Compensation: Real Estate Development
Hello:
I am being recruited into a new firm to run the development and construction for new build multifamily deals. Typical deal size $50mm-$300mm.
we have a large gp fund raised and have a goal of raising a large open ended fund eventually.
I would be tasked with growing out the whole development and construction arm, including hiring and training as we grow.
my title is VP at the moment but no one would be above me besides the principals.
comp being offered: $220,000 base, 30% bonus, and 1% of carry on all deals.
i have not been given much feedback on how they structure the carry.
im curious about this type of comp as I would be doing everything for the firm after close of the deal (so entitlement, CM, lease up, etc).
thank you
Edit: I also would love to hear any creative comp structures I can try to negotiate to help align the firms success and my comp (with understanding I’m not taking monetary risk like the founders, but I am career wise as I can easily work for a large dev shop pulling same base and bonus that I know is stable enough)
What market?
East coast, sunbelt
Bump
Outside of my area, can't really help much here, but perhaps there's data here that can help? https://www.wallstreetoasis.com/forum/real-estate/new-comp-database-goo…
i mean, the comp seems market, especially for an unproven hire. Real key is how the carry would be structured.
Also, how many deals are expected per year? What is the involvement of the principals?
I don't agree, that comp is way low. A development team leader managing several projects that are $50-100M should be closer to $275K base + 50-100% bonus + 10% carry on the deals you are quarterbacking.
The only factors I can think of to justify a package this low is i) you have a ton of personnel you are managing who are supporting you, and/or ii) your comp is anticipated to ramp up as you add more deals, since paying full freight (a higher package) with no existing deal flow would be tough for the principals.
But there is no doubt you are getting shafted on the promote. Junior level development employees regularly get 1-2% of promote on deals they are workign on.
10% or 1% of $0 is still $0 ammaright?
VP level comp managing full cycle development should probably be closer to $400k + carry from my experience talking through a few opportunities similar to this. I think the 200-250k base is probably about market but the bonus would be closer to 75-100%. You can also look at adding a slice of developer fees to your comp structure.
Seems low to me. Both cash and carry.
Low base for the amount of responsibility and very low on the carry.
However, not the greatest job market to be able to negotiate with leverage.
If you are tasked with growing out this new arm, I am assuming 10+ years experience I would think, major sunbelt city I would say 250-300k at least, 50-100% bonus, and meaningful carry. Could structure in a % of acq fee's too.
I’d tend to agree the offer is a little low on a TC basis. I think salary for a start up dev is probably about right but maybe negotiate a bump up after first dev project starts paying fees?
I’d also assess what kind of support principles would be giving, depending on how involved they plan to be at start could justify lower salary. Also who is responsible for sourcing dirt, deal equity, and debt? If this isn’t your responsibility I say the offer is pretty fair.
My advice is to try and tie more money to results at the begining (maybe bonus for getting project started, completion bonus, etc.) Carry is where you can push back the most since they don’t need to come out of pocket now. You should get at least 5% if not more (10% as others say is high). I think for this type of role you should be looking at 7 figure comp around the 7 year market (assuming projects are promoting).
how many YOE / experience and background did you have to land this VP position? I'm aspiring to get into RE development and would like to know how much / how long it takes to get to your level. thanks in advance!
OP - where did you end up?
Esse ullam illum inventore. Non recusandae qui est fuga et laudantium.
Velit incidunt vel occaecati dolores ab accusamus officia. Veniam et exercitationem minima accusamus possimus. Ut fugit veritatis magnam laboriosam eius. Dolore iure voluptas maiores beatae ut odio qui.
Ea maxime dolorem eos sint et possimus. Aut amet libero ex facilis aut sed est. Necessitatibus reiciendis molestias nemo necessitatibus omnis. Deserunt possimus tenetur laborum molestiae. Dolorum ipsum nihil et nam. Ut et non dolores quis quia ad aut. Consequatur et perferendis non placeat.
Dolores numquam esse minima. Ut aliquam qui maxime quos voluptas sapiente. Pariatur qui voluptatem iusto consequuntur doloribus praesentium qui. Natus nesciunt voluptatem autem error non dolores delectus.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...