Been working at a development shop for the last 3 years, our acquisitions/development lead is super conservative, and the company as a whole barely has money (no allocated pre-dev spend to chase a deal). All of our current development deals are sub 4.0% IRR. With no real prospects in the pipeline after that.
I feel like I'm just sitting around "sourcing & underwriting" deals that we realistically can't even move on. It's a decent paycheck for a Midwest secondary market, but thinking of making the move to a more dynamic market and joining a brokerage firm so I can control my own destiny. I also know enough to be dangerous on the capital markets/underwriting side to apply to potential deals, but don't want to sit behind Excel for the rest of my life.
Am I crazy to leave the principal side for brokerage? I know it's typically the other way around.
Seems crazy to me as someone in brokerage who would rather be in dev... but if you get job satisfaction from doing/chasing deals than ya ig make the move. With 3 YOE in a midwest market, ultimately I would think you aren't going to get a big payday in brokerage until you start selling yourself. Is that where you see yourself in 5 years? Being a producer? Anyways, how much bread do u make now? I am in a tier 2/3 midwest market myself
Yeah, I think I'm drawn more to the chase / deal-making side than actually servicing the deals and managing the development to make it happen. Yeah, I'd look to become a producer right away on the leasing side and maybe some IS on the side. Talking with a smaller firm right now. I currently make $110,000 base and bonus is subject to the development fees, but we haven't closed a deal since I've been here so no bonus. I also have more than 3 YOE, worked for a family office for 2 years, and on the IS side for 2 years.
No, not crazy at all. Development and brokerage are two very different jobs. In development, you are a project manager and your goal is to see that the project gets built. In brokerage, you are a market maker and your goal is to achieve whatever is best for your client, which usually means obtaining the highest offer with the best terms. To be a good developer, you must wear different hats, be a problem solver, be organized and be able to manage multiple parties. To be a good broker, you must be sociable (ideally charismatic), client focused, and in my opinion the most important attribute, you must be a hustler. Whichever profile meets your character the most is probably the job that you will be better at and thus, be more successful at. Some people are better developers and some people are better brokers. No one cares about prestige. The most prestigious job is the one that you find more interesting and has the best WLB to money ratio.
This lays it out very well.....I think I have many more the broker attributes in me compared to the development project management attributes. I get more excited by the hunt or looking for new deals/tenants than I do dealing with GCs, equity partners, lenders, and attorneys. I know a good deal of that will still exist on the brokerage side, but it'll be less wrangling cats to the get the project complete and more hustling, selling, and getting creative to get the deals over the finish line.
The tough part of the decision is going to a ~$60k draw from a $110k base salary + benefits, but the upside is unlimited, which is what it's all about.
If your goal is to have a career in development or acquisitions, then yes, you are crazy (though no different from most WSOers) to move from development to brokerage. You're basically hamstringing your entire career because the last few months haven't been everything you dreamed of.
If you are agnostic about where you are and think that your goal in life is to "chase deals" then by all means make the jump, I don't see an issue. I will say, lots of young people seem to think they were put on this earth in order to "transact" and all that crap and that's an attitude that goes away real fucking quick as you get older.
Why do you think it goes away as you get older?
Because I think you realize that "doing lots of deals" is overrated. That's something that try-hard 22 year olds say, because they don't know what it is to have a job and moreso don't understand that a career is a marathon and not a sprint.
Yes, looking at a lot of deals is exciting. But if you really enjoy what you do, then what you care about is the actual details around execution and not the thrill of the chase. Wanting to be involved in a lot of deals is just a roundabout way of saying "I want to seem to be important and a big swinging dick, regardless of the reality." Those are the types of people who spend an inordinate amount of time going to conferences and sitting on panel discussions and talking about the same generic shit - either the handful of deals they've done, or opining on broader market trends like they're experts. The really successful people are in the office, working.
OP is saying that he wants to move careers because he wants to appear to be busier. That is insane. And as he/anyone else gets older, their priorities will shift, and suddenly there will be other things that matter besides what you're working on, and other things that provide satisfaction other than your job and whether other people think you're killing it in your career.
OP would be far better served finding some other thing outside the office that brings him joy or satisfaction or a sense of accomplishment and focusing on that, instead of subordinating every need in his life to what is going on in the office. And that is certainly something that becomes clearer and clearer when you get older. When I was in my early 20s, the projects I worked on and how hard I worked and how much I made all played a huge role in my self-confidence and my self-perception (and how I thought others saw me). The older I've gotten, the more ridiculous that is. I don't want to work 100 hours a week now. I don't want to run that additional deal. I want to get home to my wife. I want to see a friend. I want to read a book. Those things are what I want to spend free time doing, not looking at the umpteenth deal.
As I said, if OP prefers being in brokerage to development, that's an entirely different story. But if (as it seems) the problem is that he feels he hasn't gotten to work on enough "live" deals for the last year or two and now is going to reorient his entire future in response to that... that seems shortsighted to me.
I’m a F1 driver living in Monaco but I’m not winning many races this year. Thinking of making a change to selling used Pontiacs in rural Oklahoma. Am I crazy?
Working on only sub 4% return HTC re-development deals with no bonus for 3 years and no discretionary capital to actually chase deals is hardly F1 bud.
You seem to be confusing an entire industry with your shitty company.
You're in F1, you just work for Haas. You just seem to think that because your shitty company doesn't do much, that means no one does. So, again... you've decided that you don't want to be in F1 because you haven't achieved anything, and you're gonna go sell used cars in the middle of nowhere because at least you'll notch a couple sales.
Did you just write fanfiction about me?
Is that what brokers do?
Have you done the math on the volume you need to produce to 'get back' to your $110k salary (plus a gross up for the larger, HCOL market you'd be in, plus benefits given up)? You mention a $60k draw vs. your current $110k salary. That $60k is borrowing against future earnings, so it's really $0 vs. $110k.
You mention leasing. Suppose commission is 4% and your brokerage house takes half. So on a 5 year lease at $30/ft, to get to $150k of earnings (which is on par with a $110k salary with benefits in LCOL market IMO), you'd need to sign 50,000sf of leases every year to get back to even. That's crazy volume for a rookie.
I get being hungry and taking a risk. Maybe this is your last chance (based on phase of life) to take that risk and you don't have much to lose, so go for it. Just know that odds are not in your favor and there's a very good chance you'll flame out. And keep in mind, you have many more skills to offer an employer coming from your current role than coming from a few years as a failed broker. And don't think 'I'll always have these developer skills / experience.' IMO employers don't think like that. You'll be a failed broker to them and (unfairly) your prior developer experience won't really be considered.
And I second Ozymandia's opinion on hunger for deals/volume. Especially in a downcycle where there's lots of people fiercely competing for limited volume.
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