I’ve decided to leave real estate
After only beginning my career 6-8months ago, I’ve decided that real estate is not the industry for me. I’ve listed a few reasons below:
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Cyclical business. I feel like taking big blows every 15 years can have a significant impact on career trajectory and would prefer an industry that isn’t that susceptible to economic factors.
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Money. There’s plenty of people making a lot of money in real estate but that discussion is clearly about receiving carry or starting your own shop. Seems like a thinner path toward wealth than other industries offer. Also would prefer to feel cash flow rich than taking big chunks every fund cycle that I’d prob just save or invest again.
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Work life balance. At the middle market fund level it doesn’t seem like work hours get cut drastically and when they do it’s for a substantial amount less than you could be making in corporate private equity for non investment roles.
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Startup potential. I’ve only seen people leave cre to start a fund. If I had a passion for another business it seems like my relationships and network wouldn’t help me to anything but real estate.
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Current burnout. I’m probably also feeling a huge bias right now because I work more than almost people I know for about 1/4 their pay. They also have other options to strike it big in the same way I’d receive carry at some point. Just in motivating to see.
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Real estate is fun but simple. I like real estate, but private equity always seemed more interesting because the vehicle is more complex and there’s more levers to pull to build value. So you could say a change in interests as well.
Only writing this if anyone has similar thought. I’d love to hear comments that may put me at ease or other comments from people who feel the same.
Thanks.
Wise move, but what industry are you moving to?
I’m still thinking this through. However I was shooting for a fundraising role at a more traditional GP private equity firm. I’m not super interested in doing more technical excel work, however I do like the story of how funds works and high level investment strategies. This partnered with the social/sales aspect of fundraising is why I’m thinking of making the move. Comp is a 20-30% discount to the deal teams at most MM PE shops but wlb is more like 8-5:30
You think that a PE gig isn't pretty much exactly the same as what you just listed out?
Lol what makes you think that traditional PE is any different with regards to literally all of the reasons you listed for leaving RE with the exception of #6 (and it really isn't THAT much more complex anyways).
Sounds like you got it all figured out. Good luck.
I’m on the verge of leaving as well. Money is not as good I thought it would be. Very high barriers to entry in terms of starting your own business (capital and relationships). Industry is rather efficient as well. Most of the rich people I know (not talking about billionaires, more so talking about people who earn 5-10 million a year) got into real estate after they made their wealth in an alternate business. The market is more efficient than people like to believe. I really like the finance side of RE, but don’t see how this will make me rich. I guess I was fool for thinking people got truly rich through real estate. Some have, yes. But for most wealthy people, they park their money in the asset after they’ve built wealth elsewhere.
Other downside I would mention is this: I’ve seen people who were quite senior at the verge of making it as an executive and this slowdown has completely uprooted their careers. These people have been laid off, carry may not materialize, have been moved from acq to asset management, etc. All the risk for seemingly little reward in comparison to other routes friends have chosen out of college.
I feel this as well. I think the only ppl making “good money” early in their careers in RE are brokers who landed on a good team at a MM shop. 1st-4th yr Analysts/Associates at big shops typically are paid 45k-120k and IB guys are making 150k+ year one. Wonder why this is or if anyone has any better idea to get higher pay starting in RE?
If you are on a high performing team in a bigger market you can easily clear $100k as a first year analyst and $175-200k at associate level. In smaller markets yes this comp range is accurate.
I think you’re fooling yourself to think you’ll find something with less cyclicality. Whether you’re working for a corporate in the car industry, consulting, oil and gas, minerals, insurance, etc. They all have a cyclical nature. People do poorly when the economy is down. You could have $15M of options working at a Life Company in the corporate department but the stock market tanks and there go the value of the options. A widget is a widget. The goal should be make sure you like the widget.
I agree you should like the widget. I think that’s a good saying. I just haven’t seen an entire industry get hit and be in pain for the length of periods real estate does. I haven’t lived through 3 cycles, but there’s plenty of high cash roles in the world that don’t risk being fired, giving up years of carry, or hold you back from promotions like real estate (to the same degree). I don’t think you’re wrong, I just know it’s something to think about
Corporate PE has its own headwinds as well. In addition to cyclicality (look up historical fundraising numbers on PitchBook, PE got hit pretty hard during the rate hike slowdown as well), they also have tremendous competition from public markets managers with lower fees or better alpha (see: Asness et al).
In the long term they have even less moat than direct RE. I think if you have it in you to make it to the top of RE investing (HF/MF/your own shop) then the difficulty/reward tradeoff is probably worth it. Just my two cents.
6-8 months is nothing. If that’s the timeframe you’re giving yourself to decide whether a career path is a “go or no-go”, then you’re selling yourself way short.
right, stay 30 years so then you can take a more informed decision
I forgot there’s nothing between 8 months and 30 years.
I say good move. I had the same conundrum when I was younger and listened to everyone telling me to stick it out until it was too difficult to move careers. I'm still fine with my career in CRE, but I think about how I regret not going to another field nearly every day. My peers are making so much more money than me in other fields even though most in CRE would envy the position I have.
What industries are your friends in?
Tech (both business roles as well as sales), traditional PE, AM, banking, crypto, etc.
I am in the opposite bucket. I am graduating this year and have two options between a rotational RE at a huge firm or a generalist PE at a smaller firm. I am having a really hard time deciding whether to stick with the RE or take my chances and get that general experience at a smaller PE shop. Can I reach out?
Good for you, but most of this reeks of someone who has no idea of how the world works. I won't bother to address the very naive points, because you've made a decision that works for you and that's great, but I will say that you have no idea how real estate works as an industry after 8 months, let alone any other industry. And every point you raise is applicable to every other industry you might enter. Want to be in finance? Great! But it's hard to enter and has its own downsides, and just go ask a Citi banker how much job security you've got when they decide to cut an entire department. Want to be in private equity? Great! Even harder to enter and there is no guarantee of deal flow either.
Real estate isn't for everyone, and if that's your truth then more power to you, but you don't have enough experience or knowledge to make the decision with any level of certainty. If you hate what you're doing, don't do it anymore, but it is hard to imagine anyone with less credibility to make the arguments you're making than someone who has only been working for 8 months, which also happen to be the worst 8 months the industry has seen in a decade and a half.
Don’t disagree with anything you said. My opinion isn’t really based off my experience. Although my experience has been harsh because jumping onto the ship while it’s sinking. I’ve just seen the senior people and their lifestyles. My company and all our clients. I’ve just seen higher comp for the lifestyle. That wouldn’t matter if it was a pure passion or mine but I wouldn’t believe anyone who said they had a passion for something before doing it. I did it and it’s clear it’s not enough to keep me motivated in years where 10 years could be wiped off my career. To each their own though. I imagine a lot of people are questioning things in this time lol
But you just said you jumped a sinking ship and then have seen a higher comp for the lifestyle - you would see better if you didn't join a sinking ship. Also yes, there will always be better - e.g. young and respected HF PM managing a book can pull in 10m+
agree with ozy on this. the only truth to your post OP is that its a fairly simple industry and not as nuanced and complex as PE....but who cares. money is made in simplicity. less is more
Unless you are deadset on RE, then I would advise not waiting it out until the next cycle. The industry is going through a substantial downsize in terms of headcount. The more quickly that people find that RE is not for them and they want to do other things, the better for themselves and the industry.
Well why did you join real estate? If you didn’t know it always blows up, are you stupid??? Look at every recession… I do not believe your post puts you in positive light from both a knowledge standpoint as well as a business standpoint.
Aside from that, what will you end up doing?
I wish you the best but you sound immature and stupid. Money will not knock on your door in any industry…
You don’t need to jump 10 steps ahead in your assumptions of the post. Living in a variable position in a down cycle gives a different perspective on how you’d like to design your life - much of which is hard to see before getting in. Also comp in general is lower. Real Estate seems to have greater resistance into those higher income brackets. I like real estate but realized I don’t like it ENOUGH - after starting - for the knock I’ll take in comp. I was chose to pursue real estate because I misunderstood where my current comp would be. I wouldn’t have done the same.
And I’d note of my 15 friends I graduated with that went into RE, 10-12 of us also misunderstood what comp / trajectory would be.
Not sure what the preferred industry is these days. All my friends in big tech (google, facebook, etc.) hate it and say the good days are in the past and finance peaked before tech became hot. Comp and work life balance can’t be beat in real estate. If you’re not happy with you comp, I hate to break it to you but you’re just being outperformed by others. If it’s happening in CRE, it will certainly happen in traditional PE and you’ll be working 120 hour weeks.
Real estate isn’t for everyone and it can get dull but so will PE if you specialize in one industry. And, everyone correct that cyclically in CRE is the same as every industry specific role outside of medical and government. Some downturns impact CRE more and others CRE is the resilient industry.
I think at the senior levels ability to dictate your comp progression is highly up to your abilities. But at the analyst - associate or director level it seems like any other industry with fewer spots and lower comp. Im on a top team and don’t make a lot for how much I work. I’m not at a regional developer like half of the people on wso
Merry Christmas. We are in interesting times.
I’ve been saying, view your real estate experience as a skillset, not necessarily a career.
Niches lead to riches. In your career, you might get into 2-3 niches - ride the wave of each (early to later innings) and then move on.
Become a niche finder, cultivator, and scaler. That’s the framework you need to build. Helps to make some money and relationships in the first niche, to give you flexibility.
In real estate, you learn great skills for this. As an observer of a diversity of sectors (ie multifamily, office, retail, mobile homes, etc), geographies, and seeing how capital behaves, and pays up for, you have a great lens. Transform your mindset into an investor in asset intensity - not necessarily real estate / sticks and bricks.
One of my best lessons learned for real estate in my Berkeley Haas MBA, was not in a real estate class, but in a Pricing Class. “The consumer likes to compare and is good at comparing commodities, but when you layer on services, then it becomes harder for them to price.”
Think about that for yourself what I’m getting at.
You are not wrong for saying the four food groups of CRE are in the dumps, or AM, Acq, brokerage, capital markets is uninspiring, unimaginative and like a leaf on a choppy sea. I left, but I’m valuable because I had that experience. Great brands on the resume help.
I’ve been unemployed longer than 6 months three times in my 20 year career. Thanks to downturns; hitting the corporate ceiling; and exiting companies. Each time you learn that companies, coworkers, business partners care about themselves more than anything. You learn how to survive. You learn what is the right timing and mental fortitude. Hardship will find you anywhere. Either in CRE or something else. How do you adapt?
That is life.
We are in the turning of a 24 year market cycle. Rents and values have risen that have squeezed out all the levers for growth, besides inflation that then makes the rents and values in line. We are seeing income growth at the lower wage levels, but the white collar recession is going to hurt high end CRE. I developed in Silicon Valley, I know. All the little tricks like lowering cost of capital, shrinking SF of units, Type III or wrap construction efficiencies, seem to have been tried. So what’s next? I don’t know, but pencils down is more likely for awhile and a contraction in the CRE industry.
Easier for me to say this advice as a mid-career person, because I remember the analyst grind, the boom, the bust, boom, and bust again.
I have two little kids. I’m worried about what they are going to do for an entry level career. You young professionals just starting out still has some vestiges of the old way (yes, I see AI changing things a lot). Right, I’m an old millennial, child of the 1980’s, I witnessed a world in transition. You are witnessing this latest transition but there still are seats on the old world bus currently. Learn, and find niches. Not necessarily chase niches (think future forward), find niches that are authentic to you, that interest you personally.
I said learn first. Because CRE is a great field to learn in. Each one of those buildings is a start up - an asset intensive start up. Think like that.
In summary, I say leave, but then stay. If that’s all confusing, I’m sorry, but change your mindset. Be authentic. I’m confused where we all are headed, but I just do what’s authentic to me. Think like that for yourself. Maybe you pick the right thing at the right time. New people get wealthy everyday. An industry is an industry because there is money to be made. Just do what’s best for you. And learn. If you run away from risk / hardship, your career might not be too interesting.
It’s incredible how much you can learn just reading the red line comments of legal documents. If anything, spend a couple years getting that exposure.
You want to buy and sell companies, learn legal structuring, legal agreements, enforcement via litigation. You’re afraid of AI taking your excel job, learn how the game is played, learn judgement, learn to be a nice person with a mean streak if someone messes with you.
If you understand what makes a good deal to you in that list above. If you understand how to accept shitty terms or prices but see how that affects risk and return, over time, and with market knowledge and instinct can make a future forward deal that turns out the way you envisioned it, then you can leave real estate - and go to your next niche. Because this skillset is highly transferable. The patterns are similar.
Thats what I would tell my kid if they were grown up.
What's a real world example of being mean if you have to? I've always wondered how to deal with a very political culture, obviously be nice as a junior but what if you don't have a VP+ that's on your side and willing to help you if another VP+ is being unfair? Realistically no one is going to HR.
Amazing advice, this should be pinned.
In life you have to learn how to adapt. Nothing is guaranteed including a long tenured job. If you get laid off, you either keep your head up and adapt and flourish, or flounder to the bottom.
This is excellent advice. I feel like everyone coming into finance/CRE nowadays wants optionality for the longest periods of time and they never actually build a career and specialize in something
It’s hard to specialize when you’re young given that you’re 1) knowledge base is relatively shallow, 2) you aren’t yet perceived as an “acquisitions” or “debt” or “development” guy thereby giving you more optionally than seniors, 3) the world around us is changing so rapidly. There are some shops that already outsource many of their functions. Once eventually adopted, Incorporation of AI will wreck havoc on many junior roles. You don’t get paid for specializing when you’re young so why would you. To come in to an acquisitions job at 22 and say I’m going to do this for the rest of my life is ignorant to say the least. It means you are ignoring other opps that come along as you learn and are exposed to more. I have had friends who were in RE for 3-4 years and pivoted to diff industries when presented the chance. It has worked out well for them.
I'm in a similar situation to you. I like the CRE industry generally, but there are (or seem to be) industries out there that fulfill our wants/needs a little better overall. Cash flow rich, more challenging and therefore more interesting work, less correlated to/dictated by economic cyclicality, more versatility of skillset, better comp:WLB ratio, etc. etc. The obvious one is corporate/traditional PE.
I'm curious to know a bit more about your situation. Feel free to PM me if you'd prefer.
Without outing yourself, what is your current comp, working hours, and role/career trajectory? What size firm? YOE?
What is your next move out of CRE? How would you go about breaking into a new industry, particularly one as insulated as trad PE? Any chance you'll stay in CRE? If not, what is your most realistic landing spot? What's your dream landing spot?
It sounds like you've dismissed the idea of opening your own shop. Why is that? You mentioned you enjoyed capital raising - that would lend itself to being an investment manager for people, even if it's just one-off syndications. Have you considered this carefully and just decided against it?
What got you interested in real estate in the first place, enough to get you to apply and stick it out for several months? Was it a compromise or did you actually see value in a RE career for yourself?
Sorry to bombard you with questions but I think we share a similar and rather conflicted attitude towards CRE, so I'm naturally interested in getting some persoective to help clear things up for myself. Happy to share my own answers to these questions. Again, feel free to DM ir reply here.
There’s more than one way to skin a cat. If you’re looking at your current career and thinking “what’s the use” then that level of demotivation is going to ensure you don’t get far. Hit the road and find something you’re more interested in right away.
I’m a lurker on WSO (currently a PM in tech) I have been fortunate enough to keep my job but have people from my company and alumni network more qualified than me that got axed and have been trying to land a job for over 6+ months now. Every industry has a cycle and to think that any single one is immune to macro factors is naive
I think if your goal is to make money AND you especially don’t come from money, there’s better ways to do it than real estate. If that’s your situation and goals, I’d agree that leaving the industry sooner, rather than later is wise.
What industries are you thinking?
This is a big reason why I left (3 months at top brokerage and 7 months at a large AM firm with $50bn AUM in CRE assets).
In Europe, the pay outside of outliers at JLL/CBRE and your KKR/BX teams was atrociously bad for the hours you put in. Plus, if you don't make it to BX/KKR at the start, very little to zero chance you will be there in the future.
Also noticed a lot of people came from a family with CRE history and this helped a lot when they launched funds or wanted to source deals early in career (for early promo).
Felt there was no way I could realistically compete. Everyone gives the same advice of not needing a network to succeed but it matters a lot in CRE, which is already an opaque industry (vs an asset like Equities or Bonds).
A good example is Ryan Serhant - like yes, I do know he works hard but I doubt he would in the same position if he was from a lower-income background.
Love RE, hate the pay.
Hey! Could I pm you? Similarly, I started my career two years ago and am considering leaving CRE. I even went so far as to moving from CRE at a BB to LMM REPE. For me, real estate as a business model does not evolve and I don't feel intellectually stimulated. Starting to notice that salary increase is below market as well (esp. if you're not one to go on and start your own shop). Would love to discuss more..
First off I love these posts as it means the bottom of the cycle is coming. When people start quitting our industry that is a great thing.
Because people begin thinking "Real Estate is Bad"
So thank you for posting and quitting. We need more people like you to do so. We need more people to be saying "Real Estate is Bad" and then we can get to the bottom of the cycle and everyone can start making money again.
My true advice to you is if you quit Real Estate after 8 months you never had what it took to last to begin with.
Its fine, this is not a business for the faint of heart. This is a very difficult business meant for people who know how to succeed in the face of great adversity.
Curious, how many YOE do you have and how much do you make ?
I view Real Estate more from cycles and this is my 2.5 cycle. Early 2000 tech bubble was not a bad real estate cycle unless you were in the Bay Area or in Office properties so I consider getting through a half cycle. So over 20 years
I have done very well financially in this business. Well past any financial goals or dreams I had.
When you play this game right....to me its pretty hard to beat the rewards you can earn.
Haha this can be said for literally anything from running a fash-food chain to academia.
I can see why you are butt-hurt about this but no need to act all high & mighty.
A decent amount of people on WSO would not be able to survive doing manual labor or construction work. That does not mean it's good or bad, it's just not for everyone as people have different priorities and backgrounds.
Not at all
Take the Fast Food business...you never see Hamburger sales go down 75% in one year. But look at Transaction volume in real estate in 2023 compared to 2021...Its a highly cyclical business so its very different then most. The swings are that intense and its truly never that stable.
Which is the beauty of it as think about how hard it would be to build a company to compete with say McDonalds.
I actually love people quitting the business. I am not upset at all. Its what we need. We need people to get super negative on Real Estate at all levels....that's when the real money is made and a cycle bottoms out.
Just waiting for the "Real Estate is Dead" article as that's when you hit the Buy button
Question: What industry isn't subject to the downturns referenced in #1?
I know many people in Tech who are hurting just as badly as RE folks.
Also, would this not be the best time to get into RE if you can scrap your way into a good role?
Agree 100% - and I work in REPE tooe.
Real Estate is so far apart from any other form of PE, and I absolutely hate when my colleagues say "ah but it's simple". I guess to each their own but "simple" can not get me out of bed for 20 years.
It's also the least impactful of all asset classes in PE imo, and so much time (across the industry) is spent on small deals, minute details of business plans, dealing with all sorts of middlemen etc. It's all just so... insignificant.
Real estate is just as complex as traditional PE. I had this out with some PE guys on here years ago, and not one of them could explain why their job was more complex than mine except to insist it was.
Next time your colleagues tell you RE is simple, ask them why. My guess is they'll never have a coherent reason
Tell me why
The difference is not as easily explained as simple vs complex (coming from a PE guy who has got some experience in real estate). They're very different asset classes, and real estate is complex, but but the assets are very similar. For example, there's not much difference between underwriting two different office buildings, whereas if you're a healthcare specialist in PE there's a broad universe of different types of healthcare businesses.
So for those entering the industry, the real question you need to ask yourself is whether you want to master a certain type of asset, or whether you value variety in your work.
I think a lot of people here have missed the point. A lot of other industries are also as cyclical, but when times are normal/good, they are raking in way more money. To make comparable comp in REPE as those in IB/traditional PE over 10 - 20 years, you pretty much have to take the risk of opening your own shop (which is much more risk that just a typical investment cycle).
Sorry you are missing the point
You do not get into Real Estate due to the Comp packages
No one who is successful in Real Estate cares about their comp package.
Your post sounds like lemming talk which is fine. But Real Estate is not for lemmings. The people like myself who are successful in this business are not lemmings. We don’t care about comp packages. Never have and never will. We care about creating Real Wealth. And you can create Real Wealth in real estate. Now it’s not easy or for the faint of heart but it’s available. It’s take being willing to go against the grain and take risks. Not doing what everyone else is doing.
If you care about comp packages real estate is definitely not the industry for you.
Creating real wealth in which ways? What about the comp package on the way up?
Well that is sort of the point. That the comp packages in RE don't compare to other industries, and that you have to take the risk of going out and doing your own deals to compete on the comp. Most people don't want to do that and are misguided about what their comp packages will look like in RE and end up regretting it like OP. That's really exactly the point to make here is there are a lot of younger people getting into RE thinking their comp packages are going to compete only to find that they need to do their own deals / go out on their own and regretting their decision because they don't have the desire to do such a thing.
Total speculation from my part but I'd bet $10,000, 5 to 1 odds that you're clinging onto this point and are making up other unimportant points to reason yourself into it:
"Current burnout. I’m probably also feeling a huge bias right now because I work more than almost people I know for about 1/4 their pay."
I'm assuming you're fresh out of college and are eating shit in the workplace. Never is the first role out of school gonna be the best thing in the world.
After two years in CMBS originations, think I am going to try to switch to investment banking. Just opens up more doors and gives you a much more technical experience. Can still go into REPE but totally agree that much less levers you could pull in RE to create value versus in companies. Would preferably want to be at a place like KSL where they invest in hospitality and leisure companies but also luxury hotel assets which would be awesome.
Looking at your post and comments I feel for you. Everyones coming down on and saying you're not built for it and they have their points. You also have some valid reason. As someone that navigated layoffs, burnouts, and bad management the only reason to stay in real estate is to go out on your own. For those of us that are built to go out on our own, please make the experience for next generation as good as possible. Just because we've dealt with $hit doesn't mean we need to continue the cycle. Yes we're at the end of cycle but this is the type of post that deters talent from pursuing CRE, which mean you've reached level where you don't want to do all the tedious work you should be doing in early in your career, but it will still be on you. Sure 8 months isn't long enough to understand but if the experience has been that bad F&*k what people say. Use your gut, but be prepared for an uphill battle to transition. Whether you stay in CRE or not, it's going to be an uphill battle. That's my two cents.
“private equity always seemed more interesting because the vehicle is more complex” Lol. You are going to be sorely disappointed. If you want complexity because your intellect is wasted on real estate, finance was not the industry to join.
Lol it's amazing how sad but true this statement is. We sometimes forget that we made a choice not to be that starving genius.
The one thing I’ve found weird about real estate is how all these Hardos who work for someone are so anti young guys making more saying “are you taking risk, are you signing guarantees, etc” . Well, no, but neither are many juniors in other aspects of finance and they are better compensated. As long as there’s these douchebag seniors and mid level hardos, expect young guys to work more or the same and earn less than our counterparts in other finance verticals. Just because they suffered, they want everyone else to suffer. Good luck to you sir. Keep awaiting that promote check. Hope that carry doesn’t materialize for shit.
But MDs/Partners in banking aren't taking the same risk. The only thing they are risking is their time.
Finance folks don't want to hear that. The dirty secret of Wall Street is that it's the most risk-averse place in the entire American economic landscape, even though the people who work there pretend as though they're maverick risk takers in order to justify their unbelievably outsized paychecks.
Fair enough @OP. If CRE is not your cup of tea, better leave and find a career that better serves your needs. However, what several people here have alluded to but not outright mentioned is the fact that CRE has been acutely affected by the run-up in rates and has not seen the same level of recovery at this point.
To contextualize, the S&P500 peaked at the end of 2021 at around a level of 4,750. At the end of 2022, the index was around 3,850 (down almost 20%) and at the end of 2023, the index ended around the same place it was in 2021. CRE values have not rebounded in the same way that the overall market has recovered (cap rates are still about 1% wide of where they were in 2019 and wider than they were in 2021). I ran some numbers with data taken from the S&P website and compared S&P 500 (TR) to DJ US RE Total Return Index to help visualize (there are some data discrepancies given dates and formulations) and the data shows that the S&P500 was down 18% in 2022 vs 2021 and was up 3% in 2023 vs 2021. The DJ US RE Total Return Index showed a 25% decrease in 2022 vs 2021 and a 16% decrease in 2023 vs 2021.
In other words, if you worked in Tech or PE, in 2022, you would have felt a similar impact to the one that we felt in our industry. You would have felt your net worth and partially your income tied to the valuations and performance of the market take a dip. However, at the end of 2023, you would have felt things improve dramatically with stock options performing well, and deals performing well. In CRE unfortunately that's not yet the case with Asset values still down around 20% across the board.
So my point here is that at this particular moment it's easy to feel that other industries may have been a bit more fruitful (especially if you've recently started your career in CRE). You may see your friends in Tech and PE balling out on large vacations and saving up tons of money in the past year while you're cutting costs and dipping into your savings. However I would argue that every industry has their own idiosyncrasies. If you were in the tech world in 2000, you'd probably be thinking the opposite, that you wish you went into a different industry and that Real Estate was a favorable option since it's much less prone to boom and bust (and then you'd be proven wrong in 2008). Unfortunately the pendulum has not swung in our favor the past couple of years but we should see opportunities sprout up shortly.
Thinking back to the past 5 years, it's interesting to consider what we've lived through:
2018: A typical down the fairway year, not atypical of the 5 years prior
2019: Another down the fairway year. Slightly better than 2018 with more favorable economics
2020: VOLATILE. A Whipsaw of a year with a dramatic drop followed by a large rebound.
2021: A hallmark year.
2022: A down year for the most part.
2023: A very DOWN year.
What a ROLLERCOASTER!
Plenty of people I know make $400k a year in their 20s in RE. Literally every senior associate at a big debt or equity fund. I’m just barely going to miss that mark - will be making $400k at 30 when I get promoted.
Point is, I’m just an excel jockey who barely knows shit about actually doing deals. I’m just good at excel and writing little memos. If my fund can afford to pay me and other juniors like that, then all the guys complaining about comp are just not that good at selling themselves. Plenty of highly paid juniors in RE - it’s the most annoying stereotype I see perpetuated on this forum by all the operators / developers.
To OP, you’re just not that scrappy (edited). I made basically nothing out of college but I knew there was money in REPE and I lateraled until I got it. Enjoy fundraising - those guys actually do extremely well at senior levels (not joking). Raising money is arguably more important than doing deals.
How many senior associates seat are at your firm? How many of those seats are filled by non Ivy leaguers? I’m going to assume very little. Yes some juniors make that much as excel monkeys but don’t act like there are 1000s of jobs to be filled for those high paying junior roles. Most of the firms are very lean and honestly not diverse enough to hang your hat on getting into them, so yes CRE may not be the move. Also you’ve lateraled in low interest environment. Do you think that same strategy will work the next few year if this environment continues? Doubt it. I applaud you for how much make for being under 30, but don’t attribute to how smart you are. Timing and luck factor into every career positive experience. Humble yourself and realize some people just don’t have the luck or timing.
I graduated with a 3.1 from a state school (not UVA or Michigan). My dad is not rich or well-connected - when he retired in his 50s he was making similar comp to me today. The senior associate roles are not filled with ivy leaguers. If someone with my background can do it, OP needs to chin up and realize that he’s just giving up easy. Maybe I should edit my comment to say OP is just not that determined or scrappy. I agree pretending like I’m smart is arrogant.
ill also concede the low interest rate environment point - I tell people all the time that’s the main reason I landed this great job. But still, it was up to me to make the right jumps which i did using the advice of a mentor i cold emailed.
There will be another bull market. I had to hunker down and stay at a job I didn’t love during Covid too. Sounds like OP won’t be doing that, but hopefully it works out for him
If you don’t mind me asking, what’s your educational background and age?
Someone only 6 months into working in this industry and bitching about the cyclical nature and possible hiccups in career trajectory is so fucking annoying. I was laid off several months ago with 4 years of experience. I'm considering positions that are basically entry level. You have a job and are only a few months in and are lucky af you are even working. Even if you were laid off at the bottom of the next cycle in 10 years or whatever, you would be much much much better positioned than anyone in the analyst-associate level. Good riddance.
Sorry but you should not take your experience in the first 6-8 months. In no way am I telling you to stay in real estate, but your reasoning is not sound.
1. Cyclical business - this is true of any business and not what you should really be thinking about it. What you should think about is if you are in an industry that is more susceptible to downward shock factors. For example, PE (including real estate) has a lot of stroke of the pen risk - removal of carried interest loophole, making all loans recourse to funds / firms and the general squeezing of fees
2. Money - I'm not sure what other industries have more cash flow. Real estate / PE generally have very high cash comp, as high or comparable to any other industry. The lumpy carry is what sets it above other industries. So would you rather have a job that you know pays 500k per year and it's steady, or a job that pays 500k per year and it's steady plus every other year you get another check for 500k
3. WLB - People in finance need to move around more. You can have two different shops that pay the same amount and have the same track record, and one has great people and great WLB and one does not. It just depends who the senior people are, how they got there, etc. I agree corporate PE generally pays more since deals are bigger, so if you can switch to that, great. I'm in RE because through a series of a few events that's how my career best got started, and the switching costs became too high as I went on
4. Startup potential - I would say again, true of any industry. If you worked in healthcare tech for example, your most likely start-up would be something in healthcare tech, not real estate or finance or transportation. But real estate IS one of the easier fields to do a startup because it scales so well. I have countless friends who have either bought real estate on the side or studied and really liked the dynamics behind a sector so they left to go do it and raised HNW money
5. Sure. But people also like to brag and talk up what they're doing. A lot of this is luck
6. Agree. real estate is very simple. There are facets of real estate (esoteric asset classes, debt structuring, documentation) that can be more complex. Would say real estate generally requires more EQ because of the cast of characters. I would also say that as you get older, have kids and a family, simple isn't always better.
RE: Money. Is this true? Does being a Director of Corp Fin at an F500 or mid-sized firm pay worse than a similar job at a successful owner/operator or fund? I genuinely have no idea. Most of the friends I have on that career path are tight-lipped about comp, whereas all of my real estate friends tend to share.
i would guess a director of corp finance at large company is 300-400. Just looking up CAT, for a director of finance it looks like those people have ~15 years of experience. And it seems to top out, unless you become "Head of" / CFO / deputy CFO. I don't have specifics on that path though
Just a comment on the field being cyclical, while it sucks being in a down market,
- seeing people losing money (bosses, clients, or if you’re established - yourself) and losing jobs, as an associate w 4 YOE, I’ve learned more in the past year than I probably would’ve in 4 years of a great market.
In a great market and great investment - everything goes right, and you’re not digging into JV docs in as much detail, grinding your teeth on restructuring negotiations where everyone is fighting to save themselves, or getting scrutinized on all of the slightest details by senior execs.
Even the AVPs with almost 10 YOE have seen a market like this. So I’ve been trying to take full advantage in rolling my sleeves up and diving into the nitty gritty of the shitty assets, since this is the exact situation / reason why there are so many provisions written out in these 209 page JV, lease docs, etc.
And while it sucks that I probably won’t get compensated for it, I’m pretty confident my experience is this market will sling shot me further in my career after.
But I could also just be delusional and will get fucked over, but tbd
I agree that down market experience is of extreme value. In regards to whether or not it positions you better than those you would be competing against, I’d mostly disagree. Reason being is the labor market is very efficient and all of my peers who are employed right now (of which, nearly all are, very few I know, at least, have been laid off). As such, my competition (my peers) all have down market experience as well. So I’m not sure it positions me any better than them. Rather, it helps keep me on par and I’d fall behind if I was laid off, for example, and didn’t get to learn what it’s like to work in a down market.
Why is everyone in these comments so desperate to work for someone. Start your own business and focus your efforts elsewhere if you don’t like working at a CRE firm. Let’s be honest you are working for a big CRE shop or even mid-level it’s more of a corporate job that happens to be in the industry of real estate. Make money and even into real estate passively and you will fall in love w it again
How does someone with very little experience and very little capital just ‘start your own business’.
Massive intellect like the OP
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