I'm currently at a debt shop as an analyst where I'm primarily screening/underwriting bridge, mezz and PE products. The work isn't thought provoking and sometimes can be mindless. I was wondering if anyone found the work in real estate not challenging and eventually leaving to another financial asset?
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My 2 cents..
I went from an RE fund (doing asset management as a junior) to an equities AM fund. Found out that equities as an asset class was levels more mind numbing than i thought, and now im fighting to get back into RE (but on the acquisitions side this time).
I think it's a question of stimulation and relation - I found it impossible to relate to share prices on a Bloomberg screen when our clients were all locked in for 5-10 years in a big fund. It didnt make a damned bit of difference what the Dow had done that day because the market corrects.
Maybe its just that RE debt is on the boring side of RE, given that you just look at numbers all day and really youre focused almost exclusively on the downside. RE equity looks at the upside and so youre more incentivised to think and dream perhaps.
Again, just my 2 cents..
I think about it occasionally. Certain groups are going to be more mundane than others. The easier answer is to try to lateral to a more exciting group. If you want to stay on the debt side, maybe ACORE Capital or similar would be more interesting. But in general I imagine the equity side is much more stimulating.
I started in a less glamorous area of RE as well, and lateraled to an investment bank working in the REGL group. From here, I have the option to lateral to other investment banks in non-real estate groups, but I don’t think I will. Once you get exposure to more complex RE deals, you’ll see that there are a lot of interesting deals going on in the real estate world.
I think the highest probability way to get out of RE is through an MBA. You can try lateraling to REIB / Equity Research and then lateraling again but there aren’t many spots So I would put it as low probability.
I think the key is to find something tangentially related to real estate and go for it. EG If you underwrite a lot of hotel loans, maybe try to go work for a consumer / leisure company on the strategy side. Just depends what your long term goal is
This is an interesting thread, curious if you asked in the IB or PE forums if you get more responses... still, here are my thoughts.
YES, people of course leave RE for other fields within finance. I've known several over a matter of years who have left various parts of RE to go to PE, banking, corp fin, gov't, non-profits, etc. Some are staying in semi-RE related roles, but some are outright in other fields. If you really want to transition or jump, it is of course possible.
The OP and several of the responses seem to be from analysts. Trust me on this, early stage of most careers in most fields suck. Your first 5 years are usually difficult, boring, tedious at times. Worst, you have the lowest amount of degree of control/flexibility of your job even if pay is really good (relative to other jobs, it often is in RE). Thus, these thoughts are frankly very normal. People in all those fields listed above are asking how to enter RE (the more common WSO RE forum thread) for a reason. So, the real question to consider is do I dislike my current job or parts thereof, or do I really dislike the field or industry? (that is a purely personal question).
RE can be hard to get into, leaving and coming back may not be easy. Obviously if you can transition out, you could transition back in. But, this return trip could be a lot harder. If you signal disinterest it may be tough to get an employer to consider you for a field/career you already left. Thus, make sure the grass is really greener. If you leave for a job that is a clear promotion, step-up, etc., this will not be much of an issue as you can then claim "I missed RE".; if you go lateral or downstep, it's a bad look for a resume on a rebound.
Lots of finance and related fields are more boring than real estate. That is why people who get in often do not leave. In fairness, your role "at a debt shop as an analyst" is not likely the most exciting in RE nor all that intellectually challenging; but it is a great role to develop skills and experience. It can be valued by many employers for more advanced roles and paths.
In short, the best play may likely be to hang tough, moving too early can be a mistake. My general advice to many on this forum who ask for advice on switching jobs/careers/firms/etc. is to only do so if the next role is a step-up in title, role, duties, and/or pay (prestige of firm is a good one too, but more maybe if only lateral). Recruiters and HR/headhunter firms scan for longevity when they search for people to poach, if you jump, you may reset that clock to where the jobs start calling you (no rule for when this happens, but usually 5 years exp. is the min, common after 10+).
Good luck!
who would leave real estate?
I'm in AM (interested in RE albeit), but the thing that I find most interesting about real estate is the ability to add value. In no other division of finance is it so easy to use creativity and actually go in a provide value, or better yet, completely create your investment. Yes, PE and VC provide this opportunity... but realistically most people will never have the opportunity to work at a prominent PE of VC firm, nor have the capital to do so like one might in RE (for obvious reasons discussed to exhaustion on this site). In AM and HF, were not adding any value to our investments. The only value we provide is alpha to our clients if we're lucky. IB is just brokering so I suppose there is some value in the advisory services, but you're not actually creating anything.
I moved from REPE Acquisitions to Infrastructure PE, so obviously biased but this is how I've come to think of the sector/moving on after 2 years:
I think that choosing your asset class is at least as important as what job description (advisory/IB, investing, lending, AM etc.) you want written in raised lettering on your pale-nimbus white business card. Here's how you could think about these two dimensions when thinking about what you really want to do:
Asset class: RE is a diverse asset class and there are many ways you can add value to society/feel good about yourself, e.g. as a developer providing much-needed housing to local communities. However there are also many ways in which you can make other people's lives miserable for the sake of your IRR, (e.g. by increasing rents without improving the product or kicking low income households out of your assets because you want to refurbish and gentrify them)
Job: There are various threads on this but underwriting a deal in REPE Acquisitions and managing it in REPE AM will be much more engaging and challenging than underwriting and managing a senior loan where all you care about is your DSCR. I think there's a huge difference between operating an asset/business vs. lending/advising. You can add value to your portfolio by leading refurbishment initiatives, create a new product when developing or just make the city in which your asset sits sexier when underwriting and executing an urban regeneration scheme. If you are on the advisory/brokerage/lending side, nobody wants to hear your vision/ideas - you are necessary but irrelevant (in terms of the impact of the deal/business involved).
Why move? REPE is cut throat and you will usually prioritise IRR over impact. There will be instances where you feel good about what your investment has added to the local community (e.g. when developing or refurbishing vacant space), however your interests are usually the exact opposite of those of your tenants (see Bloomberg article below). There are very few firms/deals where your returns and stakeholders will be aligned. You will also never build that shiny residential luxury skyscraper that you can boast about at the dinner table (unless your IC is batshit crazy or it's a distressed deal).
https://www.bloomberg.com/news/features/2019-10-03/how-private-equity-w…
2. Being a generalist/developing a transferable skill set
Asset Class: RE, despite being a large asset class, is a niche - you will develop a solid modelling skill set, but never a comprehensive one. You can spend your first 3 years even in a large REPE shop modelling rent rolls and cash flows without building a full 3 statement model and understanding Accounting/CorpFin. This may not sound like a big deal but I would have found the interview process into another asset class challenging had I not gotten a 3 statement modelling crash course from some of my friends in other firms. This is somewhat less true if your firm looks at public/distressed opportunities.
Job: The above is even more true for non-Acquisitions juniors. You will spend your most valuable learning years understanding how to operate and report on RE, but you won't learn how to underwrite and execute on value levers in more operational (and less real asset-heavy) businesses.
Why move?: I disagree with the sentiment of some of the guys above re: being able to move out of RE easily. Underwriting RE deals becomes very repetitive and makes you miss out on learning opps in other sectors, which makes you less competitive the longer you sit it out. This obviously isn't an issue if you are looking to stay in the sector but once you hit Assoc you become a very tough sell to firms in other asset classes. I jumped ship around the 2Y mark and was told by interviewers that this was the sweet spot where I brought enough to the table in terms of general skills that they could treat me like an experienced IB analyst in the same asset class because I could make up for weaker modelling by being a better investor and execution monkey but where I was also cheap enough to be able to start from scratch.
3. How much do you care about being a good investor?
Asset Class: The beauty of RE is that markets are extremely inefficient. This is why there is so much money to be made in the sector. However, it also implies that there is a lot of dumb money being thrown at the asset class because it is relatively easy to analyse/underwrite from a macro perspective (especially core assets). All you will think about is supply and demand and therefore rental growth and cap rates. This is obviously grossly simplified but given the limited amount of sub-sectors (office, residential, logistics/industrial, retail, healthcare etc - hotels are a different beast) and the fact that all you do at the end of the day is collecting rent, your analysis will come down to this. For the first 2-3 years, diving into e.g. office submarket dynamics or e-commerce research to support your office/logistics thesis is super interesting, however unless new RE sectors appear (they won't), you will find yourself re-doing the same analysis over and over again - just for different markets/points in time.
Job: Clearly, you can become a great RE investor if you're in the driver's seat in a good Acquisitions/AM team. But that's it. Your investing expertise will be limited to one beta-heavy subsector. If you're not on the equity side, all you think about is downside (debt) or fees (advisory). So in your case, I might try out RE equity before getting frustrated about the sector as a whole.
Why move?: The nice thing about RE investing is that given your assets are fixed, you can only get so many things in your thesis wrong (supply/demand or cap rates). But that's also how you stall intellectually. The beauty of a wider mandate (in my case infrastructure) is that you start from scratch when looking at an oil storage asset one day and an airport the next. You just can't rely on the same IC memo format with new numbers.
4. Lifestyle
One of the advantages of working in RE is that you have to go see the assets (even as a lender), which means you get to travel a lot. Obviously this depends on your shop and your job (Acquisitions > AM > Others in terms of air miles) but I always found this to be one of the nicest parts of the job. My team worked across Europe so I visited several countries for the first time in my life during those work trips and got to stay in five star hotels and do high quality boozy dinners.
Hope this helps.