Picking my own Market Salary & Bonus
Quick background: I worked in construction with my dad for 3 years after graduating with a government degree. Hated it so I took RE modeling classes all of 2020, spent most of 2021 looking for a job in CRE.
I was hired 1 year ago at a small firm (7 people) in Dallas that does developments and acquisitions with around $50M AUM. For our development-side I work directly under one of the 3 partners and work consists of underwriting, project coordination, leasing up, tracking costs, and reviewing/submitting pay apps to our asset manager for loan draws.
For our holding company I work directly under the other 2 partners and perform all the underwriting using excel and ARGUS. When I started they were using a simple pro-forma that could be created in 5 minutes, since then, I've built a model that's on par with ARGUS that we use for all of our deals. In general, I work with every person involved internally and externally from beginning to end for every deal.
Potentially relevant notes: Last week I figured out that 70% of our MOB leases contain language that allows us to gross up fixed expenses. We wouldn't ever do this but at very least it gives us leverage with a tenant we will be doing more developments with. Big value add? Also, we just hired a recent grad and I'm teaching him how to do my job including the building of financial models. Would this make me an associate?
Anyways, my boss (CEO) realized last week that I was severely being underpaid at $48k, so he's tasked me with figuring out a market salary and bonus to give myself. He's pretty worried what market actually is and told me to take into account the additional $5K in benefits I receive on top of my current salary. Hoping yall can give me some realistic salary figures with respect to my location, benefits, experience, and job functions. Also, wondering what a typical bonus structure is? He's wanting it to be based on contingency leftover for the entire project but I feel like that wouldn't be fair to me or potentially even the company.
Lastly, he offered to pay for school which I assumes means an MBA. Is that him just trying to tie me to the company long term or is that typical for most companies?
So....he should know this but you can tie a percentage of your salary on the development side in the construction costs, and pass this on to capital partners and lenders. They should only be paying a pro-rata percentage(based on equity) of your development salary. BUT if their AUM really is $50mm, I'm sorry to say it's not that big but you could definitely hit 60k in all those projects.
FYI, your position is "Development Analyst/Associate".
I would have 2-3 scenarios. 1 highest market comps you can find for base and bonus. I can't imagine a boss saying to factor in 5k of healthcare, but again small firm size. 2nd or 3rd is to have a lower than market and get a percentage of carry. 0.50% or 1.00%-5.00%.
Thanks for the different scenarios suggestion. I'm definitely going to do that.
My boss would probably love scenario 2 and 3 because he'd rather pay a less than market salary with greater than market incentive/bonus. However, I don't want to be tied here just in case a REPE opportunity comes up in 3-5 years. I assume there's not a way to tie a bonus to the success of the pre-dev and construction phases of a development?
Here is the thing. REPE is great, but getting points in an up and coming company is more rare. You don't even have to be great at your job or have all the "skills", you just need to do whatever the owner says and have him trust you. At your age, if you could turn this job into cary and 5 years down the line make 250k-300k in your market and be top of the food chain, with great hours. That would be a great place to be in life.
I mean, there is always a way to structure pay. But I would probably look at the financing part to tie into it.
Get Development VP title and ask for $150K with $100K salary, 50% performance bonus and 3% carry, tell him a rando on WSO told you to do it.
Honestly though, you come across as humble/honest and I believe everything you're saying is true - so in that case the work you're doing is a big value-add to them and they cannot replace you paying much less than what I just laid out (they can get away with no carry but might as well ask for it).
Agree with the above. OP, you're severely underpaid. $100k base salary should be a minimum.
EDIT: Misread your post. Thought you've been at the firm for 3+ years. I think you can still ask for $100K base. Market may be anywhere $80k to $100k+.
3-years experience for Dallas TX at a 50MM AUM firm is 100k? There are people in NYC not making 100k, or barely with 3 years of experience.
I want the OP to be paid a good wage, maybe I'm just in shock. The only way I go to them with those numbers, and it is a strategy, is to get carry(non cash comp) in deals. It is a win-win for everyone as they can tie a portion of your pay to long term incentivize you to stay.
I'm in a major market, so take it with grain of salt, but pay has exploded the last 2 years. From what I've seen it has at least doubled. Yes, it's a smaller shop and it's Texas, but doesn't change the fact that his replacement cost is much much higher. If they don't give it to him he could leave and easily get that elsewhere, even in Dallas (which as of a year or two ago I should now say especially in Dallas).
With consideration learning a ton and sometimes getting face-time with our investors (who range from politicians to c-suite execs at fortune 25 companies), I'm trying to find a happy medium in compensation because I'm playing the 3-5 year game. The last thing I want to do is give the partners any reason to resent me. If it wasn't for that, I'd probably be leaving because I want to learn from people who've been in CRE their entire life. The partners just kind of fell into this a couple years ago, so I frequently find myself teaching them things and not the other way around. So far through my research it seems like $80-85K salary is average, but I don't know if that's what I should present if CRE Shervin thinks some of my job functions are on an associate level.
Try applying to other places and see what the market values you at otherwise you’re shooting in the dark
I would but honestly I don't have the time to do that.
I don’t even work in this space but just keep in mind that probably all firms will have $5k in other benefits… so don’t subtract that out.
$5k in benefits is almost nothing... thats $500/month toward healthcare, which basically covers those benefits.
$50 million of AUM is tiny.
I’d think you are somewhere in the $75-125k all-in range.
Echoing what's been said here. Minimum salary for what you're doing at this firm should be $100k + atleast 15% bonus. I'm a first year acquisitions analyst making $75k + 15% ish bonus in Dallas and I feel like I'm slightly below market.
Are you saying $100k minimum because of the non-excel related things I’m doing? If so, that blows my mind because I know construction superintendents who could do a better job than me and they make $50k tops. At the end of the day, I work for two separate entities that sometimes overlap in terms of workload so maybe that’s what factors into $100k?
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