Regrets About not Going to Corporate Finance?
I'm sure most of you here have a passion for real estate, and that's why you work in the field or are trying to get into the business. But I have a controversial question... Skip to the last paragraph if you don't want to read my rambling examples in the middle.
For the Brokers, do you ever wish you were taking 2-5% fees on massive acquisitions like Amazon's purchase of Whole Foods, Microsoft's acquisition of LinkedIn etc? What if you were the advisor to Vornado in their acquisition and subsequent spin-off of JBG? Is that not more complex / interesting to you than brokering the sale of the $20mil apartment complex down the road? The two jobs are similar, yet the fees are higher and the work appears to be more interesting on the IB side.
For the RE lenders, do you ever wish you took more finance classes in college and ended up financing M&A between major corporations, LBOs for jumbo private equity funds (sometimes 10x the size of a major REPE Fund), distressed loan acquisitions etc? This would net you more fees as a senior person, and a higher junior level / mid level salary. Simultaneously, you'd get to learn about tons of industries instead of focusing on real estate.
For the private equity / owner /operator guys, how many different ways are there to execute a turnaround plan and re-lease an office building? What about an apartment complex? The turnaround strategies are likely the same from property to property, city to city, cycle to cycle. Re-do the kitchen and bathroom in the apartment complex, Remodel the lobby in the office building and hire the best agency leasing guy, bring on a new operator for your hotel etc. Think of all the operational and strategy nuances to 3G Capital's acquisition (read about some of them here https://www.fool.com/investing/2017/12/09/is-the-…), does this not sound more interesting to you?
What about when you get tired of the hustle / stress of doing the above? You can exit to a corporation in the area that you covered, make good money, and still have time for your family. In real estate is there an option like that?
I guess my question is this: Your job in real estate likely has a counterpart in private equity. That guy likely makes more money than you and has learned a great deal about business along the way. If you could start over and land a good job in an area of IB / PE / LevFin or whatever are of corp fin interests you the most, would you do it? Why not? Some of you will look through my post history and claim this is a troll account. And you'd be right. But this isn't a troll question. I'm genuinely a 1st year analyst at a cross-roads in deciding whether to stick with real estate or pursue IB, so I'm hoping you all convince me that I'm being a prestige-whore or whatever
When I was just starting out, I was at the same crossroad you are at now and I chose real estate. Everyday I regret it. No discipline in real estate is all that complex, interesting, lucrative, or fulfilling. Every day I look in the mirror and think to myself, "What if I had gone into corporate finance? How much better would my life be?"
None of this is intellectually stimulating. I mean take an office building development for example: all you have to do is pick a piece of land (any old piece of land will do), find some guy who's got the right licenses to oversee the construction, and have a team of guys build according to the rough sketches you have. If it's a tall office building, then it's the exact same process, but you've gotta rent a crane. Then, once it's built, you sign some sucker to a 10 year deal 10% over market and voila, you're done. It's time to sell the fucker. Everything is just rinse and repeat. There's no nuance or variation to any of it.
If I had gone into corporate finance, I'd definitely be making way more money, I'd have better exit options, and I'd be more fulfilled. If I had gone into corporate finance, I'd be smarter. If I had gone into corporate finance, I'd be 6'5", 250 lbs with six pack abs (that are visible while sitting) and I'd look like Ryan Gosling. If I had gone into corporate finance, I'd just be better.
If I were you, I would go into corporate finance. Don't make the same mistakes I did. You'll be much better off.
As a development manager I'm not entirely sure what my counterpart on the "other side" would be - a start up entrepreneur? Or I guess, more specifically, a product line manager working for a start up entrepreneur? I'm not sure that's a solid comparison in my case and the skillset between building apartments and coding the swipe right feature in the next cool dating app and hoping it IPOs don't overlap all that much.
I went back and read the rest of your post and your thesis seems to be that real estate and "real finance" are the same thing, but real estate is simple and boring and not intellectually stimulating. In reality, real estate can be super simple and super complex - that just depends on the company and the individual deals. "Boring" and "not intellectually stimulating" are more opinions than anything. If you're not personally into real estate, and work in real estate, that's more a problem with you than the industry. I geek out over door latches, kitchen finishes, bedroom square footage, LVT innovations, etc. because I like the industry. If you don't, why are you in it? Seems odd.
I think your thesis, that real estate is some sort of sub-finance, is incredibly flawed.
Edit: I see now you have an IB tag, so I'm assuming you don't work in real estate. That makes this thread somewhat pointless, no? It could be titled "Person Who Doesn't Work In Real Estate And Doesn't Like Real Estate Doesn't Understand Why Other People Work In Real Estate" You say you're a troll account - I think that's probably accurate.
Lol... So your asking why I would rather develop a luxury condo in South Beach than work on a share repurchase for a large Potato Chip company?
Everyone has their own preference in what they find interesting. Personally, CF sounds boring as fuck. Also, don't forget that RE can sell for just as much $$ as a business depending on the product/location. Just becuase youre in a VC group that lends $5-6M to some indian guy in California doesn't mean youre making more than the guys at Blackstone who are buying $2B hotels in NY.
Some days I don't feel smart enough to work in commercial real estate. I'd imagine in corporate finance I'd feel that feeling every single day.
I like to carve a niche. Become an expert in that niche and dominate.
Real estate is a niche business for dumb guys like me.
Also i'd take 50% less salary to have 50% more free time in my 20's and 30's. I guess I value my time a little bit more than I value my money.
See here’s a guy who tells it like it is. I think real estate at the senior level and junior level are totally different animals. At the senior level, youre more involved and some of the nuance of doing deals will make your job more interesting. But at the junior level, the work is less difficult to wrap your head around compared to IB
I was an IB Analyst and I'm now an Analyst at a top developer. I find the work is far more intellectually stimulating. In IB, once you've gone through your first year / seen a few deals, the work gets very repetitive. Pulling comps, plugging figures into template DCFs / LBOs and formatting slides for 15 hours a day gets old quick.