to $5k-$6k a month either.
Full disclosure: spend ~$6k per month, 2br good location, not single
why did you mention being single or not as being relevant?
dual incomes, and two people sharing 1 space matters in the decision. single person doesn't need a 2 BR, but very nice to have if you live with your SO for personal space
in similar position / comp level, as are many of my friends. most of us are in the $3500-4250 range. think that's the "final stop" before just buying your own place.
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Similar position as you although I started my HF gig in 2019. I paid 3.5-4k last year and am stepping up to ~5k this year. COVID/ WFH gave me a greater appreciation for my apartment so I feel ok that I am splurging. 2.5k seems quite low in Manhattan but maybe reasonable in BK/Hoboken.
Others mentioned it, but at that comp level you really cannot live in a studio. The daily stress level is going to be a bit too tough. Unless you eat out/always out/weekends never at home you going to need more space than that.
^ this is big one. had a couple roommates before/during pandemic, but WFH made me realize I needed more space to deal w/ daily stress. having own place made a huge difference. at this comp level in the HF space, have personally prioritized whatever it takes to stay physically healthy and mentally sharp. 4 years into the HF gig, you appreciate what a marathon this game is.
It's all about upside/downside analysis. Never skimp on stuff to save money if the downside is you will not perform to your full potential and miss out on bigger bonuses/comp. The guy who washes and irons his shirts instead of having them dry cleaned is a great example. Create a lifestyle that (i) you enjoy and (ii) is within your budget so that you aren't in the red every month. After a long day at the office you want to come home to a nice clean place and also, as a single guy, I presume you want a place to bring girls back to that will make them feel comfortable to spend the night.
Left banking to move into a PE role, but last year I made ~$700K total (on a $250K base; in the new role I anticipate ~$400K in cash). Last year I paid ~$4K for rent, reduced down to $3,700 with three months free for this year. Staying in the same place, just negotiated because the market was bad when I was up for renewal. Place is not huge, but fine for me - I am single and live alone in a 1BR in the West Village / SoHo / TriBeCa area.
The reality is that it just comes down to what your overall savings goals and broader expense profile looks like. The normal rule of thumb is that you can go up to ~30% of your after-tax income for your housing and be in a good spot. That is roughly where I was on my base salary, which I felt comfortable with. I also basically targeted savings of ~30% of my base + 100% of my bonus (which, given the banking construct, means I was really saving like 75% of my overall income). I don't work at HF, but in general I think it makes sense to size your life off of your base salary, and then let the bonus accrue to savings as much as you can (obviously if you get an enormous bonus and want to splurge a bit to reward yourself, that's great). If you're saving around 30% of your guaranteed income each year, the way you allocate the other 70% doesn't really matter and comes down to personal preference.
It's a personal decision based off other priorities as others said. 1st year analyst (almost 2nd now) at a hf out of school. Pay a lot less than 2k and still live in a good apartment, thanks to covid, in a great part of the city (around the village) with a friend
I don't mind living with roommates since I had at least 2 all 4 years of college and I like it more this way at least for now plus I get to direct a lot of the money I save on rent towards a very big amount of loans and save for other stuff I'd rather spend more on (not drugs..)
Not directly comparable, but my SO and I are at $400k total, and we pay $3.8k in Hudson Yards area for an upscale 1bd + den so we can WFH. I'd worry less about being too frugal and more about your comfort - you can afford $4k easily, maybe $5k depending on base vs bonus split, but if you're happy with $2500 and a commute who gives a fuck? Extra $ in your pocket... alternatively, if $4.5k gets you in a place that you feel good waking up in and coming home to, then spend the money. As long as you meet your budget, life's too short to pinch pennies
curious what other late 20's HF analysts are paying in rent vs. their total comp. I pay $5k in Williamsburg for a 1BR / live by myself vs. $975k total comp.
Guessing your comp has a lot of vol? Or would you say you're at $1mm+ / yr? Also at your level, why not just buy a place and build equity?
Yes it's ramped up quite a bit over last few years so decent upwards vol.
Main reason I haven't bought is I've moved neighborhoods four times in 6 years, so haven't picked any specific place to settle down for purchase yet. Rental yields still feel appropriate (same way if you can take a loan out at 3%, being able to rent the equivalent purchase price at 5% makes me lean towards continuing to rent).
$2500?! Man you’re making a half stick, live somewhere nice.
split a $3k 1 bedroom with my SO. combined TC $600k+
Total cash comp of $850k (right about $1mm including SO). We’ve been spending just under $3k rent for the last 5+ years. My SO doesn’t pay rent, so I view it as approx. 20% of my post-tax base income. The most important thing is being happy where you are living; the minute that changes for me, we are looking for housing elsewhere. I think I’d be comfortable spending up to $4k… but it is 100% personal preference (and what you are able to realistically lockdown at your preferred price point).
Where do you live / how big is the apartment? Seems very low if NYC given the comp level, can’t imagine finding a decent 1 bedroom for under $3k unless you’re still riding out a COVID deal
Thank you for asking the real questions here. I’m starting to wonder if I’m missing something because I never come across nice 1br for ~$3k.
Your SO makes 150k and doesn't chip on on rent? To each there own but I think that would annoy me. Does he/she cover other things - like all utilities/food, etc. or you sponsoring his/her life? Not hating, so each their own, but just curious is all.
We're married; It's all the same pot. I handle 100% of bills… I make almost 6x what she makes… it honestly just isn't an issue. Maybe once we purchase a home to “keep up the Joneses” we can have that conversion. Doesn't annoy me one bit… but as you mention, to each their own. Cheers.
Are all you guys earning 500k-1m all with <5 years experience? 2+2 and then HF?
more likely if you jump straight to HF after banking. need 2-3 years to get to 500k+ level since you need to prove your worth. some survivorship bias here since if you're not good, you don't make it past the 2-3 year mark
Are you implying that 2+2 candidates would not be comp’d at similar levels mentioned ($500k - $1mm)?
NYC. Renting directly from a condo owner.
Just don’t rent for $8k/month
If you're clipping 750k+ at an HF, why not buy a place instead of renting?
Moving to NYC next year for an Analyst role, thinking about the same thing.
My current plan (back of the envelope) is to use the rule of 40 landlords use, but only with my base comp. For me, that comes out to a little over $3K/month.
Especially at a HF where so much of your comp will be unpredictable, using only your base and a commonly used metric by landlords seems pretty good.
What's the rule of 40 landlords use?
you have to make 40x your monthly rent in annual income (pre-tax). e.g. if you want to rent a $2,500 per month apt, you have to make $2,500 x 40 = $100k per year pre tax.
most NYC landlords have this requirement in their applications
why not live in CT/NJ and own smth?
because it's NJ/CT
I vote for one of those luxury buildings near the Newport Mall, so you have an easy commute and never have to deal with off chance off having rats in your luxury obode, nor dealing with the neighborhood homeless crackheads, who occasionally take a steaming shit in front of your gold plated and marbled entrance. Plus just like you said, you’d save more money.
You could take 1 year's bonus and put 50% down on an amazing apartment in the outer boroughs if you really don't care about a 20 minute cab ride when going out in manhattan.
20 mins? Do you live in nyc? Maybe if getting out of the office late enough, but no chance during rush hour.
I meant when coming home at night. 20 min cab at 3 am can confirm
Averaged ~$1.5M / year last 3 years and have lived in the same 1br in EV / LES paying $4,000 / month. I’d buy but I’m bearish NYC real estate
Curious -- how big / lean is your fund (ballpark), and how many YOE do you have? Also guessing SM L/S? I get the rent situation, also bearish on NYC real estate. I guess that won't even matter in a few years if your comp scales, unless you think you've plateaued at $1.5-2mm
I’ve been here about 4 years and did standard 2 + 2 IB / PE before this. I’m at a pod shop but we’re one of the bigger teams. Yeah it’s hard to really think too much about future comp since it’s been so volatile historically (bonuses ranging from $0 to near $3M) but I guess our allocation is big enough now that if we have another reasonably good year my comp could go up a lot. Can’t take anything for granted in this business though
I’m surprised so many of you first of all rent and second of all rent so “cheap”. I’m in SF so maybe the market is different but for $3000 you’re looking at a tiny studio apartment if you’re anywhere close to work.
I think here rent would be $5,000 easily if you were trying to have a 2br. But most of you seem to have a relationship too, don’t you want to buy a house or something?
I am genuinely just curious. Not trying to criticize or anything.
hedge fund guys value optionality, especially with extremely high yet extremely volatile comp? would be my guess
the frugality in this thread has me feeling mad guilty. only earning $300k here and paying $3k in rent for a studio in fidi
all bout dat operating leverage
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