NYC Affordable Housing Comp
Does anyone have any idea what big players in the space are earning at various levels? Is being at a developer the best comp you're going to get versus lenders and syndicators/equity providers?
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Swinging through the jungle of NYC's affordable housing scene, it's clear that compensation can vary widely based on the role and the company. Here's a little insight based on the WSO content:
Developers: They often have the potential for higher earnings, especially if they're involved in the equity side of the deals. Developers can earn fees, a significant portion of the operating cash flow, and potentially a large payout at the end of the compliance period (often referred to as year 15).
Lenders: Their compensation is typically more stable but might not reach the highs that developers can achieve through successful projects. Lenders earn through interest on loans and fees associated with the financing.
Syndicators/Equity Providers: These players are usually in it for the tax benefits, such as those provided by the Community Reinvestment Act. They might target a lower after-tax IRR, in the range of 4-5%, but they get the tax benefits of owning the real estate.
In terms of hierarchy, the compensation structure in investment banking, which can be somewhat analogous, might look something like this (based on September 2023 data):
While these figures are for investment banking, they can give you a ballpark of the progressive salary increases one might expect in high finance roles, which could be somewhat reflective of the progression in the affordable housing investment space, albeit with different numbers.
Remember, being at a developer might offer the best compensation potential due to the upside of project success, but it also comes with higher risk. Lenders and syndicators/equity providers might have more stable, but typically lower, compensation. It's all about the balance between risk and reward, and where you fit best in the ecosystem. Keep in mind that these are general trends and actual compensation can vary based on the company, location, and specific role.
Sources: Who are the top 15 to 20 low income housing investors in NYC?, Explain Affordable Housing?, How does Hudson Yards end up?, Multi Family Investing - New York City, How will the next billionaires in real estate earn their fortunes?
Development will always pay the most at the upper levels, because developers take risk in a way that other roles don't.
For relatively junior folks, lenders probably pay more.
How possible is going from a lender at a mid-level to a developer? Would you be somewhat confined to capital markets roles? Do these roles pay as well as the pure development roles?
edit: lumping in acquisitions into this as I'd imagine rehab deals would maybe be a better fit for someone with a lending background
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