So I currently work in development, and I really love it. I do think it’s where I want to spend my career and eventually go out on my own. I’m also going to be starting an msre program in the spring.
That being said I have friends in IB/PE that are my age (24) making $160k+ and I can’t help but feel jealous and like I should’ve just done IB. Development is notorious for underpaying as is.
Anyone else have these thoughts?
| +51 | Leave brokerage to be GP | 12 | 1d | |
| +46 | New Comp Database - Google Form (Now with Data Validation) | 24 | 1d | |
| +24 | Seeking Career Guidance in Real Estate Development Post-Graduation | 3 | 2d | |
| +23 | Going out on your own | 4 | 1d | |
| +22 | REPE/Development GPA | 15 | 3d | |
| +21 | Real Estate = complicated + underpaid | 15 | 1d | |
| +18 | Spreads over SOFR/UST | 3 | 37m | |
| +17 | High achiever that doesn’t want to work weekends | 5 | 1h | |
| +17 | Fisher Brothers | 6 | 1d | |
| +17 | MSRE/MSRED with no RE experience; Naive to think I’ll land a job afterwards? | 4 | 5d |
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Saw your comment before you changed it cuz you got MS…I agree though that you can put pace folks in IB and you have a life
Made the right choice. You get to have a life outside of work.
Sounds like you made the right choice, who gives a fuck what they're doing or how much they're making. You're happy, you like what you do, and you can see yourself doing it long term. I guarantee your friends who are making 160k are miserable, have no time outside of work, and dread coming into the office. Don't compare yourself to others.
I used to want to do IB/PE and I'm glad I didn't. I know I would not have been able to work those hours and I value having a life outside of work way more than money. As for the money, it depends on what time frame you are looking at. Your friends may be out earning you today, but will they continue to out earn you 10 years from now? IB/PE are very demanding jobs, requiring 70+ hours per week. Those hours are unsustainable for an extended period of time for most people, which is why burn out and attrition is so high in IB/PE. I have friends who are in IB/PE and they have an exit date planned, as most people do. They'll do it for a couple years to build up their resume and then leave, while you continue building up your resume and rapport in the same industry/company.
Furthermore, one of the major downsides I see in IB/PE, is the lack of time to do other things i.e. research/make/manage investments. If you are so eager to make money, there's plenty of ways to do it outside of your job. By having time, you can explore different opportunities. Since you are in real estate, it would probably make sense to save up to buy your first property. Start researching different markets, go to open houses, meet with agents, take advantage of first time homeowner programs where you only need 3%-5% down payments, house hack, etc...Once you learn one way to make money from investing in real estate you can repeat it and slowly expand into small renovations and that's where the real money is
Ultimately, most people in finance will have their net worth determined by a handful of liquidity events.
It may be the sale of a big development deal, the maturity/repayment of a fund, a record year for IB fees like 2021, an IPO at the company you’ve worked for the past several years… you get it. Whatever it is, those liquidity events are going to dwarf the money you save in your 20s.
Your 20s are for getting experience, your 30s are for building relationships and your 40s are for making money. One year in your 40s should earn you more money than the entirety of your 20s.
Get really good at something finance / RE related and you’ll do great.
I know making $70k less than your peers feels like a lot of money, but it’s essentially nothing. This doesn’t help you in the near term, so just keep your head down and maybe try to lateral to a RE firm that pays a bit more. There are plenty of them out there - despite what users of this forum try to tell you
I agree with this comment; however it should be noted, I think there involves risk to get to the liquidity events, such as foregone salary, investment, to personal recourse contingent liability, to lawsuits. This life is not for everyone. Or depends on your ability to climb the corporate ladder - which is not for everyone either.
Even my friends who worked at tech companies as early employees, they didn’t really take that much of a risk (their salaries were decent), and seemingly they got stock options just for doing their jobs. However, I feel the chances of a big liquidity event in tech is low.
The exceptions to personal risk are if you help grow a platform (ie Greystar MD growing a new region for development) or are senior enough to get a sizable piece of the action (REPE fund wind up as an MD, or being SVP of Development for a development shop like Holland Residential), but that usually always means you were in that position at inception (JV docs signing, fund launch, and have management and fundraising responsibilities that helps the platform). That’s how you get your big checks. The big question is, can you climb the corporate ladder and stay there through cycles? The real estate business at the senior levels at large companies can be cutthroat. The air can get thin.
Until you get there, your carry or bonuses will be the $25K-$100K variety, on project promotes.
The big liquidity events, when you get the money, will seem out of this world. You will look back in your career and think you made more money in 1-3 years than you made in all of your 20ish year career. The years you were making $60K, $80K, $120K, $240K and big fat $0 (plus Unemployment) after a layoff, collectively, could pale in comparison to a major liquidity event.
But you will ask yourself, when will this ever happen again? (A Fleetwood Mac song called “Gypsy” reminds me of this “lightning strikes maybe once, maybe twice…”) What did you have to risk? What tailwinds, magic was there to make this a reality? How many times would you be willing to risk everything again? At times, you might feel like you stuck your hand in an alligator’s mouth and grabbed a wad of cash, and escaped unharmed. How many times would you want to do that?
The liquidity event comment is right on point. But I don’t think this will happen for everyone who goes into CRE, because a lot of it is being in the right place at the right time. And could involve a lot of risk taking, financial and martial stress.
Regarding IB:
I had a friend from the University of Hawaii (my undergrad) and he went into BB IB, same time I went into real estate. I saw him suffer health wise, relationship wise. Doctor told him, you might die working this job. He would sleep with his BlackBerry in his hand. The amount of stress was unsustainable. There is no guarantee you will close a deal (and gain that deal experience and deal toy). The exit opps were good, but getting to the KKRs of the world is very competitive. Alternatively Corp Dev, partnerships, were great career and money. However I think the Techsession (recession in tech, affecting even the FAANG companies) is closing off a major avenue for great WLB + money post-IB work. Those jobs will still be there, but they got trimmed. I just feel the tech industry is changing in terms of austerity. Where else are you going to work in industry? A bank? Manufacturing company? Service? Airline? You’re just trading an skillset for another skillset in an industry you might not be passionate about long term. Ultimately my friend pivoted to a more lifestyle and family oriented life and career. Would a career that you were passionate in (and didn’t have to pivot), that was sustainable to your body and mental health, that accumulated through your career been a better choice than IB? Hard to say.
About IPO’s and “Events” - a cautionary tale
I have a friend who struck it rich as an employee whose company IPO’d. It was like the third or fourth start up and this one finally actualized. He could have cashed out (sold his stock) but stayed in and the stock price tanked and is unlikely to recover. Relying on liquidity events - and the aftermath, can really screw with your mind. You should not after reading this or other comments about money/WSO, base your life on big liquidity events. You will never know if or when that will happen. And the paper wealth can evaporate. I know First Republic Bank people who lost millions.
One day, if you are ambitious and lucky, you’ll get $50K a year from one of your investments as part of your member interest that you spend 4 hours a month on. That $70K differential in your 20’s that you were so envious of will not be material. Play the long game. Don’t compare yourself. If you like IB, then go do that. PE shops like GI Partners which invest in real estate asset intensive industries seemed interesting to me at one time (they bought a chain of UK pubs prior to COVID; invested in Digital Realty). But guess what, GI Partners is hard to get into.
Just stay ambitious and keep pushing that is authentic to you.
I have similar concerns but for different reasons. Someone will always be making more than you. Even if you were able to get a job making more than anyone in your circle, the moment you got the job you’d meet someone outpacing you. It’s a recipe for never being happy. I want my friends to do better than me. If you want to compare- remember you’re crushing it compared to 99% of people who either hate their job or struggle to pay their bills.
That out of the way-
I like money and want to make it. I have significant concerns about the fundamentals in real estate investing versus other alternative investing. CRE takes a lot of capital to start, and it’s low margin, capital intensive work and reliant on market conditions. Say the local blue collar business turns out to be a much better investment than a similarly priced building - am I better off learning how to buy and sell companies in PE?
To a lesser degree I have concerns about what I see in RE recruiting. Many of the good jobs in my market- not necessarily sexy big names, but the small place that can raise a $300-$500 million dollar fund and does good deals with WLB- just pluck corp IB/PE guys for associate/VP roles. These guys make double what I make for a decade (that’s an extra mil or more in the bank before investing) then seem to get the better job in my industry at the end of the day too.
I went to a state school and work in acquisitions at a regional shop that’s basically shut down right now. I do wonder if my career (want to get carry or do my own deals) would be better off doing an MBA and working in IB/PE during the bad times then exiting back to CRE when it comes back around.
If your goal is to maximize your short term earnings in your 20s, then yes, you made the wrong choice. Development just isn't a good place to be in general if you don't actually enjoy development. And I know it's hard to hear the same generic advice over and over... but you aren't getting rich at 24. Who cares if your friends are making $150k and you're making $100k, that difference is negligible in the long run. Do something you enjoy and don't focus on the money aspect (beyond a certain point, obviously), because someone will always be making more than you. You simply cannot win that game
I love you Ozy, great point. Also, what are your thoughts on the comment above regarding the fact that IB analysts seem to get recruited for associate/VP positions anyway?
I made the comment. I think development is a different animal because the skillset is way more niche, there’s not really a transferrable skillset from IB/PE. But I’m not the best guy to ask about development. I was more referring to acquisitions/capital markets.
I think someone commenting that IB analysts are getting more senior level jobs in development (or anywhere in real estate) is patent bullshit. I mean, I am sure there are people coming from a REIB background getting hired, but I simply do not see 28 year old M&T bankers getting hired at a real estate firms. Even on the acquisitions/fund side, it is hugely advantageous to have some experience in real estate.
No I do not wish I had to wear a suit to work every day, work 80+ hours a week, and spend all my time updating excel models and copying them into powerpoint slides.
I'm sure the PE/VC/Buy Side life can be rewarding, but you couldn't pay me enough to be in the service industry. Bankers are the brokers of Wall Street.
Have questioned this myself. Everyone on this thread will say IB is lame and they have no life (fair enough) but I have been attempting to break into HF investment Analyst (Real Estate) or potentially REIT positions and those positions both look for REIB or REIT experiences.
However, I enjoy my gig at the owner/operator side of the bis - and pay is fair for NYC. However, I’ve had little traction in even getting interviews for those Investment roles.
If you are debating and comparing comp, apply; you should be always be looking at new opportunities imo. Comp isn’t everything, many people in RE love the work/life balance and their current role is getting them closer to their end goal - depends on what you vision your end goal to be in a career.
How do you make the transition from IB to RE?
Social skills
IB isn’t worth it, currently trying to exit to RE
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