small shop compensation
just worried this might be too much info along with other posts/comments on my account so posting anon -- I'm currently a senior in undergrad finishing up later this year (coming from a top 15 undergrad school for whatever it's worth here), I'm returning to a small shop in a major market (NYC/LA/CHI) that I've interned with before, it's mainly a multifamily focused development/acquisitions firm
because they're such a small shop (less than 10 people) there's really no set analyst position and I've kind of lucked out through networking and timing to get this spot, over the next couple of months we'll be finalizing what my role will look like
I know the answer is probably something along the lines of "it'll vary", but i'm wondering if anyone has any experience with really small shops like this, and what I might expect compensation-wise? being in a tier 1 market I feel like my pay should be somewhere around 50-65k all in for my first year, but realistically with what I bring to the table it would be hard to negotiate if they were to offer less (35-50ish I guess is the low range here?), because I obviously have no real experience and I'll definitely be doing some learning initially before actually adding value for them -- would appreciate any thoughts, experiences, or insights anyone might have on first year compensation for small dev/acquisition firms like this
My first job was an analyst at similar shop type in mountain west. Lower COL. All in was $80k. Don’t sell yourself short.
interesting thanks for the feedback, did you carry real responsibility that first year? or was it learning/working directly under someone (how I think my first year will go)? just wondering what your role as an analyst might've been
It was a lot of learning and doing work that was later reviewed. A lot of excel and Argus modeling. I had completed two internships (one of them was institutional LP RE) and some Investment banking excel self study courses where I learned modeling basics. A lot of time rebuilding already complete models They knew I was green and were very good about taking time to teach me. For more data points, I had an offer as acquisitions Analyst at a RIET in same city for $65k + bonus and Duff and Phelps in second tier city for $67K+ bonus and chose the small shop because broader exposure. I went to a non-target state school. I’m now working for a small Multifamily acqu shop (~5 acq guys). My advice for working at a small shop would be to spend a lot of time learning how your superiors think and operate and buy into their way of doing business
$50k minimum for a major market, and that really should be the floor. First year analyst at our boutique (~45 people) is $70k base in NY. Like Bob said, don't sell yourself short and negotiate if you have hard facts or reasons to increase comp.
Is this standard pay across the board for entry level real estate in nyc? What does your place do and what is bonus like?
From my experience, it is standard but can vary on what you're doing in CRE like acq, dev, brokerage, lending, etc.
My shop functions like a debt fund as we have multiple investment strategies, like cmbs, pref/mezz, bridge, structured/jv equity, small balance, and a fund for emerging developers. I started in the middle of 2019, so I don't know what bonuses look like. Maybe someone else can opine on bonuses for this type of work.
I'm in NYC, and I would agree that's pretty accurate. If you have an MS/MBA and some form of work experience (not RE), you may get 10K to 20K more, but if you're right out of UG with just an internship, 50K salary with 10-15% bonus is not uncommon in RE. This can go up rapidly, just many firms will see you as a glorified intern for the first year. Modeling skills are important, but really, that's easy to find these days. NYC (and other tier 1 cities) get applicants from everywhere and from grads of all types of programs; this causes the salaries to be lower than cost of living and any prestige factor would suggest. I've known people to get bigger offers in secondary cities in Florida than in NYC (to impressive people, I should add).
I was in a very similar spot, but in a major southwest market with lower COL. 1st year base pay was $55k with a $3k signing bonus as well as monthly profit sharing. Total first year pay was roughly $75k. Second year pay will be closer to $100k as we are growing.
was there any negotiation or back and forth involved? or was the base, signing bonus, and monthly profit sharing structure offered right away?
I told them my salary expectation and they matched it. As for signing bonus, I was mulling another offer, so they offered that to lock me in. Monthly profit sharing was offered right away, but structure of it was not set until about 3 months into the job.
Small shops are usually owned by one or just a handful of people and generally very dependent on acquisition fees, development fees, and/or the net cash flow from their operating portfolio (if they have one) to pay operating expenses, which will include your salary. The owners likely take a monthly or quarterly "draw" payment that is like a salary but much lower then they could make if employed in a big firm. When deals are sold, they of course keep all the upside (minus partner payouts) which can be huge especially if in a Tier 1 city.
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What does this mean for your salary and how to negotiate? Well, fixed expenses are painful, thus they will probably want to pay you less monthly guaranteed income, but could be considerably more generous with bonuses especially if timed with firm liquidity events. I think your idea of 50-65k is not unreasonable, but they get creative. I had a friend who took a job with a developer (smaller tier 2 market) who got $35k base salary but something like 10% of fees of the projects he worked on. If they were successful on starting new projects, he stood to make up to $100k per year reasonably, but he took much more risk. In all, expect to negotiate some trade of risk based comp in exchange for fixed income. If you can keep your expenses low, this could help you get rich if they are successful.
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You can also try for negotiating for more senior titles (this could help with exit ops after you have a few years of exp) and other perks that a small firm can do that a large one can't. Good luck!
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