Are there ANY jobs in RE that pay as much as (high finance) Hedge Funds?
An analyst in a hedge fund (high finance) can make $500k-$1 million a year at the right shop.
What are the positions in RE that are comparable if they even exist at all?
I am not talking about entrepreneurial developers of property, but rather positions in a RE firm/company.
An analyst at a hedge fund who is pulling in $500k - $1M per year probably has 5 - 10 years of experience.
A VP/principal at a top REPE/REDev shop who is pulling $500k - $1M per year has 5 - 10 years of experience. 2 year analyst REIB -> 3 year REPE/REDev associate -> 5 year VP/Principal
Although, I will say there is probably room for a lot more upside while working for a hedge fund. Definitely a good amount of upside in RE, especially with distressed assets and leverage.
in the OP's defense, I do recall seeing a couple crazy examples out there: - in 2007, rumors of KKR offering $1m over 2 years pre-MBA (400k yr 1, 600k yr 2, included phantom equity etc) - everyone wondering about the Stanford grad who was offered $520k out of b-school ( //www.wallstreetoasis.com/forums/highest-paid-stanford-mba-earns-522k ) - some quant grad being offered $400k out of a PhD program etc etc etc
These are some pretty young people to be "1-percenters." You just don't usually see things like that in real estate. It depends on your product type and the timing of the market. Whatever's hot at the time.
edit: let me add something ... when you see a HF like Corvex Management battling to take over a REIT such as Commonwealth, is the Corvex analyst on that deal a real estate analyst? I would say most likely not, but those guys make bank, so keep that in mind...
From my personal experience, the real money in real estate is made when you are the one with equity backing the deal. That being said, you need money to make money, but the great thing about real estate is that if you have postive cash flow on your holdings, its pretty difficult to lose. As long as you have enough cashflow to take care of yourself and your debt payments, you are building equity, which in turn can be leveraged for your next deal and the snow ball effect takes place. Don't get me wrong, leverage includes more risk, but if you have positive cashflow on your investments, you can afford to take it.
Lets say you have $10M in holdings with an 8% cap rate, thats 800K right there, after calculating FFOs you are left with 500k+ to do what you want with it. After depreciation ends or doesn't seem appealing anymore (I'm not a tax expert, but I'd imagine you can use MACRS for real estate) you can sell that to another holding company (Pretty sure you can create it yourself, I've seen it done, so basically you keep getting that depreciation tax shield while controling the asset) and use the money gained from it to keep reinvesting through 1031 exchanges to defer taxation.
It is a less attractive way of making money, but I know a guy who turned nothing into $30M+ in assets, 2/3s being in equity. This was done in a town of about 70,000 through pre-dominantly student housing. So after all expenses he has $1M+ to do what he wants, but who needs that much money with a relatively cheap cost of living? Reinvest it in your own investment vehicle that generates double digit returns that YOU have control over. Sounds pretty great to me.
The sky is the limit if you take the initiative.
If this were a thread on the tech industry, "The real money in tech is made when you are the one with equity backing the deal." Look at Andy Bechtolsheim ... he put $100k into Google, which is now worth $1.7 billion!
My point is that it can be done by anyone who can find positive cash flow investments (i.e low risk because you can pay off debt while building equity), refinancing those investments to keep feeding the machine, and after 10 years you will be sitting on a couple million in assets while paying down debt at the same time....UNLESS theres a real estate bubble, and you default on your properties, in which case you have nothing, and owe a couple hundred thousand dollars to your bank, but who has ever heard of real estate going down?
Some superstar brokers. It's not uncommon for good brokers to take home $500k-$1m/year or more. The guy I work for does and he isn't even 30 years old. This by no means is easy however. Most people burn out before they can make any money and leave because they're broke.
Agreed but highly dependent on factors out of your control.
Simply put, the answer to the OP's question is yes, but it is less common.
The great thing about RE is that you are dealing with hard assets and if they are in a good location, they could pretty much generate cash flow for perpetuity. The thing about working for a hedge fund is that there is more risk, the fund could bust or maybe the talent pool is so large that your salary could decrease. Fund managers make a lot of money and its still a good place to be wealthy, but your ability to make money has a lot more factors such as market conditions. Yes RE is also subject to the market, but if you are talking about retail or office spaces with long-term leases, its not as bad as you would think. Multifamily is still big considering people need a place to live.
You can make the same money in real estate as other parts of the alternatives business if you're at the right firms. Industry standard is lower than PE/HF, but industry highs are similar.
In terms of comp: I think there is a wide delta between average Hedge Fund Analyst/Associate and average Real Estate Analyst/Associate. Seems that the lion's share of Real Estate guys are making 60k to 120k in that strata.
The equity position is where salaries are magnified and notable in RE.
But it also takes a lot less credentials to be an analyst in most RE funds compared to a hedge fund. And far less time spent in the office.
apples/oranges
Top RE brokers can take home several million a year-cash-without any skin in the game (other than their time). Of course this is paid as commission and not as salary. To that end, it requires one to be less risk averse and more entrepreneurial than most people hunting for analyst positions.
To SHB's point, apples/oranges.
Sure there's some high paying jobs in the biz
But people don't go into the biz for a salary...
You want real $$.. Become a developer
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