Starting CRE Career in lending
Would starting my career in CRE lending (think PNC, Valley National type firm) be a good move? Right now I’m a brokerage intern at one of the big three CRE shops with their private capital IS Group. Learning a ton but not sure if brokerage is for me. I have long term goals of owning my own investment/development firm and trying to align my early career moves with that goal in mind. Would starting out on the financing side be worthwhile or should I stick with brokerage? What are common comp levels and exit ops within lending?
Yes lending is good, but so is brokerage. Both are great places to start and learn.
Lending you can do to credit fund, buy-side, or another bank. You have a greater chance of being pigeon holed in the capital markets side, however. Not a bad thing. Also, for this next cycle, I believe credit will do very well on the risk adjusted return ride.
What’s the difference between lending and brokerage? Is lending like typical banks such as Wells and brokerage like JLL/NMRK?
yes, lenders lend their own money or bank money. Brokers connect people who need financing and banks/lenders.
Thank you for the insight. Any advice in terms of comp levels in a role like that? Would this be considered commercial banking?
Yes it would. It really isn't the worst place to be, with decent exit opps.
Lending at banks you list is easily one of the best jobs out of UG you can get (assuming you are not at so-called "target" and can land a legit IB or equity fund role). They will train you, pay you decently well (for a UG), and the experience is respected in the buyside world and other parts of real estate (including brokerage tbh).
Now, is it "better" or "worse" than brokerage?? Really really hard to generalize. Like if you start as analyst with Darcy Stacom's CBRE team that will be 100x more "powerful" than a credit analyst role at Valley National..... if instead you are an analyst/associate on the an industrial leasing (landlord/tenant rep) shop at CW in N. Northern NJ (note... no clue if this team is good/bad or even exists lol, just made it up).... I would say the banking job is wayyyy better for future buyside roles in investment mgnt and 100x better for development. So... if one must "rank".. I'd say top tier IS/DE brokerage > regional/national lending > average brokerage. This is strictly on the starting/exit-op fronts, if you like/want to do brokerage.... then clearly do brokerage....
Final point, if you decide you want to go up the chain to the "top tier" or even "middle tier" institutional investment mngt and/or development, you may be best served by going back to grad school in a few years. Like a banking job for 3-5 years, plus decent MBA/MSRE, can be a very legit (yet time consuming and costly) way to leverage this career path.
Right now I’m interning on one of the top capital markets groups in NJ focusing on private capital investment sales. Meeting all the big players in NJ CRE and learning a ton about how these deals get done so it feels like a good start to a career. Just not sure if it is for me. For example, I don’t think I’d like being full commission. Also learning it is impossible to understate how important the specific team/Group you’re apart of is. Seems like there’s no such thing as broad, blanket advice in something like brokerage as it is fully dependent on what your team/Group is.
Transparently I also keep hearing how “you don’t necessarily need a college degree to do this” which doesn’t make me feel great. I don’t want to be limiting myself as I’m a really good student with a strong resume and relevant experience and leadership examples for my age, in my opinion
To make you feel a bit better on the not needing a college degree comment - you don’t need a college degree for pretty much anything in real estate. For that matter - pretty much every white collar job in the US (except for scientist type jobs etc.) you probably don’t need a college degree for. A college degree has become a pre requisite as it’s a way to sort people and “find the best” which frankly is not true. Some of the most successful people I know in this industry never went to college.
Should also mention that I’m in a sales role in the team, not an analyst role. As far as I know, though, exit ops are far superior for analysts as they are the ones with the strong modeling/valuation skills, no?
Responding to points from both your posts here....
- Not exactly sure what you mean by "private capital" but I interpret this as sub-institutional clients (now with a market like NJ, that can easily mean "institutional" grade assets and deal sizes... just nature of big/expensive markets). The real and direct question... do you want to work for this group/type of clients? If yes, that is the target, then the brokerage can be great for facilitating that move. IF you are hoping to "level up" (like go work for Blackstone, and your clients are nothing like Blackstone), then the brokerage job won't be uniquely helpful, and the banking route could easily be better. This is subjective, so just laying out the framework.
- The "don't need college" thing is an interesting "tell" that relates to the above point. In the top tier institutional world, having grad degrees are super common, practically required, and even "where" you go matters (yes targets are real, even if overstated on WSO....). So.... when you talk about your academic ability and desire... sounds like you want to live somewhere in that "higher-up" world. Subjective call if its better or not....
- If by sales you are cold calling (ala Marcus and Millichap style), prospecting, and not tied to the "analytical" side of IS (which is overrated tbh...), then you are correct about the lack of transferrable skills (with respect to modeling/valuation, etc.). BUT, if you are legit negotiating deals, managing DD, and involved in deal structuring/finance, etc. you are still getting skills that have transferrable value to buyside firms (more aligned with development than classic investment mngt tbh). If you self study the modeling and force yourself to do it (like "underwrite" the deals/listings you are working on, even if not required, this could become value add to your clients and firm, you should be able to over come this deficit in all reality.
Gonna be a interesting time to get into CRE lending to say the least
I’m an analyst at a lender - we do large un syndicated construction loans I’m underwriting probably 5-6 deals a week and trying to get as much transactional experience as I can. - my office has had a few prior analysts that all left for mega funds / joined top capital markets teams at brokerages. It’s definitely an extremely valuable experience to have and based on where previous analysts have jumped to, has great exit opportunities. I would take the lending job
I was at PNC for 2 years in a development program out of undergrad. Then went to another bank as a CRE underwriter. I am now placing equity for developments and acquisitions, getting closer to where I want to be (the buy side) but also enjoying what I'm doing and could see myself here long term.
PNC sucks. It is extremely corporate, bureaucratic, and the pay is not great. If you start in the RE development program you will probably be making $60-$70 for your first 3 years, not horrible, but not much upside (maybe $80k + 20% in your next role and $150 + 20% after 8 years). You will learn a ton though, significantly more than you will learn in IS. Work/life balance is also good, would never work more than 50 hours, and your role/job requirements are very clear.
IS is sales focused, and not for everyone (including me), but there is significantly more upside ($200-$400+ if you’re killing it). I was able to exit underwriting after 2 years to more money than I would have if I moved into a lending role at PNC or my 2nd bank. I likely would've had a $80-$90k salary with 10%-20% bonus. Now I'm at $95k with 40% bonus and way more upside.
Overall, unless you are a people pleaser, love to network and talk, love to grind constantly and always be making sales, go to the lending route. Stay there for 2-3 years and then reevaluate. Or try to wiggle your way into a buy side role (investment/acquisitions/AM analyst) right out of undergrad (much harder to do).
Just an FYI, being "a people pleaser, love to network and talk, love to grind constantly and always be making sales" is basically what you have to do in acquisitions too, with the added bonus of taking round trip flights to random suburbs on a Monday
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