Leverage Loans Investing -> RE
I’ve built my career in RX banking and have spent the last couple of years on the buyside investing in leveraged loans. It’s been a great learning experience but I’m wanting to branch out to do something more cross functional and dynamic where I’m not just sitting behind a computer screen all day. That’s led me to consider making a shift to real estate which has always interested me in the back of my mind and would allow me to leverage my current background to be more entrepreneurial. I’ve been accepted to the MBA program at Haas and would like to stay in Northern California long term to be close to family.
Pros: More Entrepreneurial, Regional Focus, and Fragmented
Cons: Pay
Does anyone have any thoughts on the real estate program at Haas?
What does comp trajectory look like? Are there any areas in particular that would be partial to my background?
$121K for an average starting salary out of an MBA seems comically low considering the cost of living. I’m not expecting to make some crazy comp figure coming out but $150K base and $30-50K as a bonus seems reasonable and is in line with what corporate finance roles pay which aren’t very lucrative. Within 5 years I’d ideally like to be at $300K all in assuming I’m promoted and able to scale responsibilities.
I understand the goal is to eventually go out on your own but I’m a little concerned the lower pay is directly at odds with having the ability to go out on your own. I don’t come from money so I’d be solely relying on my W2 income to build a base such that I could afford to do my own deals.
Your background is perfect for all things debt - senior and junior originations, special sits, etc. you’ll pick up the real estate piece quick coming from corporate credit. It’s dead easy.
Comp is all over the place in RE, so it’s tough to give you a post-MBA range. I did an MBA at UCLA/SC - personally found the comp trajectory depends on how hard you want to work for a seat at a “prestigious” fund. Graduated in ‘23 and had buddies go to Greystar, CIM, TCC etc, even in a shit market, so it is what you make of it. You’ll largely be on your own as most recruiting is off campus.
Thank you so much for your feedback! What is the correlation between prestige and places attracting abrasive people in real estate?
Part of my desire to leave my current role is I work with a lot of guys from prestigious backgrounds who are just insufferable to be around. I’ve looked around at other shops and don’t see things that are radically different.
I wouldn’t want to work at a Starwood or BX type shop if everyone sucked to be around. At this point in my career I’m just looking to work with talented people that aren’t jerks and am willing to sacrifice some upside for that.
The megafunds seem to attract the same types of personalities you'd see in corporate PE/PC investing groups, though the personalities in RE may be slightly more tenable.
Take this with a grain of salt, but I'm a mid market guy (aside from MBA internships), and have optimized for both culture and mentorship. At my current firm, our deal team speaks freely, and office politics likely aren't as prevalent as places like Starwood, BX, etc. There's something to be said for that, but YMMV.
Regarding comp, would I make more at a large cap fund? Probably, but I cleared $300K my first year post-MBA; making 15-20% more and working with shitty people doesn't seem like a worthwhile trade to me.
Not sure if you’re interested in commercial banking but you would be a rockstar RM candidate and likely fast tracked into leadership. Comp would likely start at something like 150k + 30-50% bonus target, with great WLB.
What would comp look like at those leadership levels?
Commercial banking is something that I’m open to down the line but would probably not pursue straight out of school. Thought process being I love investing and hated working in banking.
I recognize that commercial banking may be more chill but with banks facing a ton of regulatory scrutiny it scares me. I distinctly remember getting yelled at by some woman on an elevator at my bank after talking to my boss about betting on the Super Bowl over the weekend because it was against firm policy. While this is an extreme example I’m someone whose a little more rough around the edges (doesn’t like following BS rules) and is very risk on.
I’ve found generally people attracted to jobs at banks are the kinds of people who would be HOA president types who take an inordinate amount of interest into people doing things that don’t fit in that don’t really matter. As a person who is fiercely independent some of that conformist attitude turns me off from going back to the industry.
Should have also said that nobody gives a shit about prestige in commercial banking, which is refreshing. I went to a top school (HYP) and nobody cares. You do have to deal with dumb people and politics but that’s way better than being surrounded by insufferable douchebags.
I'm sorry but even if you transition over to real estate, you're still going to be sitting behind a computer screen all freaking day. Breaking in is also hard. I wouldn't recommend commercial banking because you'll get incredibly bored.
I work at a diversified alternative investments firm (we have leveraged loan funds, distressed debt funds and CRE funds, which I work on).
My understanding is that the leveraged loan guys make more than me and work less. Real Estate deals can be so freaking hairy, especially on development deals, which leads to longer hours and stress. Sometimes it takes us half a year to close a construction loan.
Other than a site tour here and there, I’m iterating models, putting together IC memos, conducting market calls etc… just sitting at a desk. Honestly the site tours are annoying bc I’m traveling for two days, fall behind on work and then have to play catch up on the weekend.
On the pay side, I’m objectively at a solid-paying firm. I left IB and started out at $225k as an associate and now I’m up to $290k, still as an associate three years later. How do those numbers compare to leveraged loan roles? Keep in mind, this is very good comp for RE - not guaranteed to land a role like this. It’s not easy to move up either. No guarantee you make it to MD.
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