I had an interesting conversation with a recruiter a few weeks ago about how many new college grads / those in their 20s in RE industry are "acquisitions or go home" in their career search. He felt this thought process is naive because he sees many successful principals that have both Asset Management & Acquisitions experience and it truly makes for a better investor (i.e. can underwrite to realistic levels because you have been apart of CapEx projects, TIs, or whatever it may be). For example, at Hines analysts have a hand in both acquisitions and asset management (please correct me if I am wrong).
Now, agree with it or not, I wanted to get a conversation going on how popular acquisitions is and how there is a stigma around asset management in real estate.
I mean there is good and bad to both experiences, but the money in our business is on the transactions side of things. It's about being able to create new business for yourself and your firm via relationships (both w/ capital partners and other market participants) and acquiring a property at the right price. There are not assets to manage without 1a) capital and 1b) actionable deals. Many senior folks I know believe most of the value in a deal is created on the buy and the sell. Now you need good asset managers and property management folks to accomplish those goals.
The experience asset management gives you is super valuable and may make you a better investor over time, but the quickest way into the batter's box as an investor is being on the transactions side of the house. There is a reason why there is a compensation difference between the two business lines.
For stabilized deals, asset managers play a lot less of an important role. Figuratively, its pretty easily to sail a boat when it is sunny, 75 degrees, and the water is calm. For value-add or opportunistic deals they are incredibly important.
In general, the stakes are a lot higher in acquisitions. If we buy a 3M square foot deal, and I missed $0.50/SF of CapEx on my underwriting because I didn't ask a third-party the right question, then I just likely ruined the deal no matter how good of a job the asset manager does.
I am at a small developer, I do acquisitions/development underwriting, asset management (comparing OPEX/property efficiency, changing website vendors, reporting to lenders, LP's), and more recently fixing accounting integration issues with a third party property manager. It is not glamorous, and the acquisitions/development work is the most fun, but I would say I am better prepared to start my own development firm with an understanding of all 3 (if you dont want to start your own thing some day, working your way up in acquisitions/development makes the most sense in my mind). As long as you have a hand in acquisitions/development, that is good, because that is the real value creation/creative aspect (You can argue, but the bottom line is, in general, it is a true statement)
I’d say 15 years ago (Pre-WSO; the Age of TheVault) there was a lot less banter of who’s better. The acquisitions analysts stayed in the office late, working on the IC memo due 9am the next day. Never ever looked at my AM colleagues as below me. I just thought I had to work harder due to the time sensitivities. You really have to be a grinder. An athlete.
Post-WSO I can see the prestige train that comes with group think.
I really think that high octane goal you seek really comes down to your work ethic, personality (you can be a listener or beta yet aggressive), and your ability to piece together your observations into something valuable. I think in real estate, having passion is very important. You need a mindset to underwrite a new deal cold; just like you need a different mindset to execute tasks (ie Development minutiae).
Early in your career, if you can hone your vision and see something through and be able to communicate it orally, written and in a spreadsheet; that’s great experience. Asset management or Acquisitions, whatever, you’re in the game.
I think this Acquisitions or go home mentality is shortsighted for those just starting out. A real estate career is really a long term apprenticeship.
Good topic as I think entry level AM gets an unfair rap on WSO. You should really be honing the skills I mentioned above. AM you should create your deal / project sheet. It’s very important that you do.