Been doing research on CRE careers, specifically REPE AM/Acquisitions and Development. The compensation I have seen posted on forums here seem great. My question is, am I missing something? Why don't more people go into real estate for the insane pay that I have seen posted and solid work life balance i.e. below ~60 hours a week.
Are the salaries posted on WSO complete outliers? It makes me wonder if what I am seeing on here is not what you should expect in an average CRE career i.e. 120-150k base plus strong bonus with around 5-7 years of experience... I know most don't make it to the top but still, making near or above 200k for a good wlb job within 10 yrs of starting seems like a no brainer compared to other financial careers.
Most colleges have only recently started to build out commercial real estate programs within the last ten years, so it isnt widely advertised to most students. I went to a large state university and the program was fairly new when I went through it.
That comp range is absolutely achievable in most primary or secondary markets in 5-7 years. I fall into that bucket and rarely work more than 45 hours. The perceived boom or bust nature of commercial real estate looming since '08 and lack of stability keeps some folks away as well.
Up until 10-15 years ago, most people didn't even know what commercial real estate is. It isn't a career path that is traditionally in the public eye like "Law" or "Engineering" or "Medicine" or even "Wall Street Finance." Kids don't grow up wanting to be developers or acquisitions directors and if you ask most people, the idea that commercial buildings aren't all owner occupied single tenant doesn't even occur to them.
Aside from what's already been mentioned, not much money at the start of your career, compared to a lot of other routes. There is a pretty big learning curve for real estate and it takes a long time to add value. That and most of the money made is from doing your own deals vs. working at a shop - you top out pretty quick without putting some type of significant skin in the game, be it money at risk, deferred comp in carry, commission etc..
When you say 'top out' - what kind of comp and how much experience generally is that? 200k+ seems like more than enough to live a happy life. Betting on doing your own deals seems like a pipe dream since 99% of people wont have the balance sheet and ability to put all of their capital at risk in one project, no?
It's in comparison to other routes people with the aptitude to make it in real estate can take. There are other high earning jobs that tend to have better long term (salary) earning potential even when you consider the potential marginal increase in hours work to salary hours worked - tech is a good example here for what I'd say is comparable hours but much higher (salary) earning potential. $200K may or may not be a lot money depending on lifestyle: where you live, if you plan to have a family etc. This is a little subjective though, I'll admit.
Yes, doing your own deals is a pipe dream for most, but I think it's more attainable than striking out on your own in most other high paying careers. It's actually pretty common to see successful industry players start there own ventures.
Also - topping out is a little bit of a broad question as it will depend heavily on what type of company and whether your at a GP,LP, bank, brokerage national or local shop, development or acquisitions, asset type etc. Generally speaking fee's keep the lights on and promote pays bonuses. Companies try to keep salaries low so they can carry staff in periods of low transaction volume. In other words, real estate has lumpy cash flows and a lot of other industries are more consistent so they can afford to pay higher salaries.
Shhhhhh. Dont tell em -.-
Those positions are very competitive especially in this market. It’s harder and harder to get hired without experience these days. Our firm generally like 1-2 YOE for entry analyst.
During the junior years you make a good bit less than corporate finance unless you work for a top firm. Even then you make about as much doing REPE at a Mega Fund, the top 1% of Real Estate professionals, as an IB Analyst / Associate who works for a bottom tier IBank.
The comp scales massively with promote / carry and a lot of undergrads are wildly short sighted. It's also a high risk / high reward route to count on getting a cut of the carry and count on that carry being substantial (a lot of principals at office focused RE shops are probably watching what they thought would be million dollar promote checks get wiped out completely right now). So in that sense, people feel like they can autopilot through the ranks in IB and make a ton of money on a mechanical basis where it's easier to move up the ladder quickly and annual cash comp starts high and scales rapidly early on. Again, undergrads don't realize how short sighted this is because VERY few IB Analysts make it more than 2 years without getting burnt out these days so it's not necessarily the steady/reliable career path kiddos think it is. A wild guess says just as many RE Analyst 1s end up getting carry at a RE shop as IB Analyst 1s end up getting to a level of seniority where they're making above $500K a year.
Way to lay it out. What is your recommendation? I’m on my 3rd yr one in brokerage, one in an acq shop and now at a new acq shop. Bonuses are never what they say they are when they are interviewing and I’ve never broken the 100k mark the two acq shops promised. Always getting hunny dicked etc.
Should I run and get my mba and go to traditional finance to make actual money since it’s so hard to get good comp at an RE shop early on. Then maybe look at coming back later on at a MF REPE or Devlopment shop?
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