Hi,
Was wondering about this career path and the state of debt brokerage going forward. Is the market too consolidated now with only the big CRE firms being viable long term options? Or does anyone think there is a market long-term for small boutique relationship focused shops?
Thanks!
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I think you’re overthinking this. If you wanna do debt then do it. Does the market suck, yes. Will there be opportunity in the future, also yes. You can make a lot of cash and although the business is not easy no matter where you’re at, it’ll be easier if you’re at a big shop. Hope this helps.
It depends on your personality. There are some that thrive in a large corporate environment and others that are better off in a boutique, entrepreneurial environment. The negatives of the former are the splits will not be as good and you have to navigate bureaucracy and politics of a large org.
Negatives of the smaller shop will be you have less resources and you truly need to go out and find your own business, no investment sales teams will be around to spoon feed you deals.
Positive of the big shop will be more resources and brand recognition. Positives of a small shop will be better splits, more flexibility and independence to build your business. You also are much more likely to make partner, get ownership in the business, etc
I prefer a smaller shop — I’d rather have 100% of $1MM in commissions than 10% of $10MM in commissions. I think the high performers are under paid in large organizations - 20% of the producers generate 80% of the revenues, but their splits aren’t 80/20.
Having been in debt brokerage at a small/boutique shop initially and later getting recruited to one of the premier (CBRE/JLL/CW/Newmark) firms. I would tell you first hand that “starting out” or being new to brokerage is massively easier at the big firms. The amount of support you get is night and day. At the big firms there are deals that come through the platform and get handed to more junior brokers. These are not glamorous assignments but they keep your compensation at an acceptable level.
Even things as simple as expense accounts, may not be provided at small firms. My experience with the smaller firm was: you originate a deal completely on your own, underwrite/package completely on your own, close completely on your own. Then when the money arrives, the small firm still demands their share for doing less than nothing.
The larger firm: you originate on your own most of the time while some deals come through the platform, a team of associates/analysts put together your package, you get the deal signed up and then are given a closer to deal with the paperwork, the big firm comes and takes their +/- 50% cut but I’ve always felt like they (mostly) earned it.
I wanted to chime in here and add more color - refinance007 and nnjcre's comments are some amazing advice w/r/t differences between small and large debt brokerage.
I've been an analyst and a junior producer at two small or "boutique" mortgage banking firm - as an analyst I will get passed off the shitty deals my senior doesn't care to shop; many days I felt more like a glorified graphic designer aligning logos in PowerPoint; proofreading and writing summaries, emails for my senior brokers; and occasionally just doing bullshit IT and office admin work. When I was junior producer all I did was make cold calls from 7:30-6 everyday.
But your question is about viability at a boutique shop vs large shop and it's something I think about often and am fearful about. I think there are opportunities at small shops but you must be more focused on middle-market, private capital, which is a very fractured, crowded, and relationship oriented space unlike the large, institutional players which are, yes, relationship oriented, but business and profit centered first and foremost.
I have heard that the larger shops are looking to push into the middle-market space but I just don't think the profit vs time is worth it when one producer has to staff 3 sweaty juniors onto a 1-10mm deal - you'd need to be doing like 10-15 deals/month for it to makes sense. I know guys at middle market shops who might crank 10-30 $1-5mm deals per year and work maaaaaybe 50/hrs/week. You're making like what? 200k-400k/year depending on splits? Sure, you're not some big swinging dick at JLL but also your wife isn't sleeping with someone else and your kids don't hate you. So, as long as that kind of volume exists so will small brokerages.
Don’t think the stress of capital markets brokerage is worth it unless you are aiming to make close to 7 figures tbh. If you like debt, you can make $300k+ at 30 at VP level w a debt fund / bank and go up from there.
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