Employment Dilemma
My real estate experience consists of +4 years in MF acquisitions. About 3 months ago, I left my old company on good terms and transitioned over to the development side (MF). I work for a small shop with a good group of guys who are intent on growing. Culture is good, work/life balance is good but pay is definitely on the low side with my experience. I don't have a slice of the pie and bonus is a lump sum for each deal closed. If we close any deals next year, it will be towards the very end of the year. If successful, I will be in the low 100's next year, all-in comp.
Recently, I was approached by someone who is affiliated with my past company. The pitch is for me to work for this fund that wants to invest $400 mil. into mobile home parks. Details are still emerging but it Iooks like I would be the lead acquisitions guy. The offer is tempting and I am sure I can arrange a better comp structure. I would be located in an area that suits me better and I am certain the culture and work/life balance are similar to my former company. Additionally, they are better capitalized and thereby more stable than my current company. From what I understand the MHC industry has a lot of good things going in its favor right now. I should mention this group is open to me doing contract work for them for a period of time but the goal is to bring me on full time. Ideally, I would do contract work for another 9 months.
My dilemma is as follows -
1) I have only been at my current company for ~3 months. I find it nearly impossible to maintain an amicable relationship with them if I leave this early. With that said, I think the opportunity I am presented with is superior to the one I am in now.
2) I transitioned over to development because I find it interesting and wanted to learn this segment of RE. If I leave development now I don't think I'd have an opportunity to get back in ever again. I suppose this would preclude me from any opportunities down the road that want hybrid acquisition/development experience.
In many respects my mind is made up. With that said, I care about managing the relationship and negotiating a nice compensation package. What do you all think?
Opportunities to be the lead acq guy at a will capitalized fund are few and far between. I'd likely go in that direction if I were you.
Sounds like you left acquisitions though so maybe you're pretty keen on development. Comes down to preference really.
You wanna be an acq guy or you wanna be a developer?
On the surface, acq opp is clearly more lucrative in the short term (one could argue long term as well).
Dev situation seems pretty good... Is it defined what your acq fee is? If there is meaningful upside there once deals start closing then comp could get attractive.
$30k per deal closed. They have mentioned they are not keen on sharing their promote. I suppose I am still a little junior for that yet
Agree with the above, but just want to add a counterpoint or two.
Manufactured Housing(Mobile Homes) are very niche. I think it would be hard to switch back, not impossible, but hard. But if it works out and you are making bank(define as you want), then that is all that matters anyway. I think the primary thing would be to mitigate your downside while trying to capture upside in your career.
Development, is very niche....and honestly if mastered(never, but 2-3 years), it is an Amazing skillset to have.
Okay, obviously this is highly personal as to what is "best" to do, so please take everything I say very loosely.....
My gut reaction, which seems only firmer, the more I think about it, is that you should stay where you are. Getting to the "lead acq guy" is a great opportunity but it sounds like the reason they are interested in you is because they are a startup and would probably have troubles (from lack of reputation and/or capital) to hire an experienced person. This is not an insult to you, in fact, it is a huge sign that you make great impressions and people believe your long-term potential. If you said you hated your current job and wanted to leave anyway, then I would probably say to take this for sure, but you didn't really say that. You said you wanted to go into development, and frankly, I think you are too new in the current job to say if you made the right choice.
All that is background, the real reason I don't think you should take the offer is that you may be able to wait (by saying no), and actually get a better deal later. If they really want you, the harder to get, the better your positioning will be. This also let's you build time in your current role (good for resume) and let's you get a better honest assessment on whether to switch or not. Believe it or not, but for people viewed as "talented" these type of opportunities keep coming around and are not "once in a lifetime". If it really is a once in a lifetime thing, it's probably too good to be true or not best for you. My gut says you are in-line to be desired, thus, waiting won't cost you anything in the long run.
This is very opinionated! And based on my past experiences, thus, if you ignore it and take the role, it may be the right decision. All in all, isn't it great to cursed with many opportunities? Enjoy the fact. Actually, if you do feel the "urge" to jump (only do this if like 100% willing to take the new offer), it wouldn't hurt to approach your current employer with your situation and be honest about it and how you feel. They MAY give you a raise or do other things to keep you (or get mad and tell you to F off, both are possible). All in all, being honest is only way to keep any good relationship, even if they will hate you leaving.
Good luck!
This is a great answer. I also think OP and I have different definitions of “Lead Acquisition Guy”. The founders are going to be leading the acquisitions. Their relationships are the reason they were able to raise $400mm in equity (really good for a first fund btw). I’m guessing OP would be taking the lead on the analysis?
I also don’t think it’s fair for OP to compare the “capitalization” of a developer versus a PE fund. They have different models of investing, raising money (per deal basis vs fund) and what not. Totally different players
Lead Acquisition Guy = heading up underwriting, analysis, IC briefs, etc.. The two principals can barely use excel.
When I speak about capitalization what I really mean is their ability to raise capital. The MHC guys can practically snap their fingers and money will appear (I know that sounds like hyperbole but it's honestly not that exaggerated). The developers definitely have to work harder.
First off - thank you for taking the time to provide such thoughtful commentary. I really do appreciate it.
I think the reason why they are interested in me is because 1) they have worked with me in the past (+4 years), 2) they know my skills and abilities (underwriting and analysis), and 3) finding skilled people for a reasonable price is tough. At the moment they are tapping their network in an effort to put a team together.
I definitely don't hate my current job - I do have concerns about their long term viability and underwriting ability (specifically as it relates to modeling costs accurately). I will be holding my breath at each construction loan refi.
I should mention I am doing contract for them right now which I think acts as a good way to get a feel for everything. I think this could help get them comfortable with making me a strong offer when they want to bring me on FT. Ultimately, I am looking for a big bump in base, a market rate bonus %, optional co-invest, and a small piece of the promote.
If you are able to start off as a contract consultant first (I'm assuming your FT role either doesn't know or care), that is very smart. All the reasons you cited as why they are interested in you is pretty much what I suspected. It also validates my sense this will not be a one in a lifetime opportunity.
The big question is what is your long term goal? Would you rather be a big guy in small shop, very entrepreneurial, with the ups and downs that come with that. Or would you rather be an MD/EVP or higher at a big time development firm working on big deals, getting a large salary and big bonus, but maybe missing out on those major 8-figure paydays that are in the realm of possible in the other field? Obviously, staying put makes sense if you want to "move up the ladder". The other route, well who knows.
Personally, I've had many friends and clients (I used to do development/finance consulting) who chased the big $$$$ and some ended up wealthy and some had mixed results. I def wouldn't advise leaving a solid gig until the new one has actually raised serious money. I've been shocked more than once when certain people/teams tried to raise capital based on prior success for a new venture, it's never as easy as it looks.
Either way, If you can keep the consulting role going for awhile you can ease into this with far less risk. But there is a saying (my first MD told me this)... you can't ride two horses with one ass. If you are doing side work, you may under perform in the development gig (i.e. no free lunch).
Please don't do that. I would never do that at such a junior level( up to VP). Never say you have another offer, they could wait 2-3 months, then fire you after. Then you wouldn't have any job. Not only that it would leave a bad taste in their mouths too.
What you can do it negotiate a raise based on performance, usually around year end or 1-year anniversary.
I should add, I do agree here, if you go this route, you are only doing it if literally you are out the door and want to see what happens. It's a major risk move and have to agree that at Associate level it may only have downside. I do not know the extent of the relationship you have with this firm, so tread softly. Still, I don't think its totally to crazy to try if you are respectful and honest. Personally, I'd be shocked if a firm were give someone a raise only to fire them later in act of retaliation (not saying it can't happen or hasn't happened in this world). That would be really bad for reputation and would hurt recruiting and maybe if spur others to leave.
How much better is the comp at the MHC fund? If we are talking an extra $25 grand or so, you have to put a value to the development experience you are achieving. Like you, I also work on the multi acq side of things and would love to get solid dev experience so i can get a hybrid acq/dev role down the road. It would be tough to go to trailer park investing unless the comp was really good. The "contract work" aspect of it also seems kind of shady (unless i am misinterpretting), why wouldnt they just bring you on full time up front?
They would not hire me upfront because: 1) I just started at my new company 3 months ago. Me leaving now would kill my relationship with my current company and I told them I would not jump right away 2) They are still putting together the team. For instance, they are looking for an AM/Accounting person. I volunteered myself for AM responsibilities.
Well, without knowing how much better the comp is, it's hard to say.
Personally, do you want to get into the mobile home space? It seems like you will learn a lot more at the development shop, and set yourself up for better exit opportunities down the road. With that said, I would just want to be sure the developer you are working for has a strong track record and steady pipeline, because we are at a weird point in the cycle.
You’re getting to the age / years of experience that you should really be focusing on what you want to do long term. You already have the junior level skills that are largely transferrable wherever you go (modelling, attention to detail, etc) but the skills you are trying to develop over the next few years are likely non-transferrable (process mastery, the relations you develop, sector expertise, etc.) Whatever bump in career trajectory the manufactured housing positions gets you will likely be negated if you every want to switch out of the asset class so make sure you do an honest assessment about whether you think you'd want to be in the space for the long haul.
If you're interested in development and want to do that long term but are unhappy with your current comp, I'd just keep plowing through your current role and either ask for a raise or look to jump ship at the 1-year mark (around the time you’d be able to join the new gig full time anyway).
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