Is it possible to average $1M per year in a job in RE?
Title says it all. Just wondering if this is truly even feasible. Obviously, I don’t expect this to be easy. If it was, everyone would be making this much. For those who do not want to pursue entrepreneurship, is it possible to make this much money? Obviously C suite pulls this money in but excluding them, is it feasible for MD’s, etc? As you can tell, this post is somewhat me facing reality / coming to terms with the real world now that I’ve been in the industry for a couple years? I’m at a large national shop and it is very hard for me to tell how wealthy seniors are as the culture is rather humble (for lack of a better world). Never see any fancy whips in the office garage, no MD’s wearing fancy watches or clothes, etc.
This is a fun question... I mean obviously people are making $1 million plus in real estate. How many, at what rank, YOE, what firms, what markets etc. is probably the better question. Alas, I have not yet reached the milestone so can't say that much, but here is a framework a mentor of mine laid out for me when I was new-ish in the industry...
Senior people (this would generally mean MDs/EVPs for sure in buyside context) are usually paid according to the 1/3, 1/3, 1/3 model (need to be exact ratio, but you get the general idea)... meaning 1/3 Base Salary, 1/3 Cash Bonus (annual), 1/3 Long-Term Incentive Program (vesting over some number of years, this is includes carry/promote, deferred cash comp, company shares, etc.). At least from what he said, it's not uncommon for packages to be like $300k salary, up to $300k bonus, and $300k LTIP. That's close enough to $1M for purposes of discussion.
So, I think "many" (no clue what I really mean by that), are earning that much on paper at least (the real value and collection rate of LTIP can vary wildly), if there long-enough to see vesting/payout and things go well for firm/fund/deals then yeah.... averaging $1m per year for the MDs/EVPs and above is probably happening at many institutional buyside firms.
As to cars and watches or whatever, I mean what the MDs at your firm driving? I've seen these types with a lot of BMWs, Mercedes, and Teslas, and wearing Rolexes and the like (now the Apple Watch is cool enough, go figure). Is that "fancy" enough? (to be honesty, you can make wayyy less than $1m and have that stuff, not even be dumb purchases necessarily). The thing to consider in that 1/3, 1/3, 1/3 model is that really only 1/3 (base) is sorta "guaranteed". So, you can't really (or shouldn't I'd say) live like you make $1m, you really need to keep it down unless you just like risk and such. Go through a downturn (like we are probably doing now), and you will be more conservative for rest of career (I was new to biz before 08-GFC, I keep wayy more cash reserves as a result). Most people who make MD and such have been through such experiences (I mean probably all MDs today were around for at least 08-GFC if not the Dot Com bust/9-11 one, the real old people can talk about the 80s hits).
Stainless steel model in silver best watch ever
Bump
Yes - very possible. I have about 9 YOE and early 30’s. Cleared around $900k this year with 50% being salary / bonus and remaining 50% being promote. Expectations on next 5 years to be around $1M per year before additional upwards movement. Many ways to get there in the industry but I work for a REPE fund with rough $4B AUM and key is to get promote which takes time to pay out but once it does you get a nice payout every 3 years.
Which city are you in? Seems like really solid pay for early 30s. Does this also come with awful hours?
HCOL - West Coast market. 40-50 hours a week while checking emails outside of office with travel 2-4 times a month.
Did you start in acquisitions out of undergrad? Would love to hear more of how you made that success for yourself
4 years on the LP side focusing on multifamily value add / development before joining my current company
wow, that’s handsome pay!
Mind sharing a bit details on what you do exactly in CRE? Capital markets in debt or equity? Underwriting/originations (don’t think so giving your short hours), CRE structured product (CMBS/CRE CLO/SASB) structuring? Trading? Portfolio management? Asset management (don’t think so …. Your pay gotta be front office role)
Acquisitions covering a region
I was wrong lmao
Lol yeah you def are thinking of the wrong person. We are on funds 5-7 at my current company when I joined to now.
It is absolutely possible. I assume you mean for people who don't own a significant piece of equity, as in a founder or principal? It should be said right off the bat that the reason real estate "pays well" is because it is way easier to be entrepreneurial, and you can make many millions of dollars a year if you own even a small shop. To that extent, that's the equivalent of being the rainmaker at a bank or a PE shop.
That being said, senior level roles at funds will make a ton of money. Senior level roles at developers will make a lot of money... as @redever says above, a lot of this is discretionary comp, in the form of cash bonus or participation, but that's not different than people getting paid in any other industry. I'd argue it is extremely rare across the board to see guaranteed salaries above $1mm.
Also, and this will sound obnoxious but I think it's true, real estate as an industry (with some exceptions) has far less of a culture of trading on the appearance of success. I don't want my counterparties to know I can afford a Rolex or a Maserati or whatever. All that says is "this guy has a lot of fat in his budgets/deals, lets try and bid him up." I want to give the impression that I've given my best and final offer, that my construction budget can't handle another 5% increase, that I need that tax abatement or the deal doesn't pencil. If I roll into a meeting with the local zoning board and cry poverty and how my deal can't possibly work without an increase in FAR while I'm dripping in tens of thousands of dollars of clothes and watches, that doesn't really cohere, you know?
Where in other industries, the perception of success can be a precursor to actual success (or a driver of it, I suppose). If I'm running a hedge fund, of course I want to give the impression of outsize success, because everyone wants to back a winner. Or, in the real estate sense, if I'm a broker then of course I am going to relentlessly self-promote in every possible way, because my entire job requires very little that could ever differentiate me from the guy down the street, so the only actual thing I can hang my hat on is seeming more successful that my competition.
Yes. It is really that simple.
Yes. REPE? Plenty of people at well known shops are making that. I would expect MDs at shops 5-15 (excl. BX, Starwood, maybe a few others, where they can be making much, much more) to be making 1 - 2.5m cash per year, plus have carry per fund in the 5-40m range (5 for junior MD, 30-40m for group head / CIO)
5-40mm in carry for an AEW / Gaw / BGO / Bridge / Tishman (all of which are 5-15 on the PERE list) seems grossly exaggerated to me, esp considering that for the most part they raise ~$2B funds, not megafunds.
Fair, I think of those as asset managers rather than opportunistic real estate groups. So 5-15 was really based on some list in my head, but also probably not wrong. Idk, to name a few CIM, Ares, Angelo, Cerberus, KSL (?), Almanac, Oaktree. Whereas the firms where there might be even more are BX, Starwood, TPG, GLP, Bfield
Not at all uncommon for top investment sales and debt brokers/lenders to generate $2MM+ in gross commissions, which would likely net $1mm+ in take home pay after splits with the house.
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I would say no, but CMBS and Agency originators can hit over $1MM net.
I know half a dozen independent mortgage brokers that cleared 5-15 million last year.
I'm late 30s (15 YOE) and just hit the $1mm+ mark including carry. (base/bonus is ~650k).
This is the job I'm most likely going to retire in, but absolutely possible to make very good money in RE
Where did you start what what type of firm are you in? I’d love to hear about your success
how much of that $1mm+ is in cash vs deferred, can you give a rough %
650k cash / 550k carry (already in the money, just have to wait 3 years to vest).
Not common but absolutely possible. Have current and former colleagues at the $1mm+ mark in both REPE and brokerage. One of them drives a $100k+ car and wears a patek but the others are pretty low key and the only way they ever signal they're rich is by always picking up the bar/dinner tab when they go out with younger employees.
This is what I have seen in the industry. Yes, its very possible but you'll find it easier to make $1M+ in brokerage than REPE. I know more people in brokerage clearing a $1M+ compared to any other part of the industry. Its a bit more difficult on the acquisition side. Development side has potential if you especially hit a slam dunk. Keep in mind when I say the word "easier", I mean it in the relative sense. Its still very hard to make a $1M+ in anything, but the brokers I know clearing it are real hustlers.
As for what people wear and drive, RE is actually a very down to earth industry. I know a broker that cleared $3M+ in the SE last year and he a drives a F150. People in RE are not very flashy. In fact, people in RE would rather show off or flash their properties/developments than their cars. I think this is the case because RE is a bit more entrepreneurial than other industries and has attracted a generation that grew up middle class or poor. So for these people, they don't feel like flashing their wealth.
This just isn't accurate. Yes, there are brokers who make a ton of money... but comparing them to a mid-level executive at a development shop isn't apples to apples. The Doug Harmons of the world make bank... but he's at the top of his industry. The appropriate parallel is Jonathan Gray, not John Smith at the Hines DC office.
Yea Im not referring to Jon Gray. Also I never said people in REPE dont make millions, many do. Its just easier on the brokerage side because its transaction based purely. There are several brokers, whether in sales or leasing that clear a million in small markets. I know an industrial leasing broker in a small market (think Shreveport, Little Rock, Baton Rouge) that cleared a million+. But bear in mind this guy has no formal education, but mainly hustles. The comparison for someone like this would be someone based in a similar market doing REPE.
I don’t know what market you work in but the idea that most people in CRE grew up middle class to poor doesn’t compute to me. Most people in my cohort grew up very comfortably (imo) and came into the industry because they were guided by a family member. I’d say around 10% of my network tops didn’t either have a family connection directly or go to an elite private school in my city before entering the industry (therefore likely also having a built in network on entry).
Yea I dont think I meant "most". I just said its attracted middle class to poorer households as its not as education or pedigree intensive as IB or PE. You are also solely referring to CRE, I am referring to RE as a whole which includes those who buy investment homes(hence biggerpockets type crowd). CRE is no doubt harder to crack for those from a poorer background.
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Possible, yes.
Probable, no.
Equity tends to have more upside, but there are plenty of brokers making over a $1M and the top players in the country are making several million with some in NYC making 8 figures in a year, but each year is different and it depends on the deal. There is not a broker that will ever accumulate the wealth that Jon Gray has, but there are brokers like Bob Alexander, Mary-Anne Tighe, and Stephen Siegel who are most likely in the low 8-figures annually, but this is extremely rare.
In cash it’s tough. I work at a place that offers up stock compensation and a lot of the MDs have touched over a mil in good years when you account for deferred compensation
Yes, very possible in a transaction-based role (with the proper experience, knowledge, rolodex, etc. of course). I have some MD's who consistently bring home that much, or more, each year.
It's possible to have a big year and clear 1MM pretty easily
The median comp for an MD in acquisitions is 1.1M cash (see here for yourself) and carry should also mirror PE Partner level carry (at least 15M if AUM is 1B+, maybe a 20% discount if your target returns at lower)
Heads of Asset Management having 14 years of experience make a lot less than I thought
I started my own capital markets shop, clearing $1M isnt very diffucult when you own the bussiness. its somewhere between 3-6 transactions a year averaging $50 Million which is very do-able
I don't think people are talking about being an owner. Of course, the reason to be in real estate is because starting your own shop is orders of magnitude easier than in finance or whatever, but that is risk people don't want to take. Adding in the subtext to the question, it really was: "is it possible to make a guaranteed $1mm a year without taking any risk?"
LOL Investing is about taking calculated risks.
Guys - less pontificating, more real life data points pls.
Head MD cleared $700K upon the recap of my old firm's $350M Value-Add fund. Fund size has doubled since, so I'm sure he's clearing $1M now.
What were the fees on that fund? Math seems a bit wonky here since it sounds like you roughly 2.5x'd.
I am going to SUPER napkin math this, but ~350M and ~30% IRR (what you stated) for ~5 years should have kicked out something well north of 100M in promote/carry over 5 years, right? Maybe I am way off here, but not sure how the most anyone got out of that was only 700k. Even 100bps should have been over a mil.
Please someone correct me if I am off here, but not sure how the math works out on this given the returns stated above.
The math doesn't work out if you're assuming they get 250 bps of carry, so he obviously didn't get 250 bps of carry. Idk how his portion of promote was allocated but I do know for a fact it was just $700K and some change.
I think they kinda just saw promote as general business income and paid bonuses according to what they thought was fair.
Fuck carried interest
can you provide an age range for the Head MD who only got 700k
[Swag King]
Real data point from my shop:
Multi-phase development that sold all at once this past year: >100M in total promote paid to the firm (plus whatever the GP profit was). After overhead, profit sharing, cost of capital charges, etc, the two MD's that sourced that deal both grossed something like 30M (I don't have the exact figure but I can back into it with 90% confidence since I know the splits, and do know it was "multiple 8-figures"). Roughly a 5 year timeline on that I think from pursuit to sale
Obviously we don't do many deals like that, but we do a ton in the ~10-20m profit range per year, and usually that means 1-2 of the senior guys are taking home a few million once everything is split out. One MD in his early 40s has told me that in good years he clears 8-figures (and had done so in a recent year), but my read is that typically the average year for our senior guys (Principal / MD / SMD) is in the low to mid 7-figures
Unreal haha
That's definitely going to be my MD in a few years, we have a couple of very large developments under construction/permitting that are projected for high 8 figure promotes. He runs the office (regional branch of national firm), so I imagine he get's pretty favorable economics.
Can we DM
Average is the operative word here. I do not know of any jobs or any people in the real estate world (not including brokers) that clear 1m a year unless:
They are running the deal process from start to finish with an understanding such that they could be doing it themselves and making at least 5x the money
or
Their dad owns the company
The crux of it is, 1m is a lot of money and owners are not handing that out to just anyone. One disclaimer is that I never spent any time in a big REIT or Blackstone type company, and am entirely unaware of the economics and frankly what a lot of those people do on a day to day basis. My experience is at a small family office (800m assets) and the like along with knowing a few large PE principals.
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