I am curious about those who left CRE or REIB, where did you end up? I wonder if anyone did RE -> MBA -> non-RE or some variation of that, or if RE is a sticky field. You see a lot of IB into RE but never RE into something else.
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I’ve seen RE to HF, RE to Tech, RE to IB, RE to Consulting. Real Estate tends to be sticky because people enjoy the asset class and the money is pretty solid, but you certainly build a skill set that is transferable to other fields.
Asking a genuine question here - in what way do you feel like the RE skill set is transferrable to other industries? Setting aside the soft skills gained from RE, from my perspective (having worked across a couple different segments of the industry over 3.5 years) it seems like the hard skills you gain in RE are pretty specific to RE itself. For example - obviously there are parallels between valuing a property and say valuing a company if you work in M&A, but the degree of complexity in valuing a company exceeds that of valuing a property by such a wide margin that I'm not sure how useful the RE background truly is. Point being, while there is a bit of overlap between an RE job function and consulting, IB, etc, that overlap doesn't seem strong enough to ever convince an employer to hire the person with an RE background over someone with a background in the applicable industry (obviously there are rare exceptions to this).
The RE background isn’t useful in valuing a company you are right on that front. But the skills as a junior is mainly excel, PowerPoint, knowing formulas, and there are some soft skills that transfer as well like presentation skills. You don’t need your skills to be 1:1, especially as a junior, but RE can help you build a decent baseline. I mean, accountants switch to IB, consultants go to PE, and I’ve seen RE people go all over.
Valuing a building is just as difficult as valuing a company. Especially seeing as the level of knowledge needed to accurately put together a pro forma for a building far exceeds what the average M&A or PE analyst needs.
Merely pushing back on this assumption (clearly not from a RE person) that acquisitions is simple or even less difficult or complex than purchasing a company. After all, most buildings are owned by an LLC, and thus are a company in and of themselves.
.
I was being facetious about the LLC issue!
But as a previous reply indicated, modeling and diligence can be as complex or as simple as you want it to be for both a company or a single-building asset (let alone a large portfolio of assets).
Real estate modeling is much simpler than corporate valuation.
HOWEVER, if you're intelligent and actually understand the "concepts" of valuation, it is transferrable - there is just a small knowledge gap where you would need to make some calls
Well, "modeling" and "forecasting/valuating" aren't the same. I agree that a real estate model is generally easier (though not always... in fact, once you get into underwriting portfolios across multiple municipalities which may have alternative sources of financing, it rapidly becomes much more difficult), but that wasn't the question. The post I was responding to was specifically talking about "valuation"... and when you think about valuing a real estate asset, a ton of additional factors come into play that really don't when you talk about valuing a company. Perhaps few people do it, but knowing what kind of pipes are in the walls, knowing how many layers of water-based paint are on top of that lead-based paint, or how much asbestos is left in the boiler room, knowing groundwater levels and the condition of the roof across every square inch... all of this should be part of a real estate valuation, and only isn't because of the constraints of the diligence period. The fact that those details often get ignored when a similarly granular detail for an operating company will be explored isn't a reflection on the intrinsic difficulty of valuing each type of asset.
You're missing the forest for the trees. If you don't think this applies to corporate valuation (small details that are often overlooked because of time), you're delusional
I'm sure it does. But you can say "you're missing the forest for the trees" all you want... but saying it won't make it so. I've looked at investment pitches from PE companies, and did not get the sense that they were doing meaningfully more diligence or drilling down into more detail than a fellow real estate owner would in their pitch deck. Obviously you don't see the full extent of diligence being done in what is effectively a summary, but that goes for real estate as well!
I understand that asking the question "show me all the diligence you do!" is ridiculous, since it takes months and even listing what you look for would take a ton of time you probably don't want to spend, but I also reject the idea that you (generically) get to assert "corporate valuation is more complex than real estate valuation" and then decline to produce a single shred of evidence for that assertion and walk away. If you want to value a newly built warehouse for which Amazon has a 20 year lease, then sure... that's super easy. What happens when you have a portfolio of several assets, scattered across three states, which all have tax credits with different placed in service dates, different types of subsidy contracts, differing tax regimes and housing authorities and attorneys general to deal with, etc etc? It gets a lot tougher just on the regulatory front, before you even get into the assets themselves. Likewise, a cargo airline with fixed contracts seems like a pretty darn easy analysis, on par with a single asset LLC in real estate. Some multinational conglomerate is going to be much more difficult.
Which is why making the blanket statement "corporate valuation is harder" is silly. Even on average, it doesn't seem to me to be meaningfully more difficult, and the fact that no one seems capable of explaining why beyond saying "it is" is the kind of response which leads me to believe that there is less to it than the PE industry wants me to think. That's a generic observation, by the way - any time anyone cannot explain to you the complexity in a given issue, it either doesn't exist or the person you're talking to doesn't understand it, either.
The mask finally slips.
If you do development, you should have a great project management skillset, and sure while most of your knowledge is very specific to real estate (zoning, building code, construction, etc.) the broader brushstrokes are definitely transferable. You have experience running a multi-disciplinary team, coordination between multiple groups of people with conflicting interests, leveling/negotiating contracts, dealing with government authorities/regulation, work with multiple capital partners and understand the P&L of a project, able to learn on the go and pivot quickly, understanding the basics of legal docs (understanding how to negotiate contracts is extremely underrated in development), manage multiple projects at once, etc.
If you work in opportunistic RE, just like in a lot of infra, the modelling is identical to modelling corporates/ standard PE.
You may also be dealing with special situation deals which again are similar to coming into a special sit from a corporate perspective, whether from debt or equity.
Some deals you do also involve building out operating company platforms (check out e.g. Blackstone's European logistics platform) which again blurs the line between RE and corproate PE.
Some asset classes are also covered by REPE funds that are covered by infra funds/ regular PE funds elsewhere.
My path was CRE Acquisition (3y) > IB (3y non-RE related) > Corp Strategic Finance. Exit to anything is possible if you can tell a good story to sell yourself and try hard enough.
Can I PM you? Curious to hear how you did it. I’m trying to do the same move (I’m 2.5 years RE acquisitions)
Sure, feel free to. I came from a non-target background so my path is very non-traditional.
Yes
feel bad for anybody who left the real estate field. no field is better....
Have you worked in others and if so, which ? Also; why do you think its better? Just curious.
Residential real estate -> Vertical Developer/ GC -> Tech (Infra SWE)
Do I spy a Malta name change?
Yes
That's cool. Did you do a coding bootcamp or something?
Also curious about this. That's an interesting pivot
I left to go live in a van down by the river...
But in reality, I have not left CRE yet (work for a CBRE/JLL/Cushman type firm). Strongly considering trying to make a switch to something in the proptech field.
I have friends and colleagues who have left to do a wide range of things: personal trainer, reiki healer, web developer...just to list off the obscure ones. But mostly, I've met a handful of people who have left traditional CRE to work as corporate real estate managers, and shift around in the ranks from CRE to non-CRE activities within their respective organizations. That's the main one I see.
A mentor of mine did undergrad --> brokerage (think CBRE, Eastdil, JLL) --> Harvard MBA --> traditional PE
Back after 08-GFC, saw some people leave CRE for bartending......
Most actually made it back in just a few years.
That aside... I've known people go from RE to tech, corp. fin, commercial banking, government/non-profit, law school (does that count?), and various forms of non-re related entrepreneurship/startups/small-biz opps (for some reason seem to be many who buy/open nightclubs and restaurants... go figure).
The reality is that anything in the "business/finance" world is totally doable from CRE, sure you may need to learn certain technicals, but come on..... it's not like trying to become a heart surgeon or opera singer..... business/investing is all the same at its core, I'm sure you can move to anything if you really want it bad enough. (I'm discounting stuff like I-banking or firms/fields that basically require tons of pedigree and/or luck/connections to get hired within, that may not happen even for those with "perfect" backgrounds)
Of course, as many know and has been said above... real estate is found to better/cooler and often higher paid than a lot of other jobs/fields in the business world. Real estate is the "exit op" as they say!
You are just tooting your own horn by saying real estate is the exit opp. I’m sure if there was one, definitive exit opp to select, it wouldn’t so obviously or at least without significant debate, be real estate. Talk about having a bias.
LOL... you too "THE" wayyy to literally.... I was not implying mutual exclusivity.... I think most readers get the point, real estate is the desired outcome for most of those who seek it. The ratio of those looking to get in vastly outpaces those looking to leave. Just look around WSO... people from banking, accounting, consulting, and all other sorts of fields come here to get advice/tips on getting into real estate. Do people leave.... of course! It's not for everyone, but clearly the ratio is quite slighted.
As to bias...... this is the WSO Real Estate Forum... exactly what else would you expect!
It might be the top exit opp for him. I wouldn't go back into IB, or work for a PE shop, for almost any amount of money. Much rather be in real estate.
Everyone has a bias, all the time. Since there is no objective "best" choice, you should have been following your own advice and understood that @redever is talking about his own best exit, not yours.
I went from REPE to PE (growth capital). I'm not sure it was a smart move, but I really found RE boring as an asset class and thought general growth PE / tech growth PE more interesting. REPE made way more money though. You get a lot more capital leverage in REPE. We ran a $1B first-time fund in REPE with a team of 10, levered it up, returned 80% IRR (not a joke, it was nuts) and made the ibank we were attached to a killing. Moving to PE was a huge financial mistake, but then again, much more interesting.
Were the skills transferable? Yes and no. Obviously there is modeling and IM writing in both REPE and PE. But the models are totally different so what I had learned in REPE wasn't directly applicable to PE modeling. And the asset-specific knowledge and market/economic/macro thinking I had gathered up to that point in REPE was all thrown out. I had worked in RE development prior to REPE, so all that knowledge about how to get developments done was discarded.
I'm interested in the pivot to PE... What REPE role did you leave and what PE role do you have now? What are some of the biggest things that you had/had to obtain in order to make the switch?
I went from CRE Brokerage -> CRE MF ops -> tech -> now in a prop tech company
Also building portfolio on the side
Both fields have their own complexities, and while I respect and acknowledge the intricacies of PE, there's something straightforward about our real estate sector that's worth acknowledging...there's no shame or bias to admit it.
In PE, you often come across well-crafted financial models and presentations that require a sharp analytical mind to understand fully. Investment bankers weave together a web of variables, in their 75 page pitch decks with way more substantive information to digest than a simple Marcus and Millichap OM which primarily consists of fluff (photos, market data).Anyone in PE can understand this to be quite honest. Not too hard to understand the income and expense of a property. PE work dives into areas like working capital analysis, logistics, offerings, SKUs, warehousing considerations, gross margins, and more – a world of numbers and strategies that genuinely impresses me as a person who loves complexity. I am jealous of how they have a understanding of how businesses are not only bought and sold but in addition to learning the intricacies of operating one. Due diligence also consists of management meetings where you are communicating with people who went to top schools and are Ivy League educated. (RE is a hustler industry, many of the successful people we all know that are older now didn't even finish college), bid rounds, and virtual data rooms with much more high. level information documents than a survey, delinquency reports etc. that all these associates are exposed to.
Now, let's come back to real estate. In many cases, a simple handwritten rent roll can provide a significant glimpse into a property's potential. It's that uncomplicated (I am ashamed to admit)! While we do engage in thorough financial analysis and due diligence, it often doesn't reach the same level of intricacy as PE. But that doesn't diminish our work or its significance.
It's important to note that this isn't about comparing intelligence or capabilities. It's about recognizing that real estate operates in its own sphere, focusing on property management, cash flow analysis, and market dynamics. While it may appear "simpler" from an outsider's perspective, we understand the effort and expertise required to thrive in our field as @OZY mentioned when you get into the higher level acquisitions which isn't too common for the majority of people in the space.
Interestingly, I've come across PE colleagues who chuckle at what they perceive as the relative simplicity of real estate. They might assume we don't engage in high-level analysis or face similar challenges. But we know better. We know that our industry is unique, with its own set of intricacies once you peel back the layers a bit for. That serves for every and any industry. It is always more involved than you think. A wise man understands this. Make sure to stay in your lane and never think that it's easier to operate in another industry since this is a rookie mistake and can get you burned.
Ultimately, there's no shame in acknowledging that real estate is different. Our strengths lie in understanding properties, locations, and market/regulatory nuances, construction, management and rent collection. That is really the basic tenets of the industry.
Imagine anything that includes development would work, eg various infra, mining, O&G, midstream, power, aviation, gov't infra, etc. I see ex-RE is some of these. Caviat that modelling skill would need to come up for a lot of these as they can be pretty detailed fields, but that's not the only thing that counts when recruiting.
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