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Paid less? Depends on the level you're at. At analyst level you're probably seeing higher pay at HF or PE than RE, but at VP and higher its about the same. It also depends on what shop you're at since BX/Starwood/Brookfield pay about the same, but slightly less than the PE counter parts.
Less attractive? Depends on what you like to do. If you like investing in crypto then obviously you are not going to like real assets. If you don't have the patience to sit on an asset for a long time and need instant gratification like public equity trading, then RE isn't going to be for you. Some people (most on this forum) like the fact that there is a tangible asset to cash flow. Personally I think an apartment complex with luxury amenities and modern units in a great location is a very attractive asset compared to a MM manufacturer that PE might invest in.
Bruh I love real estate just as much as I love crypto. Barbell approach and all that
preach brother
On average, yes. Hours in my opinion are generally better (and where they're not the pay gets closer to traditional PE). Most people in real estate don't go into it to work for someone else though, the dream is buying your own buildings.
Thank you
Compared to what? Better paid than flipping burgers at McDonalds, I'd guess.
At senior levels, cash comp will be lower in real estate than in IB or whatever, because real estate's incentive system isn't designed to milk clients dry the way Wall Street's is. However, you have more opportunity for ownership in deals, which while risky can end up paying more than most equivalent roles in finance.
When compared to Tech, IB, General PE, and Consulting at the more junior levels, RE will generally pay less unless you wind up with Blackstone, Starwood, etc. Those seats are not going to your average junior though and the hours look more like the better-paying industries.
I love the industry and daily job, but it definitely slowly reacts to any paradigm shifts (salary bumps, etc).
Overall, once you get more senior, the base will top out and the big pay jumps will be in the form of equity payouts.
At junior levels, definitely. Associates at top shops in PE will clear 300-350k while associates at top shops in REPE will clear 200-250.
Ok this is true to an extent, but these positions are not common and are super competitive. Theres not a lot of openings for a REPE associate making $250K+, but there is plenty of positions for IB and PE associates.
What? There are extremely few IB and PE positions and a LOT of competition for them. That’s why they pay so much…
I’m going to disagree with the general sentiment here.
It’s not an apples to apples comparison. I would say consulting doesn’t come close to RE comp unless you’re only counting MBB. If you’re going to look at the very best consulting firms, you have to compare them to the very best RE firms (the megafunds like BX, KKR, Apollo) and MBB comp gets blown out of the water by them.
Similarly, you can’t compare Evercore IB comp in a good year to comp at a smaller sub-$5B AUM shop. You really think HSBC IB pays more than Square Mile? You think BMO IB pays more than Walton Street? You think Piper Sandler IB pays more than Westbrook? The list goes on forever. Hop over to the IB forum, pay was embarrassing this year even at BBs and top MMs.
first person ever that's called apollo among "the very best RE firms" :) (unless you're talking about RE debt)
but the general sentiment is correct
the first person ever to call apollo among "the very best RE firms" :) (unless you're talking about debt)
but agree with the overall sentiment +1
Someone always post this topic once a month now.
I've been in the industry for 12+ years now, so here is my advice and take. Yes, traditionally RE is much less paid than IB and PE. The same people who graduated with me from college at the same time are making more for their salary than I am, assuming they stuck it out in their field.
The difference between RE and IB/PE is that I love RE. Its as simple as that. In the last few months, I have traveled the country, touring deals, talking to brokers, being on construction sites, all of which I truly enjoy. Not to mention it gives me plenty of time to spend with my wife and kids. If you're only looking for money, then go to IB/PE. You can make money in RE, but not if you're working for someone. Whereas in IB/PE you can still make good money just working for a major firm/bank. RE is more fun if you think your entrepreneurial and willing to get your hands dirty. The real money in RE is starting your own firm, whether that's brokerage, leasing, acquisition, development, etc. This cannot be done by everyone as it involves making connections and taking risks. I can certainly understand the IB/PE route people take because its risk-free and you get paid well.
In short, do RE if you enjoy it, but dont expect to make IB/PE pay working for someone.
I think it is important to build on this thought. Yeah, you're always going to be paid less than your equivalent peers on Wall Street. But real estate offers an entrepreneurial route for many, many more people than you'll find in IB/PE/HF. It is much much easier to go out on your own, or to get significant carry, than it is in those finance oriented jobs. And that's when you'll see the script flip a bit, in that you can start to way out-earn your peers in finance who end up spending their career as an MD in some bulge bracket bank, pulling down several hundred thousand to a couple million a year. Running a small, lean real estate development company has the potential to pay you far more than that, and often does.
So yes, you'll almost always be paid more on Wall Street, but you may not actually earn more in the middle and later stages of your career. However, this site is enormously tilted to people in their early to mid twenties, and for that demographic banking or finance will blow real estate out of the water in terms of comp. I just happen to think that's an exceptionally short term view (though and understandable one) and when it comes to earning potential, it makes sense to think about where you want to be at 35 or 45, not 25.
+1 to this. Great take.
Know some family-owned small RE development shops and some of these guys are printing cash while retaining full equity by passing the business down to the next generation.
Majority of the wealthy people I know (family net in the $5-10M range) made most of their fortune via RE development / acquisitions. Know some families worth beyond that range and they don't do real estate exclusively but do invest in it.
Probably a really silly question but when you are talking Real estate, can you elaborate? You seem to be referring to RE PE but what about like industrial brokerage at say a JLL or something? Again, I am really unfamiliar with the industry but would assume a brokerage role like that is not in same league as RE PE?
RE has low stress jobs paying $250k+ where you legit work 40 hours a week and aren’t surrounded by assholes. IB/PE/HF don’t.
Really? Where? What jobs??
Pension funds, life cos, bank lenders and family offices. Stick around at a pension or lifeco for more than a decade and you’ll be making $200-$500k and working 40-50 hour weeks.
Honestly a big reason I was drawn to RE over other jobs on this forum is although the pay is lower it’s still higher than like 90% of all jobs and the hours are great. When I was “grinding” as an analyst I was still averaging only like 50-55 hours/week and lately I rarely work more than 40.
The median associate makes way less than the median lev finance associate. And likely works more hours.
Banks pay decent especially for the hours, there are so many small re companies that pay shit.
And big ones that pay shit too.
What about brokerage at a top firm? Say mid level like associate/AVP. Base + % of commission?
Why don't you ask Jon Gray if the RE group is so much less prestigious at BX vs the corporate PE group?
RE has a whole spectrum of different investment styles and while at one extreme REIT acquisitions may be like a passive equity shop like Fidelity/ Blackrock, at the other extreme your REPE teams are building platforms that roll-up assets with a corporate company above it.
You also have pod shops trading REIT equity/ debt, hedge funds and credit funds doing direct lending/ private loans, and special situations teams that trade distressed loans/ assets
Don't pick an asset class because of compensation. Pick something you have a genuine passion for, where the "work" doesn't quite feel like work.
Yes, REPE pays a lot less than PE/HF etc but none of that matters if you quit the other two after a year because you hate the work
ok but like what about someone considering vc vs pe? Interested in VC a lot more, but the pay seems to really suck
If you buy real estate as an operator and have equity, real estate is the easiest way to become wealthy.
Better than any W2 or banking gig.
I like RE versus other industries because it’s better geared towards entrepreneurship.
I am drawn to multi-family, as I grew up in an apartment. Got interested in the finance side when I managed the property for 6 years and learned how r things operate.
Long time acquaintance of mine just mentioned that he has about 50 commercial units already (portfolio’s worth), runs a small restaurant and has a few apartments he built (fully rented out). He’s late 50s. He’s a former stockbroker from back when, studied finance. Came back to California with nothing in his pockets and worked minimal wage jobs until he was able to purchase his first asset. Everything else took off.
The other friend is a commercial owner who is in the process of doing a development. He explained the whole process to me, timeline included, and what’s being expected revenue wise. Again, worked regular jobs until he purchased his first asset then it took off from there.
I’m actually looking at my first asset purchase shortly too. It’s quite exciting.
Sure, in IB it’s glamorized on the site, but the odds of going out on your own is just too much risk for them. Here, in RE, it’s pretty much open season.
Do the math. You have a two private credit funds, both are a billion dollars, both hit 15% gross IRRs, both have the same waterfall structures. One is invested in real estate debt and one is invested in corporate debt. Which one makes more money?
Top performers make a lot of money in real estate relative to hours worked. You just have to be willing to take personal risks (work on commission, or under long term carry packages, invest your own money into deals, buy your own deals with personal recourse).
If you're a desk jockey who just punches the clock and doesn't actively partake in the risks of the business, you're not going to ever make big money. That said, plenty of people make a good living with great work life balance punching the clock - it all comes down to personal priorities.
Less paid compared to what?
are you a bot?
ChatGPT with the all-time slam dunk answer on real estate
Analyst pay? Yes
Partner pay? Yes/depends
Overall? No, RE almost always wins.
How does this work? Well it has to do with how the heiracy triangle works in RE. I have written about this as well as a few others on this site as well. But basically if you take IB/PE/HF and RE as an apples to apples comparison at various title levels the IB/PE/HF side will almost always make more, however the ability to scale up and achieve those income levels becomes increasingly difficult when compared to RE. For example if you have 100 IB analysts maybe 5 - 10 will make to MD, if you have 100 PE/HF analysts maybe 10 - 15 of them will make it to partner level positions. If you have 100 RE analysts it is likely that 75%+ of them will make it to partner level positions or start their own firm/fund. It has to do with the ability to raise capital in the RE space is exponentially easier due to fact that it is more simple business model to understand for investors, leverage can be significantly higher with lower risk compared to other areas, and the absolutely massive market that is highly fractured creates opportunity for more money making opportunities than in the equities or other markets.
fantastic answer
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