I’m done with RE - looking to pivot, but where to?
I’ll preface this by saying that I have been quite fortunate in my career (HSW JD/MBA, MBB, etc) and life path, but am longing for more. Any advice on where to look would be immensely helpful. TLDR: I’m fed up with real estate, and am looking to pivot (industry/role agnostic), just looking to optimize lifestyle and pay.
I’m a VP in mid-sized REPE shop - work and pay are alright… but frankly I don’t think the juice is worth the squeeze as to what I really value. I’m also fed up with various aspects of the industry and how it operates (I know, each industry has their issues) - the need for significant capital to go out on your own, slow investment pace, entrenched relationships, etc. and let’s face it - the finance oriented roles don’t pay nearly as much as other industry counterparts.
So what is it that I really value? Frankly, I don’t care at all about the actual work, whether it’s mind-numbingly monotonous or intellectual stimulating, or whether it’s in the sanitation industry or tech. I’m optimizing for lifestyle and comp (NPV of career pivot as well), and don’t know where to start…
I’d think with my background (JD/MBA at HSW I went to McKinsey for several years, then real estate PE) I’d be afforded some good opportunities, but don’t know what I should even be looking at.
I’m in my early 30s, and after a lot of soul searching I’ve realized that real estate isn’t for me, in large part due to the fact that the real money is made going out on your own, and I don’t have that type of capital/connections/etc.
Kind of at a loss and going through it, would appreciate anything you have to offer.
Following this - same exact position (albeit still early into my career). RE being so product specific makes the skillset a lot less transferable relative to other jobs in finance or professional services. Would be interested to hear how people have pulled off a pivot (w/out an MBA or advanced degree)
Tech
Yeah, i’ve thought about this, but not entirely sure where to start or what to look at. My opportunity set is somewhat limited, since I am tied to Orange County
Right.
Probably tech, but as with everything, those companies have more than their fair share of issues as well. Of my ten or so friends in tech, two love their jobs, five could take it or leave it, and three absolutely hate it. Pay looks amazing when stock prices are increasing 20-30% a year, but that can always change.
Family office that allows you to pursue multiple asset classes is also an option.
Yeah, I have some friends in tech. Seems like a great lifestyle and pay definitely gets up there at the right firms
Yeah, important to point out that tech was great for the last 15 years when we were in an extremely low interest rate environment and any idiot with Powerpoint installed could go raise millions of dollars to "disrupt" something. The entire industry may not be quite as lucrative when valuations start actually getting tied to (almost nonexistent) performance and suddenly also those vesting options are worthless.
As always, remember that past results are not indicative of future performance.
I agree with this, plus a large component of why the pay was so good for so long was because there was a dearth of talent relative to demand. If more and more people flow into tech because they are attractive to the comp/lifestyle, then over time wages will decrease.
why did you go into MM RE in the first place w/o a clear plan? HSY JD/MBA + McKinsey so I assume you had a ton of other options. MF REPE if you did go RE. I know some people with really great/prestigious backgrounds but only go to RE if it's a top fund (comparable pay to other top finance roles tbh) or entrepreneurial route starting their own firm
Hindsight is 2020 and if I could do it all over again, be on a different path. But can’t cry over spilled milk. Just trying to put the pieces together on what the best opportunity is for me. Not sure what that is particularly in Orange County
Respectfully, isn't this a bit like going to a Texas BBQ convention, saying you are done with BBQ sauce, and asking for some top vegetarian recipes? Not that people here would be offended by you moving on or anything, but your future seems specifically anywhere but here. We don't, nor can't, really know what you want to do, only what you don't.
True, I get what you’re saying. Fact of the matter is that if I could go back, I would go on a different path. But need to move forward. Will cross post this
I'm kind of having similar thoughts as well. Because the tech industry is incredibly huge there just seems to be many roles that you could acquire where you getting a good balance of committed time and life outside of work.
However, owning a business in the future is a goal of mine, and it may or may not be in real estate. I am thinking about operating some type of blue collar company because i had a lot of friends when i was younger who's parents owned those types of businesses and were successful at it. Because it's mostly physical you're overhead operations are generally low because you're not paying for some super expensive staff because of the multiple degrees and knowledge they have.
Agree. The appeal of real estate is in large part the dream of going out on your own. But frankly, there are many industries with a path of lesser resistance. It’s just so tough and real estate to scale and you need real dough. On top of that, with promotes, it will take a long time for you to realize any substantial gains
Can you name a couple of those industries?
Look, if you don't like real estate, then obviously get out of the sector. However, this is just bad advice. Real estate is, without question, the easiest industry in which to build an extremely profitable and successful business. You sort of give your own bias away with the last sentence - you aren't interested in spending a career building something. You want to win the lottery and make nine figures in your 20s. No, real estate won't give you that, but quite frankly nothing will. Go literally play the lottery, in that case. Real estate rewards long term thinking and careful risk management and mitigation. If you have that view, you have a much higher chance of being successful and a much higher expected return on that success than in basically any other industry you can name if you want to start your own company.
I've had similar thoughts but not sure what the move would be.
1. Tech - In a finance capacity? Is it going to be an easy switch in this market and will it actually pay more? One perk is way more remote offerings
2. IB - More Money but Horrific Hours
3, Consulting - You've already done
4. Start your own business/buy a business - Huge risk
5. Corp Finance- Do these roles actually pay more than RE roles? Seems like similar comp
And if you don't like what you switch to, definitely a tougher road/story back to RE but I'd be curious to hear what other options are out there/what else you've considered.
Yeah, this is what I’ve been thinking. Corporate strategy and tech seem like good options. And if I want to start my own business, it likely won’t be in real estate given the headwinds
How much do you make now and what type of roles in Corp strategy or tech would you aim for? Tech and finance seem tough to get atm because of layoffs as well but perhaps you have the network to do it right now.
Go do something crazy like convince someone to back you to buy a gas station biz or QSR or whatever.
Sounds like you’re in the perfect position to take some major risk, and with you’re credentials, the sky is the limit
Man… I would love to put my balls on the line - but just don’t have any compelling thesis/business plan. Also don’t have ready access to capital
Put your fucking balls on the fucking line pal. Look your peers fathers and their forefathers in their optic spams, and you tell them you are a HSW MBA JD JEDI type of mfr. You tell them you’ve seen the biggest thing since sliced bread.
Your business plan is buying tax lien single family properties. You’ll find the deals analyze the risk and deploy. (You get a 25% interest if the home owner pays off their lien depending on what county. It’s in the records somewhere, you’ll figure it out. So you’re immediately at 25% each investment if you pick property with taxes less or equal to their value in the market. Upside they usually are way less than market.) You promise a 20% return on their money over 5 yrs and take 100% of the profits over 25% and split 25/75 in b/t 20-50. (When they question your JV structure you tell them “This isn’t free and they can’t win as much as you will win bc you are the brass balls behind this opportunity anyways. Don’t take any questioning on your split.” “It pays to play” you tell them.
Now that you told them your plan. You immediately take 25% of the equity and start gambling, you play the lottery A LOT, you sign up to charter jet around the globe, you drink, you eat, and you engage in tomfoolery for about a year. You’ll probably come up 10% if you’re a good gambler or 1Mx if you win the lottery. (Since that’s seems like what you’re trying to do anyways)
Next, you get back to business you take the next 25% you meet a man named Rico you offer an LP structure to his snow selling business. You get some bad mfrs to hold him to his end of the deal. You buy a 30ft yacht for Rico and his routes to Miami. You also use the Yacht you gave Rico when needed for additional tomfoolery.
Finally you take the last 50% halfway through the second year after you have Rico handled and he is efficient to actually invest in property. You first buy a decent nightclub, stripclub, casino, idc (you’ve seen Ozark whatever you prefer) to launder Rico’s distributions. Hire one of your shitty KPMG accountant buddies to wash the money. The rest of the money, you start searching for tax lien single family homes and this will be your real bread winner you should hit your return promote within Q1 year 3. You continue until Q4 and close the fund and get out. This will give you a higher IRR, you start your new company with a successful first fund, and you can rinse and repeat and start growing your investing business and get serious with less tomfoolery. Maybe have kids or something. Hire some ppl to pour into. Start an empire. Sell it. World is your oyster.
You can drop Rico now. Let him run the show on his own and sell him the laundering property you previously acquired. You only really needed Rico to check the box of being hard, having that dog in you, and making you feel alive for a minute to restart your burnt out ass etc.
Hope this helped.
I started off in RE in brokerage, progressed into development, and ultimately ran an acquisitions department for a few years. I was laid off due to the turn in interest rates (i.e. no more acquisitions needed and company had to cut costs), but once I found out I was getting let go I was very relieved. I was already having the same thoughts as you, and that was before the market turned sour.
(After some years I leaned the dirty secret of real estate is that you can only succeed if you come from family money. No surprise why Hines, Tishman, Trammell Crow are successful operations—lots of family money required to float through the downturns, or to take advantages of distressed assets.)
…Regardless, with my MBA and my newfound time, I actually pivoted into a corporate finance role. Corporate has great work life balance, but the pace is slower and essentially is a glorified a desk job as you don’t produce anything. If at a large company it will get monotonous pretty fast, and if at a small company it can get pretty stressful without the upside. Still, it’s steady.
Tech has a lot of pressure and is subject to numerous layoffs, but no one in tech ever will tell you that because “everything is perfect” in tech. Also, because the business is already self sustaining, it’s nothing more than pushing paper and playing politics everyday.
One under-the-radar industry is government. If you’re interested in being on the finance side of things, working at a pension manager might be up your alley, otherwise I’m sure you could use your skillset to start at a pretty high pay rate in a different area. The benefits, work life balance, and retirement pay is cream of the crop. Only downside is you won’t see $100k bonuses, but you will have a steady job, and at age 65 you can waltz your way into guaranteed millions (if you last that long).
Anyway, happy to answer any questions.
Very helpful, thank you. So far, I’ve been thinking: Corp finance, tech, doing something in my own (idk), and public equities.
Really been toying with hedge fund world - spend a lot of time personally investing and always found thematic/event driven investing very interesting. Thoughts?
You have Pimco in the area. Have you thought about them?
My thoughts exactly. I have been toying with the HF world as well. Still young enough to pivot and there are a bunch of small HF in my area. Thinking about CFA 1 to get foot in the door. Been playing in the market with some success and find myself ignoring prospecting to study the markets lol.
What type of role in corp finance did you transition into and was the transition difficult or fairly straight forward? Additionally what were you making in CRE vs your job now?
Late to the game, but this is such an awful take.
You can only compete with the Hines' and Tishmans of the world if you have family money. You can absolutely succeed coming from any background (which isn't to say it's easy). Which makes sense, and reveals the complete lack of imagination on the part of most people in CRE. If you want to be mega-successful, you have to do something different. Executing on the same strategies in the same markets, buying/building the same assets... of course you're going to get wrecked by the big guys in that case.
You either need to have an actual value-add business plan beyond "deploy balance sheet and succeed!" or you need to modify expectations of success.
The Hines reference was another way of saying you need millions to start/succeed in real estate.
Pretty hard to invest in real estate in HCOL areas even if you are making 250k/year pre-tax (which is 150k post tax, and closer to 60k/year after all expenses are paid.) This means you would have to save for 5 years just to contribute 10% to a 6 million dollar project (as in 10% of owners equity @ 3MM, and the other 3MM financed through a bank). This is the cost for a standard retail deal, not anything major (4MM acq + 2MM budget). And thats if everything goes according to plan.
So at a minimum you need to be able to raise 3MM in capital from friends and family. Again, this reinforces you need friends and family money to get started. $6mm deals are too small for tishman and too small for most boutique developers. And you still need millions.
Oh,wait, you will also need to be able to survive for 3 years before you see a single dollar of return on investment from your value add strategy.
....The only way to be able to play in the game is to have money.
1) Pivot into highest earning seat you can find regardless of hours, eat the shit for a few years, live for cheap, build up a nest egg. Then go into academics and become a professor.
2) investment role for pension fund, university, defense contractor, etc.
Actually taught as an adjunct professor at an Ivy for a while and really enjoyed it. Would love for that to be a constant in my life, even if it’s part time
regarding the second point on investment roles within a pension fund, university, government, etc. Not sure how I could even start breaking in. Any advice?
I see them sometimes on LinkedIn but that’s really my only advice. I’d network, especially with your education and background.
Can you elaborate on the difficulties around comp and starting your own thing?
What are the specifics around why it's so tough to scale, need for significant capital, and promotes taking a long time to realise any gains? How does this compare to Corp PE and VC? I would've thought the hurdle for starting your own thing is lower with RE (deal by deal is a more common model here?)
Given my pedigree/background, I feel like there are other career path that align with what I’m looking for. Everyone has an opinion, but from being in the industry and my vantage point - real estate (finance) is amongst the lowest paid occupations in the finance realm. Talking acquisitions and asset management. The real dough is made when you have your own thing. But look at almost all of these shops - they mostly started with family money or some insane backing (married into money, etc.).
look, I’m sure I’ll have an alright career in real estate, but frankly I feel like I’m wasting my potential and not maximizing what I am looking for (pay & lifestyle).
I’m getting paid <300k cash and my carry is essentially bullshit given the vesting schedule (call it an additional 100k/yr on average) and in my early 30s. Feel like there’s different paths in tech and business that would be more fruitful
Would you have a different perspective if it was UMM/Large Fund/MF REPE? Someone else mentioned that pay is comparable to other roles in corporate pe, which is true.
Would think that there would be less monotony and more intellectual stimulation at the MF level since those would be portfolio level deals. I also think that real estate is uniquely intellectually stimulating in that it is strongly tied to psychology, engineering, architecture, etc.
Yeah at MFs like KKR / BX / APO they are certainly not paying less than other PE arms. They are paying AN1 ~200K or sometimes more. In the case of BX, RE may actually make more, and I know KKR for sure has had numerous senior members move to real estate from other PE strategies.
True, honestly would be cool with MFPE pay (obviously). Problem is it’s slim pickings in OC.
You want a unicorn job/industry - in your backyard without having to move?
So - you want it all without having to give up anything.
Fix your entitled attitude. That should be what you work on first.
I might be overreaching here but it sounds like the path you took in life was a challenging/top-tier route, and after working for a bit, you have now come to the conclusion that the compensation doesn't match what you deserve. Therefore you are underachieving in life. Your sentence, "I'd think with my background...looking at." is telling because you have a great job in Orange County (according to you, work and pay are alright) but you feel like the grass somewhere is greener...and that you should go do that instead. Amongst this you don't care what work you do as long as you optimize for not working and getting paid lots of money.
I think you just need to settle in for the long run of life a bit and accept that without drive/commitment/entrepreneurial spirit (which includes the willingness to take on massive risk), you likely won't be "extremely" rich, in spite of you being smart enough to get a top tier JD/MBA and work at McKinsey. You are probably undervaluing that you'll likely end up solidly upper middle class and have no real stress related to money in your life, other than keeping up with the Joneses. As a function of your achievements so far, you've probably spent time around folks who are (i) in similar socioeconomic positions, or (ii) come from wealthy backgrounds. This might be skewing your perspective.
eg. watercooler chat at work or school about someone staying at their parents place in Jackson Hole leaves you with the realization your job won't give you the financial means to buy a house in Jackson Hole, ergo, injustice!
Your job is probably easier than you thought it would be and so you don't take it super seriously. You think you can do more but lack various things that are out of your control. You are frustrated that things (career/money) are not progressing as quickly as you would like. If real estate isn't for you by all means switch careers, but don't expect things to drastically change.
Take a break. Go work a shitty job or volunteer somewhere. Again, I might be reading too much into your prompt but you seem a bit naive. If you "want something more" but don't know what that is other than to not work and have a bunch of money, you probably need to re-calibrate your priorities.
Somewhat agree here. 300k+ & carry seems pretty good in OC. Not sure what jobs are in OC that you can get making more than that. Maybe Anduril or Pimco or some type of smaller finance company.
Well he’d be “willing to be a PM at Pimco” as if that’s something remotely possible to pivot to directly.
You pretty hit the nail on the head here man. Very sobering advice, thank you.
Well said.
Nobody can tell you what you should do from here, but I will say one thing - it's crazy to me that someone in their early 30s "doesn't care about whether a job is mind numbingly boring or intellectually stimulating". That's the type of thing a fresh college grad says. By your age usually people figure out that money only goes so far and a career is a marathon, if you don't at least somewhat enjoy what you do you're going to be fucking miserable regardless of what you get paid at best, and at worst you'll underperform and see slowed progression in addition to being miserable.
My recommendation would be to figure out what actually makes you excited work-wise and look into options in related fields. You say you want to balance lifestyle and comp, historically the answer to that is "tech" although as others have pointed out that's changing (and the lifestyle aspect is very frequently overstated, I know plenty of tech guys working brutal hours). Frankly, you trade one off for the other in every job. Your goal should be to find a job in an area that interests you that pays enough to achieve your goals. If your goal is to get rich, well sorry brother but VERY few people have gotten rich with a balanced lifestyle.
True. Very helpful. I think I need to get my mind right…I’m in a relatively good position and I discount that.
And very few people get rich working for someone else. OP is making $400k in his early 30s and complaining as if that's a subpar outcome - there are exceptionally few people in any industry making that kind of money. Yes, there are a handful of mid 30's guys making mid seven figures at a hedge fund or PE shop or whatever, but all in all I think you have an amazingly entitled view of where the money comes from. There isn't a "path" to that kind of payday; you either start your own enterprise or you accept that effectively no one is going to pay you that kind of money to do the same job that tens of thousands of other people can do just as easily.
He could do Law. IDK why finance simps say Law is the code word for sui----. I enjoy valuations but not at all as much as exploring something in the papers about who did waht and how. DK, they said w'ed be fatter and better off in commercial real estate finance. Instead all I see are copers
What does that have to do with my reply at all? Lol... the big law work life balance is arguably worse than any other field. Not saying its not a good career or a perfect fit for some at all, but not really relevant to this discussion.
Although I would argue that at senior levels in a finance role where most of your job is negotiating the legal docs anyways, you get to focus on the actually interesting part of practicing law without worrying about the 100 pages of cookie cutter, check the box legalese that eats up a huge portion of the day to day of an actual lawyers career.
I did similarly. In my late 20s I left a REPE shop to go into China to help build a growth capital PE shop. I didn't like real estate. The idea of just buying office buildings and bidding on sites to build residential was so boring. Growth capital PE is a bit more interesting. But like you, I'm scratching my head trying to figure out what's next.
What did you like about growth capital? And you're bored of that now as well?
If you have a JD and are a master of the legal side of things in real estate, DM me. Always looking for lawyer folk to partner with: we may need each other it sounds like.
You're private so I can't PM you but can you PM me? I'd like to get coffee with you
Done, would be great
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