Best paths to higher comp in REPE?
I'm an associate VP of asset management at a startup GP making $120k a year all-in (+ option to coinvest) in a MCOL city. I'm comfortable with my pay and have a great savings rate (approx 30% of gross). But I definitely don't feel like a high earner and am not "stacking cash." The large majority of it goes into retirement accounts which won't see the light of day for another 30+ years. I feel relatively cash poor.
I'm on a solid trajectory at my company and have a chance to earn $200k all-in with promote if I stay another 2-3 years, at which point I'll be in my early-30's.
I'm just trying to think of ways to accelerate my net worth growth. I know real estate is the long game, even when it comes to comp. But maybe there are ways to jumpstart things. Should I spin my couple years of experience as an AM at a GP to join as an acquisitions associate at a state pension fund? Or just keep leveling up companies based on AUM? Should I stop maxing my 401k and start saving that money for my own potential CRE deal in the next couple years? Should I do some freelancing as an underwriter? Maybe build proptech product?
These aren't answerable for my specific case. I'm just curious to know what others think about where I'm at now and what my best chances are for getting to a more comfortable standard of living in the next 3-7 year time horizon. Feel free to start a discussion about non-related things. Just want to start a career conversation here and spitball ideas.
What are your hours and how many are you willing to work in this "comfortable lifestyle"
You don't earn higher comp because someone is feeling generous
Yeah, I get that. I'm willing to move to a HCOL area and work +/-60 hours a week on average, potentially more depending on the work and pay.
I currently work no more than 40 hours a week so the hourly rate isn't bad by any means. But it's not amazing compensation either.
Besides working longer, I could work smarter. Meaning I bring something valuable to the table that gets me paid. So another aspect of this question is, what can I do (within the realm of AM and/or CRE generally) to become more valuable and thus more highly paid?
I think you're looking at closer to 80 hours if you want to super charge your comp, others correct me if I'm wrong.
It's also not a question of just working smarter. It's a question of being on vacation and being demanded to jump onto a call even if you have plans to explore the city/go to the beach etc. It's cancelling date last minute, cancelling a catch up with your friends, being unable/on edge at making midweek plans because you don't know if you'll be out at 6pm or 12am etc etc
I think you'll find your comp at any of the bigger names, but with that comes sacrifices. Alot of people focus purely on the money but not on the immediate trade off, your time. Sometimes you'll find the unicorn firm which gives you everything, WLB and money, but few and far between.
Which geography are you also located in?
These answers all suck.
Work more hours to hit better comp? Not how it’s done. Maybe even the opposite.At $200k (including carry! Wtf) low 30s age you will be underpaid. Plain and simple. The reason? “Start up GP”.
Spend all your time looking to level up immediately. $100mm AUM? Get a job at $1b AUM. Managing 2k units? Get a job managing 10k units.
If it’s not a pay raise and reasonable hours, don’t take it. It will not be worth it.
Once you have a few years at the next shop, do it again.By the end of 7-9 years instead of start up GP and $200k you should be at a good shop as VP / Director of AM making $400k all in.
To clarify, I’m not saying go for name-brand. Just increase your value as an asset manager via level-up experience and you should be fine.
OK, so you're managing 10k instead of 2k units, how are you going to work less hours for more comp? Granted its not a linear scale such that your hours increase 5x, but OPs hours will increase considerably.
I'm not saying you need to work longer hours to get higher pay, but let's face it, people don't pay you 100s to leave the office at 5pm. There are a few unicorns out there, but few and far between.
The asset manager md I know who oversees 30k units works over 900 hours a day. Sucks to do it all on their own.
This is helpful, thanks.
So essentially I'm being underpaid, and working at a startup GP isn't helping with that and probably won't lead me to any desirable comp (unless I'm invited to participate in promote and the fund does well, which none of that comp would be realized until 3+ years from now) - is that right?
So, the answer is to join a firm that can carry a higher salary/bonus because of more AUM and/or increased job responsibilities (but not necessarily more hours/week). Totally makes sense. I guess it's time to apply/reach out to my network.
Is there anything besides that that I should do to get to a higher comp level? I know acquisitions has higher comp upside but is riskier. Will I see a meaningful increase by pivoting to this role? How about potentially moving to the debt side of things, like a private credit fund? I know a lot is dependent on my skillset and interests, but just trying to figure out what my best career ROI might be and what steps I should be planning.
Thanks again!
Which MSA are you located in? My fund is hiring for an AM associate role that pays significantly more than your current role - lmk if you’re interested
del
Sure, take yourself off anonymous and I can DM you
I believe to earn more, like way more, you need to do the following:
If you are going to work for someone, to make outsized comp:
You can combine the above:
Act like an “owner” in a company that needs real estate skills combined with business building abilities (ie brand building, marketing, sales, structuring, systems building, capital and partnership, and operational expertise), in a place and period of time of this skillset scarcity (due to geography, nascent tech, operations, niche, attention elsewhere), in a growing company and sector, where you have the desire and passion to be a world class performer. After which a critical component is you maintain a good relationship with your partners, and exit at the highest market price and distribute the rewards according to agreed upon terms.
Examples (there are many):
- working at Digital Realty Trust (or the like) in the late 90’s, 2000’s (RE mash up)
- senior living in the 2000’s (RE mash up)
- building a global brand at Greystar circa 2013 when they advanced the disintermediation trend while attracting global LPs for expansion (niche RE investment product for global LPs)
- being at Security Capital Corp and heading up one of their spin offs (ie Archstone, during the nascent days of the REIT and apartment trend (emerging RE investment product)
- Prudential Real Estate Investors, now called PGIM (emerging RE investment product - open ended funds aka PRISA)
- being a single family home or hotel developer in Hawaii during the 1960’s and 1970’s with the advent of the Jet Age
The people in these companies view themselves as Operators. Operations scale. With scale comes higher comp, outsized opportunities.
Wanna move to Africa and operate real estate? I joke partially. My advice is similar to the “juice worth the squeeze” topic of entrepreneurship. You’re working to fund your development and to find what makes you authentically world class. Don’t chase trends. Be there when the trend comes to you.
Yes, you could be the most broker-y, bullshit artist financial genius acquisitions guy in the game. You’re growing the biz, but you don’t get there without knowing the industry (I’ll define below).
Similarly, Development is not an industry, it’s a skillset.
It’s hard to predict, but an industry is an industry for a reason. It supposed to make money. See how that’s changing.
To me, real estate is not an industry per se, it is a skillset. That’s why I am a proponent of the MBA for its broadness. Think what industry you want to be in (Mr or Ms Real Estate Professional).
If you choose to work for a traditional real estate company, you’re going to get traditional comp. Your skillset is traditional, generally speaking.
That’s my pep talk for my fellow mid-career folks.
Great stuff, thank you! Your points were more general than specific (nothing wrong with that at all, it helps a lot to understand what mindset is needed to succeed). But I'm curious about your specific thoughts on:
(1) Where a mid/early-career professional should go to set himself up to see what different opportunities might be attractive? Work in development at a family office? Get broad exposure to financing by working up and down the capital stack?
(2) What technical/soft skills or activities should this professional be constantly working on that could serve him in whatever path he takes? Always be networking? Read entrepreneur bios? Learn how to leverage and build on AI? Actively invest in RE as early as possible?
(3) This is maybe more personal and something each of us should have our own answers to but I'm curious... where do you think the greatest opportunities are right now in the RE/RE-adjacent industry? Using technology to find efficiencies and scale that advantage? Buy office at a stupid low basis and hold? You mentioned RE in Africa... potential to have those areas embrace modular housing and working with governments to build better city infrastructure?
Great questions. It’s late at night and I busy this week so I’ll give a shot now.
(1) Where a mid/early-career professional should go to set himself up to see what different opportunities might be attractive? Work in development at a family office? Get broad exposure to financing by working up and down the capital stack?
My take: this can be a long answer since your path can be corporate, entrepreneurial, or something else.
One would hope by the time you are mid career that you checked some of those boxes, as the economic cycle over the past 10-20 years led you to a diversity of learning opportunities (I worked for LP when capital was expansionary, operator when the world went to shit, development when green shoots of a bull market cycle started spouting, started companies when corporate no longer worked for me. I’ve had geographic diversity, asset class diversity, invested up and down the capital stack, worked on mega deals to smaller ones, 11 figure deal sheet, etc). Work with people you can learn from.
To expedite, try to connect your past, present and future. Be focused on an industry while honing your RE skillset. Because that focus over ten years makes you somewhat of an expert.
I will preface that I eventually saw the writing on the wall and got out of big corporate, and sought smaller companies, including opportunities to have an ownership stake. So I am unique in that I could not or would not continue to move up the ladder - and got out while there was still some juice left in the economy. Timing was important.
I got broad experience.
Now for my mid career peeps who manage to stay on the corporate track, it really is harder to leave (vs being kicked to the curb). If I was an Asset Manager at a great company, you’re in this middle place of you’re going to be fine financially but it will be hard to make the big time. It all depends on your risk appetite and what you value most (vacations, hobbies, work life balance) or doing something crazy professionally.
(2) What technical/soft skills or activities should this professional be constantly working on that could serve him in whatever path he takes? Always be networking? Read entrepreneur bios? Learn how to leverage and build on AI? Actively invest in RE as early as possible?
My Take: the greatest skill in our game is being good at 1) having a vision, 2) effectively communicating your vision, regardless if your are corporate or entrepreneurial.
All of the above to your questions.
Ultimately, have a vision for yourself (what industry) and then be bold enough to take action.
If in corporate, the mandate is $1 billion of capital to place, they have the vision and sell it internally.
Everyone’s path is different. Look up the podcast of Tim Ferriss interviewing Todd MacFarlane (Part 2) episode (he made comic books which I’m not into personally but as a business person, I’m all over this). Probably the closest advice to what I would give you if we talked for two hours.
(3) This is maybe more personal and something each of us should have our own answers to but I'm curious... where do you think the greatest opportunities are right now in the RE/RE-adjacent industry? Using technology to find efficiencies and scale that advantage? Buy office at a stupid low basis and hold? You mentioned RE in Africa... potential to have those areas embrace modular housing and working with governments to build better city infrastructure?
My take: I am currently focused outside of RE, mainly because personally I’m bored of pure play RE and soured on many aspects on multi million dollar commercial real estate investing. I’ll list a few here, and I’ve done it: requires lots of capital, means someone else has control, while you take the same risks, over a long term period, with people who you hardly know, who can become adverse to you, and you’re trapped.
Macro, I just don’t know where we are heading.
Greatest opportunities in RE, I think you folks are better able to say. Look at industries or regions to focus on. Example, if you love the San Francisco East Bay, become Mr East Bay. Gain relationship and information power. If you think office to residential is a longer term trend, focus there. Focus on being the best operator. Let others take the real estate risk, otherwise what value are they adding.
I think it comes down to Focus on the industry. Hope you are right about this industry. Shape your skillset development to overlap with this industry or industries.
When you are personally at risk, it is like putting your hand in the alligator’s mouth and grabbing some money without getting your hand bitten off. I’m kind of tired of that game at the moment.
+1 [@odog808]
Bring in deal flow and/or be attached to revenue producing activities, and you'll get paid...
Lastly, this is broad, but Naval Ravikant's rant on "How to get rich without getting lucky" is a must listen. It's available on Youtube.
What a worthless, ridiculous word salad
You’re welcome a$$
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