Development pay sucks. Stick it out or REPE ?

Hey all, first year development analyst. I really enjoy the business and love the varying nature of the work. However, my pay is significantly lower than that of my peers with comparable experience, while working similar hours. I guess I'm not really seeing the reward of pursuing this career path. I understand the reward comes later down the line, but at the end of the day, I'm still making less money than others in RE, even though I have the ability to level up my pay in REPE. I've interviewed at other development shops as well and comp hasn't been attractive to no surprise. I guess I'm confused in general and just need some advice. I pursued development very hard because I love how it encompasses construction, finance, design, land use, etc. and was lucky to get in with a major developer after undergrad. I do enjoy the work, but the pay just isn't there. Obviously, I want to pursue my own venture down the line and somewhat have an inclination right now to say "fuck it" and quit and figure out the process myself. A lot of development seems to be problem solving and I believe in myself enough to figure it out as I go. If I fall on my face, I am fortunate enough to have the option to go live at home for the time being. Comp currently is 80k plus 20% bonus with around 60 hours per week (give or take). I think another consideration would be is that I enjoy development a lot, but it doesn't feel as personable or enjoyable when its my companies money and interest on the line, as opposed to mine. I think I would enjoy most if I was fully invested in the project and business and thus am inclined to "just figure it out". With that being said, I know this post started out about comp. However, I'm not sure even a 120-130k salary would make me happy. I think what would make me happy is doing my own thing and seeing how that goes. Obviously very confused and thus would appreciate advice. Thanks.

Comments (14)

Jul 16, 2022 - 11:28pm
redever, what's your opinion? Comment below:

Rather than leave us all in suspense, can you post the actual details of your comp package? Maybe a rough guide of hours, market, and prop type?

You already posting anon so shouldn't be too much risk, but clearly be mindful of anything that could identify you.

Without the details, harder to give advice/thoughts.

  • Analyst 3+ in RE - Comm
Jul 17, 2022 - 1:28am

Similar position here.. at a small development firm and current salary is $115k and bonus has been only 20-40k. They have given me small % of carry on the deals ive worked on but comp is not really where i want it to be. I also enjoy the work and thats why my plan is to float my resume around here and there and see what offers I get.

Jul 17, 2022 - 5:23pm
Fuhnance is WACC, what's your opinion? Comment below:

Assuming 3 YOE and high CoL city, that comp package is excellent for development.

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Jul 17, 2022 - 6:07am
703_native, what's your opinion? Comment below:

It's a great question and one I struggled with too as I found myself on the development track in my twenties. Unsatisfied with where I was at comp-wise but enjoying the business overall, much like yourself. Not a perfect solution, but I eventually concluded that I would need to be strategically mobile in those earlier years. Ended up doing a few one to three year stints at different firms. Every time I pivoted, I exaggerated comp so the increases became meaningful in a relatively short period of time. The variety of experience I obtained simply by witnessing how different shops do it only made me more valuable. The combination of a strong labor market and sticking to my guns made this possible, but title lagged due to lack of tenure (insufficient time to climb ladder to manager). That said, being a well-paid development analyst/associate sets that trajectory higher if you're patient and eventually work your way up. At the end of the day, and this is no secret on this site, you play the game with other people's money while you learn the necessary skills along the way. When it's time, you leave and do it with your money. That's when the real wealth generation begins. The earlier years when comp was less than ideal will be part of the story when people ask how you made it one day.

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Jul 17, 2022 - 9:51am
redever, what's your opinion? Comment below:

Okay... my thoughts/opinions with the added detail/context provided (useful, but quite a shift...)...

- $80k +20% bonus is fair/market in development for a 1st year role out of UG. Are there higher paid industries/gigs? Of course..... but some are much harder to get (like PE or even IB based roles), and will probably have you over the 60 hrs even substantially quite often. Is $200k all-in worth it for 90 hrs a week of spreadsheet/powerpoint fun? That's purely personal and subjective... I wouldn't fault anyone either way. Final point on the matter.... I'd venture to guess that there are people in some 'mega fund PE shops' making close to $200k that would LOVE to swap in for your seat (trust me, I get contacted by them from time to time), as they say... they grass is always greener. 

- You talk about enjoying development (totally get it), but feel frustrated by the level of pay as I'd assume you are aware of the comp of some of your UG peers (guessing you went to a school that had some legit top tier IB/PE type placements). This is very understandable and honestly, would be weird if you just were perfectly content otherwise. Still, as you seem to understand (and made more clear with your edit), you like development, and I'm guess that the 'high finance' route was less attractive. Thus, either you can happy/content with your path, or switch... but letting comparison be the thief of joy is where you are now. 

- Chasing money at 1 year post UG is a very dangerous move, IF high pay aligns with skills and passions, great! BUT the reality is unless you really love those high paid high-finance roles/firms... you are likely to wash out by year 3 (which is what happens to a lot of direct UG hires, and the firms plan/expect it). What is far more important is learning/gaining your own skills/trade and learning and getting acclimated to an industry. Worry about earnings 5 or even 10 years from now, you will probably make a lot more and enjoy doing it. Seriously, talk to anyone close to or even above 40, I doubt anyone would suggest you go for max pay just because in your early 20s (this leads to next point).....

- Have you ever heard of the Dunning-Kruger effect? If not, google it, and just know that from my point of view, it sounds like you are sitting on the first "peak" in that curve. This is not an offense, it is literally where you should be like most people in year 1 of professional life. Here is the the reality (note I speak of most 1st years, I don't know you personally so I can't relate this individually to you...), people generally suck first few years of a career/profession. Worse, the 'steeper' the learning/difficulty curve of the industry the worse this is true, and guess what..... development has one of the steepest curves in all of real estate and finance (yes, in all truth, PE/IB is simpler in many respects). This means a few things... 1. Pay will be lower to new people, as they are less able to add value day one. 2. It will feel worse for those who start (this is why so many devcos skip hiring UGs all together, and just stick with exp. hires or at least post-grad school). 3. It requires a longer time horizon to harvest the benefits. The upside?? The payoff for longevity can be substantial.... like make more $$$$ with fewer hours and enjoy it more.

- You speak about a lack of enjoyment from only being in charge of the firm's money and not your own.... This is a totally understandable thought, and it may drive you to be mega successful in your career. BUT.... dude.... do you have any idea how nerve racking and risky that actually is? It seems very easy when new to an industry and sitting at the bottom, but I promise you, it is really difficult to build and start firms like development companies. I really doubt you have even 1% of the skills and mental fortitude it takes, and that is not bad at all... I mean... why should you? If are sufficiently rich on your own or family or can convince people to write big $$$ checks to you, then go prove me wrong! Again, not hating on this passion/energy of yours.... its legit 100% a good thing.... just play the long game..... if you want that, you gotta learn alot, and being humble today can pay off big time if you are persistent.

So bottom line.... should you jump? Eh, if just for more pay, then no. Play the the long-game, nobody gives a fuck what you did direct from UG, prove your value and learn your skills, then monetize the crap out of it !!!!!

Jul 17, 2022 - 5:18pm
HundredMillion, what's your opinion? Comment below:

If u want corp money get a higher paying job

if you want to risk it and try to go out solo after a few years, chasing millions in earnings, stick it out then have the balls to shoot

  • Developer in RE - Comm
Jul 17, 2022 - 7:39pm

I have 4 years of development experience, work at a very large developer making $115k salary, 25% to 35% bonus, no additional comp. It is annoying that my friends in REPE/acquisitions earn significantly more than I do and I have been tempted to leave development for a high paying REPE role. However, these same friends constantly ask me for advice on cost estimating, construction, zoning, entitlements, feasibility analysis, scheduling, partnership structuring, etc. and it seems that they don't have much experience outside of financial modeling. Working in development has been an excellent way to learn all aspects of the real estate business and I have used these skills to put together a few apartment syndication deals.

The syndication deals are great and I plan to continue searching for deals, but I am curious how long it takes for compensation at a corporate RE development company to get better.

Jul 18, 2022 - 12:27pm
CRE, what's your opinion? Comment below:

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