Quick Question -
So I am currently working for a Life Co ($2.5B allocated to RE) that is doing primarily debt and LIHTC, however we do have some equity. Currently I am the only analyst that is supporting a number of investment managers so I am seeing deals across the country and all the asset types.
As of a couple days ago, I received a soft offer from a top IS team for a top firm (think number 1 IS team at JLL) in a secondary market. On this team I would be solely focused on one asset class and would be focused on the market the team serves - much different than my current experience..
My dilemma is that I do not know what is better experience, in my current role I am doing a lot of underwriting and comprehensive investment analysis where I am forced to make my recommendations and back them up - the only issue here is that it is mainly from the loan perspective which takes much less granularity than an equity position. If I were to take the new role, I would be mainly a model guy building OMs / BOVs / Models but I would be pigeonholing myself in an asset class and market - I also think I would have to change perspectives as I would be forced on strictly producing work rather than thinking like an investor...(at this stage, being an investor later down the road is much more appealing than being a broker)
Looking for some input on approaching this crossroad.
Very interested to hear feedback on this. I'm in a similar position myself.
As someone currently working in IS in a primary market, I'd say stay where you are, especially given your long-term goals. I'm trying to make the transition OUT of brokerage. The way I see it, as a broker, every deal you/your team wins is automatically the greatest, most perfect asset in your eyes. You have to sell the dream. You underwrite aggressively (within reason) and virtually aim to get the highest price you can for your client. On the investment side, however, I think there's more value in understanding what actually makes an asset a good one, and one worth investing in. Even on the debt side, you're taking more into account than the IS side, which mainly looks at how much you can convince a buyer that they will be able to push in-place rents with minimal capex, etc. etc. And all of that experience you're currently getting will come in handy down the line as you say you want to be an investor. As far as income potential, great brokers make big money in a good market like todays. But in my opinion, I'd rather be the one with the money, getting OM's sent to me than the one creating them and pitching to guys to let me sell their stuff.
Just my $.02
I second this. Been a broker for 15 years. There is huge financial upside in brokerage but I feel you can make tons of money long term and on a consistent basis with an institution.
Keep in mind the power of the split. These CB, CW, JLL guys get 50-60% commissions then that gets divided up a few ways. I know associates taking home 25% of their commission, that's it. Yes, you'll meet great people but it sounds like you're already doing that.
Lets say your goal is to make $500k+ a year. That money is out there on the institutional side. Yes you have to be top tier, but you also have to be top tier to do that in brokerage regardless of what anybody tells you. Ask all the guys in brokerage what they made in 2009/2010. We gave back a lot of what we made in the good times in just two short years.
Meanwhile, I got buddies making $300k salaries when it's slow working for a firm.
as PEREtzel said, it is always nice to be on the side where decisions are made instead of having to constantly be selling something. Sure, you are in turn selling the deal to your investor/investment committee etc. , but you have a pretty good gig right now looking at a lot of assets all across the country. If you want to be an investor later down the road then you should stay put for now.
How long have you been at the life co?
Do you like debt or do you hate it?
Are you planning on staying in that secondary market long term?
What kind of investor do you want to be -Individual, institutional, fund?
I personally would stay, but I'm partial to life cos (I work at one myself) and have never wanted to be in brokerage. You can make a lot of money, especially in the good times like right now, but the lean times like the downturn suck. My life co didn't really downsize during the recession, they just moved people around to focused more on portfolio surveillance/workouts/mods. Plus it is just a good general world view.
If you want to stay institutional, then you should be able to lateral to another life co that has an equity group as well if that is of interest down the line. It will be much easier from your current position than from IS.
I have been here for a year.
I cannot say that I hate debt, but I would like to jump to the equity side later down the road.
Still not set on what type of investor I would prefer (all have pros and cons)...
A major driver of the IS interest is that the team works on large portfolios from time to time and I know for fact that I wouldn't get exposure to anything over $30m in my current role - but I am not sure that there is THAT much merit to working on larger deals....
If your interest is larger portfolios, then I would sit tight for now and look for an opportunity to lateral to a larger combined debt/equity company.
I work at one of the large life cos. I stared in the debt group (was there for 3.5 years) before switching over to acquisitions for a new value add fund that was created last year. That is the easier path to take than trying to make it from IS.
As others have said, there really is money to be made at institutionals...and you get a work life balance, because you don't have to do everything yourself.
Not to derail, but quick side question - what is the ceiling on IS brokers comp? I've heard multiple times that they can take home big checks but have no frame of reference. 500k+? 1 MM+? 5 MM+? I'm sure there are a ton of variables, just curious what the ballpark range is.
How does the compensation progress at the life co's? And how does the work life balance look?
Work life is great. Around 50 hours a week, come and go as your please. Work from where you want (I frequently work from home or my parents vacation home abroad). 5 weeks of vacation. Full benefits including very generous retirement benefits.
Compensations progression from analyst through associate levels is pretty similar to banks - salary + bonus, rising each year with experience. You hit the 200k/250k mark once you hit director and get deferred performance awards that are tied your investment portfolio.
Whats the asset class you would be working on and how does that compare to your goals? Same question with the geographic location.
My personal opinion is that it would be easier to transition to the equity side from IS than the debt group.
The asset class is MF which is not the most appealing to me..
In that case, I would probably stick with where you are and continue looking for opportunities. MF is one of the most basic asset classes and easy to get pigeonholed into. Retail and office are more complex and thus provide a more transferable skill set.
I agree with what most of the people here are saying. The majority of people look to jump from the brokerage side to the equity / debt side. I would say stick it out for the next 12 months but start interviewing with larger debt / equity shops now. That way you can see how the interview process goes along with gaining experience on what to expect during a model test. You mentioned that your firm has done a few equity deals. Were you on those deals in terms of UW the Cash Flow / Waterfalls? I would definitely highlight that within your resume if you were.
PM if you want I can give you a couple of analyst model exams that I was given during my interview process.
At the end of the day it totally depends on what you want to do down the road but it seems like you want to be on the equity / debt side rather than brokerage with a preference on not doing MF. I used Select Leaders when searching for my jobs previously and in the past few days saw these two openings. Shorenstein Realty Services who I am sure you know are opportunistic office players based in SF and Square Mile Capital which is a NY based equity / debt firm that has definitely been in some large and interesting deals within the past 10 years.
https://www.selectleaders.com/candidate/viewjobdetails.do?jid=44111&eid…
https://www.selectleaders.com/candidate/viewjobdetails.do?jid=44120&eid…
Totally a matter of opinion, but I think the ownership side is the end game. The work is more stimulating and there is significantly more money to be made if you're in the right seat too; eg developer, REPE with ownership in the deals.
I spent a few years in brokerage and PacNumber hit the nail on the head. Still a great career for many, though. It has to be one of the top sales jobs out there and is a great way to get CRE experience.
Unless you're big on sales, I'd stick it out where you're at if you enjoy the work. If you're interested in a change look into smaller development/equity/mezz debt firms where you may have more involvement in deals (beyond modeling monkey) and the chance to move up the chain faster.
Good luck.
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