"Don't worry about pay at the start." - Do you agree?

Sorry if this posted twice

Maximize every opportunity you get, but realize that you'll have to compromise at times just to have the POTENTIAL of getting ahead. If there isn't a longer term play, then I would reevaluate ASAP.

For context, I started working in 2015, earning $60,000, and after switching companies a few times, a series of promotions and a bull market (obviously pure luck), I'm on track to making $600,000 this year.

Conclusion: no, it doesn't matter where you start, but constantly keep your eyes on the prize.

There are 2 faces to this:

- you need to learn to reach mastery in your field

- you want to make money to support your lifestyle, because you’re worth it, and to establish a precedent. 
 

Any job is a trade off between these 2 in combination with WLB. Ideally you want to maximize 2-3 of these if you can.

Prospect in RE - Comm

In college, I always heard this statement from professors and especially working professionals (acquisition and development folks) who would take the time to speak with me on the phone or over a cup of coffee. I did follow this approach and am now a first year analyst that regrets not maxing my pay out instead. I went the development route and am paid a good bit less than my friends who are in acquisitions and even those in lending. From knowing what my company pays at the associate level as well, I still will be far behind in terms of pay. My question is as follows: When should it become about the money? At what point, should I start prioritizing that? I completely turned a blind eye to pay and went instead for a role that provided the best value in other facets (vertical of real estate I wanted to be in, name brand of company, strategy that aligns with what I enjoy most, etc). The problem is even if I stay with this company and take the promotion route I still won't be paid on par with that of my peers. Should have I taken a more balanced approach and focused on both pay and experience instead? Based on what other friends are making, I know I should at least be making what they are. Is there a certain experience level where you say, "Okay, it's time for me to maximize comp now." The issue I see with this is, why wouldn't you always try to maximize comp and experience (as it seems my friends in acquisitions are doing). 

It depends what you want.  Advising to ignore pay at the start can be good advice, because at the end of your career 10k isn't going to matter.  That being said it'll matter a lot when you're 23, so I wouldn't just forego it because your professors said not to negotiate.

Taking your story, development is a route that rewards entrepreneurship.  It's a lot easier to start a development shop than an acquisitions shop, so if you are hoping to go out on your own one day, then perhaps it's okay to take lower pay now.  If that isn't something that is appealing to you, maybe you switch.  Also always worth noting that your job is different than your peers in acquisitions.  You may be doing more interesting work, you may be working less hours, you may have a less stressful work environment.  What monetary value you put on that is up to you, of course, but it's disingenuous to say "I'm getting paid 20% less than my peers in acquisitions" if you also work 9 hour days to their 11 hour days.

As others said, it depends on your situation. Some people have hefty student loans to pay back, and the money may be super important. Others may not have that burden and just want to wear as many hats as possible. There are places where you can make good money and learn a lot, you should seek these out first. If you must settle for a place to learn and not get paid well, I’d do that for 2-4 years then try and switch at the senior analyst to associate level. 

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Pay matters from Day 1, unless they're providing you with all-inclusive accommodation, food and transportation.

I hate people and organizations that try to pretend we do not work for money. 

It's a tough one because they are right but I also feel our generation is way more educated about FIRE and investing so if you look at it through that approach, an extra 10k right now is worth 100k in 40 years (assuming inflation adjusted average S&P returns) and that is quite a lot of money i.e. someones college paid for

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if you plan to work 24/7 your whole life, i.e. doing banking/PE in your 50s and 60s, then yeah definitely it doesn't matter what you make in your analyst years.

however, if you plan to retire or semiretire in your 30s, i.e. not work at all or do some light work like remote corporate finance several months a year or 10h a week, then it matters what you're making at the start, cause that's what will allow you to retire/semiretire in 30s.

Listing where you live and what you're being paid could add some valuable context.

I posted this as a poll on our linkedin https://www.linkedin.com/feed/update/urn:li:activity:6975490352531030017

My two cents...

1 - It sounds like you've misunderstood what is meant by "don't focus on pay at the start". It doesn't mean ignore it entirely, it means  focus on maximising the NPV of your future income stream by taking a longer term view. If you're now stuck in a lower paying job and haven't developed the skills to move to a much higher paying one, this would indicate you didn't understand what they meant.

2 - Never take career advice from a college professor unless you want to become a college professor. Make sure the people you take advice from have credibility, which is best demonstrated by them having already achieved what you hope to achieve. 

Might get MS but honestly if people have to ask this question, I feel like they generally come from more low income backgrounds - in which case, yes that extra $10 or 20k worth a lot.

Obviously some people play the long game as well from poor backgrounds but I feel it generally tends to be people who don't have as many things to take care of or worry about.

I know I am generalising but that's my take on this. I've personally gone for salary from day 1.

I don't think going on my own even matters if I have freaking 0 (or small when it comes to seed capital) savings from doing low paid jobs in CRE.

Larry the Cable guy. 

When you're a stand up comedian, you don't always get paid what you should. Sometimes its $50 for a show two hours away, but  you're just hustling to get stage time, sometimes doing it for free. I remember listening a podcast where he spoke. Larry (real name Dan) talked about he just came back from being the road for several weeks, and someone asked him to do a gig basically for free because someone else backed out. That gig was where he essentially got discovered. Point is, he wasn't so transactional in how he did his stand up, but it lead him to better things because he took opportunities. 

If you think you can get more money, go get it, but also weigh that. If you work 40 hours making X, but could get a job working 80 hours that pays X plus $10K, yea thats more, but maybe you could be using that every 40 hours you would work to build a business or learn skill that you might not immediately get paid for, but could lead to way more money down the road. However, if you're not going to do much with that extra 40 hours, maybe the higher paying job is then worth it to you. 

So, interesting post.... with A LOT going on.... I see about three relevant/worthy questions...

1. Choosing a field/career path based on pay (i.e. development vs. acquisitions vs. lending, etc.)

2. The general wisdom of "don't worry about pay at the start" and "when should it become about the money"

3. Maximizing pay in a given field/career path/market (OP doesn't really go there so directly, but the comments seem to add it)

So, I'll add my two cents along those above lines....

1. Choosing a field/career path should take pay into account, it's perfectly fine as it is legit what let's you live and buy stuff. Being honest, if real estate weren't such a highly paid industry, doubt I would have had an interest in the same way. Of course, life time pay should matter more than starting pay.... so not sure you can make many blanket statements about pay between broad categories of "development vs. acquisitions (meaning investment mngt) vs. lending".. ALL are in the highest paid quadrant of CRE fields and details on scale/success of firm/personal activities dominate more than anything (i.e. some in development will make more than acq/IM and vice versa). SO, what would I give as advice.... pick a field/career path factoring your "love"/interest in it, how well it pays... AND.... how well fit you are to succeed in it (this last one actually determines how much you make and likely how much you really like it). Of course, that last one is difficult to know/figure out in UG, but you are not locked in for years, so really doesn't matter. So, to OP.... is development where you best fit factoring all those? Or is acquisitions/IM or lending better? I'm guessing something made development stand out, maybe you need to reassess, but you may realize you are in the right place (maybe wrong firm) and the payout comes later (as is the case in development quite often relative to some fields).  

2. I'd say that pay should be towards the bottom of the list of priorities, but it is on the list and not inconsequential. The thing about getting a job out of UG is that you are generally a "price taker".. meaning you really don't have much to stand on to name your pay. Since CRE is a highly desired field, there is probably a person willing to take the job if you don't and the firms know this. As you gain experience, skills, track record, and even maturity... you gain market power and better ability to negotiate. Thus, you can make deals "about the money" when you can legit drive profits for a firm (i.e. manage deals/projects, raise money, close deals, etc.). In development, this can be as early as when you reach a "development manager" type level, and really rises as you complete projects and have a legit track record. Development has a longer learning curve (i.e. you are more useless longer) than other fields like acquisitions/originations, and this is a big part of reason why you may be paid less relative to your friends in those fields. (WLB, hours, may also factor.... development can be wayyyy better on this front from day one, but that can vary firm to firm tbh). Still, even as you get more experienced/able to create value.. you will probably not want to make pay the sole measure. In fact, I think the older you get the more you value work you like, working with good people, cool projects, and WLB... and thus less about pay (this is individual of course.... if you want to be money-centric it's your right!).

3. How you should maximize within a given field/market (i.e. development in city X, in the OPs case)..... so, first a point... no where in the "don't worry about pay" advice should be construed as "don't attempt to negotiate" or "it's okay to be underpaid".... it's that certain tradeoffs matter more (like ability to learn, deal exposure, mentorship, and even name brand can be worth more than an extra $5-10k or whatever, especially for a first job). If your firm "underpays" to market without compensating benefits like lower hours, then moving on sooner than later can make sense. Clearly, getting promoted internally or via move is best, but laterals can make sense if getting a legit upgrade (i.e. hopefully more pay but ALSO better firm/deals/role, etc.). If you lateral just for pay to "equal" firm (or worse "lower" one), you can easily just "reset" your career. Meaning, you reset the time counter towards promotion, and the time lost in transitioning (and even job hunting) costs you in total time to where you can optimally go "for the money" (like I describe above). So..... (and this is the whole pay not matter point), is it better to get an extra $20k next year, or an extra $50k in five years? Knowing that each multiplies and compounds the longer you stay in the biz? So, just like the first point..... think long-term. 

A final, related point.....

- OP, you seem more bothered by what your friends make while your firm/job "provided the best value in other facets" (all of which you list sound reasonable). So, you seemed quite aware of this when you went this route (not sure if you had other offers, but it sounds like you feel you could have), thus, are you really second guessing yourself? Or just feeling down on "cash vs. cash" basis? Not gonna lie.... I meet 100X people looking to leave the "acquisitions/lending" type world to go to development and many are quite willing to take a pay cut to do so (I do know people wanting to do the reverse in fairness, just far fewer). I suspect with time, you may not feel so conflicted about your choices. Clearly, development better with experience, but takes longer on average to get really good. It's a personal call if you like the tradeoff for overall job satisfaction. Just keep in mind the saying...... comparison is the thief of joy!  

My $0.02. 

It is true that you should be more focused on networking & skill-building than comp in your early 20s. 

It is not true that you you have to pick one or the other. There are plenty of roles that pay well & will help you develop your skills and network.

Final point - I do think comp is an important criteria to consider when you're young. Not because you're trying to become a materialistic millionaire, but because in finance success is measured in dollars. If the company you're working at / getting an offer from cannot afford to pay you market, it is often an indictment against quality and/or how well capitalized they are. 

OP- this is my story. I was paid $110K base + $50K bonus at my previous shop. I was okay with the comp but hated the hours. I was really working to the bone. Started at 5 or 6 AM most days and it was not unusual to work till 9 or 10 PM. Worked on some weekends as well. I did not want to do it anymore especially since I had options. There are "lifestyle" gigs out there (agencies, life co's, corporate RE etc) where I can be paid well and work 35-50 hours a week especially in middle/upper management. I quit my job literally few weeks before I could get a bonus. I could have stayed and collected the bonus if I wanted to but I was at the point where the bonus did not even matter. I had an opportunity lined up. I put in my two week notice the day I got the verbal offer. I did not even wait to complete the background check and get a written offer. It was risky but it felt so good. Guess what the base pay was at my new job? 90K. That is right, I took a pay cut. Most would not but in my view it was worth it as I was single and had no mortgage or kids, I can take more risks and I felt this was a temporary pay cut and it was especially worth it as I was going to be working (sometimes barely working) 35-40 hours most weeks and I was also going to have lots of flexibility in terms of WFH.  I was also working on something that was new to me (that was one reason for me to accept a pay cut as my peers in the similar role had more experience ) even though I had a strong foundation and I bet on myself that I will get up to speed quickly and within 2 years I will get to a $160K base at the minimum. I knew a position I targeted paid $160K base and in order to get there I needed two promotions. Keep in mind a $160K base would be the total comp (base plus bonus) at my previous job.  That was my target as in my mind I saw that as truly leveling up. If I was going to be targeting a 3% or 5% or even 10% increase, that was not leveling up for me as I could have gotten that at my previous shop as well.

And the good news in my story is that within a year of starting my new job I got to a $160K base. It was a year ahead of my expectation. I got promoted twice and I benefited from a little bit of luck as well. As soon I started there was a company wide increase in comp due to inflation and that adjustment meant I was already starting at six figures which made it easier to get to $160K quickly. End of the day, it all worked out for me. I took a temporary pay cut because I knew that it would get me to a place where I wanted to go plus a big reason why I accepted this new job was to work 35-40 hours while still getting paid well. No complaints so far as I feel like I am having my cake and eating it too. So take a step back and look at the big picture and every decision you take should help you get towards that goal. Sometimes a little detour would be the way to get there. You are either moving towards your goal or going backwards early (I say early as you get older most people are perfectly content with being in the goldilocks zone in return for stability and security) in your career. If you are not going towards your goal, it's up to you to do something about it, take a pay cut, switch jobs, field, market, etc, do whatever you have to do. 

I started in acquisitions at REPE firm in a secondary market about 2 months ago. It’s a small shop but we’re taking on huge office deals, so when we bid we’re usually competing against BX, Starwood, AEW, Tishman…all the usual big players you’d expect.

It’s a lot of hours, even for a new analyst like me who doesn’t have the chops to take on everything just yet. I’m easily averaging 60 a week, often more. I didn’t have particularly outstanding internship experience prior to this (honestly I’m lucky to have this opportunity), so given the relative lack of experience, my base salary is pretty low ($75k). But in this base salary, the execs were pricing in the expectation of a fairly steep learning curve.

You definitely have to keep in mind that at first you’re going to be underpaid relative to what the actual expectations are. If you ever wanna move on to the big boy money, you have to do the big boy work before you actually get that salary bump. Thankfully with what my starting salary was, expectations were kind of low, so exceeding them is very feasible. Despite the low base, I’m well on track to beating my bonus target since I’m picking up very quickly and am able to produce solid work on my own.

To me, I didn’t care about starting salary beyond minimal subsistence (rent, small amount of student loans, occasionally having fun) and I cared much more about sector, investment strategy/portfolio, firm trajectory and culture. But at the end of the day, all those things are what drives your long-term salary growth. So I don’t care too much about my salary TODAY, but that’s only because I have the expectation that pretty soon I’ll be making much more.

I pretty much advise you to do the same. As you long as you don’t feel undervalued at the current salary and it’s enough to motivate you to keep pushing and growing professionally, playing the long game is going to be much more profitable IMO.

Facing a similar decision right now for my first FT job out of school. I have a respected and well compensated corporate finance rotation offer that scrapes over 6 figures all-in. And a underpaid acquisitions offer from what is basically a family office/developer that has little track record. Spread between the two is close to 40k.

I'm extremely fortunate to have either opportunity, much less both- especially since I’ll be 25 when I graduate college and come from a shitty state school. So not sure what the right answer is, tough call between stability and risk/reward.

Agree. Go to the best shop you can get hired at, and outperform. If you do this, the money will come. $10-20k today is silly to fight over. Wait until you create enough value that you can have a conversation with your boss about a pay increase and have reasons to justify it (vs I got good grades in school). You’ll likely have headhunters chasing you by that time.

Curious what folks think about my scenario. Been working 2.5 years working for one of the top local developers in my market (HCOL City). More on the finance side than PM route. Solid mentorship, get to present in front of CEO and execs on a weekly basis. Good WLB (45 hours a week). I currently earning $75k + 5% bonus. It's my understanding that $120k all-in is the average for someone in a similar position at a firm with similar reputation and hours. 

A lot of commenters are mentioning $10-$20k is irrelevant early in your career, does this still hold true for a $40-$45k spread?