What's with all the IB/PE bros asking about CRE?
What's with the sudden interest in commercial real estate?! It's not fun and you get paid like shit, go away!!!!
Just kidding, all are welcome.
But for real, what's with all the interest in real estate as of late? Not strictly talking WSO, but in general. Everyone seems to be wanting to get in the space as of like, 2016 or so. What would be your guess as to why?
Could be related or not, but feel as if the CRE job market has gotten absurdly competitive the last few years too. It used to be you have a degree and you like real estate, then bam - you got a job. Now they are looking for 3+ years experience, MBA or MSRE, plus whatever else for an entry level, ANALYST role, like wtf is that?
What are your guys' thoughts?
I think in general CRE is becoming more institutionalized. Most jobs were (and maybe still are) with small family offices, but that is changing. Now, larger institutions are building out more CRE allocations and teams. As such, you'll have more people inquiring about it.
Exactly this. You can summarize it into one word: BREIT.
Big REIT's?
Helpful tip for you given that based on your username you were likely born in 1999 so you genuinely may not know this yet
Whenever you see an abbreviation or any word that you don’t fully understand... just copy and paste it into google. Sometimes the first result won’t be exactly what you’re looking for. Then you can try “xyz abbreviation finance”
Idk why but this always bugs me when I see someone on the forum type out an entire response saying “what does xyz mean?” When you can literally type “xyz” into google and the very first result gives you the answer
End rant
I can only speak for myself and for my close network. I think COVID is partially to blame. With massive layoffs across the country, I am starting to realize that one source of income may not be the best approach because if you lose your job, you’re kinda screwed.
People are seeing RE as a great way to diversify investments and produce monthly income. However, it can be a steep learning curve to be able to jump in without any experience. What better way to learn than to join the industry?
On a more personal note, Commercial Real Estate as a career is quite appealing. I have always been interested in fundamental research and it seems like this will exist for a long time in RE compared to other asset classes. It’s still a form of investing, except you are looking at something more tangible and there are proven ways to add value to your investments. This is not necessarily true in other investing careers (Equities, PE, VC, etc).
He said it guys! You know the rules, take a shot.
Are they actually IB/PE bros or are they undergrads who don't know jack shit about anything?
This, 100%. Don't confuse the "IB" tag beside their name with working in the industry.
They're probably college kids who are still figuring things out and just learned that there's a career path that doesn't necessitate 80 hours a week of editing powerpoint slides.
I suspect it could be driven by the market, or specifically, people thinking there will be big 'distressed' deals ahead.
Finance types always mess this up, they think stuff will be '10 cents on the dollar' in the NPL and distressed property arena. This happened in the early 90s due to the gov't being stupid (research the RTC). Did not happen after 08 anywhere like people thought it would.
I think after 08 there was like $10 for every $1 dollar of actual distressed assets, it was a joke. Tons of HF and PE shops that never had an eye on real estate gave it a try. (go look up firms that where trying to 'buy tape')
I'm already seeing it in NYC. Several calls from investors (HNWIs and PE, no HF yet) asking about getting 20% off before even explaining their situation. When I ask why they think that's warranted it's been, "Hello do you see what's going on out there? It's going to get worse." Sorry man, just because your equities got slammed doesn't mean there's a fire sale on performing assets in Manhattan. Kind of scary that people with this much money are that disconnected from reality.
To be fair, equities get slammed overnight. Real estate may just be trailing by 60-90 days. Once you have 2-3 months of rent collections declining from 95% ot 85% down to 50... some of those fire sales will definitely materialize.
But for sure, there are a lot of vultures who frankly don't even understand the industry who are thinking to buy "at a discount" as if that's a business plan.
Many people who succeed in real estate do so not because they're the smartest in the room, but because they know how to build relationships and ultimately a pipeline of business. My hot take: might be a rude awakening for those who decamp to real estate only to find the reason they didn't make VP is still staring them down, and they're now down a fair amount of social capital.
Not directed at anyone in particular, but yes succeeding in any partner- or principal-level role is heavily dependent on one's ability to source deals (and politics). I've never worked in IB but I know it's true for most banking industries with an established hierarchy.
There's a book titled "What Got You Here Won't Get You There." I think it's a handy reminder (warning?) that to continue up the ladder, one's main responsibility pivots from execution to sales.
Sometimes this hits analytical people hard. Law firms are even more notorious for it.
edit: reworded to make more succinct
edit 2: less cryptically, anyone will have job security if they're able to bring in business and some people don't learn that skill set early enough in their career. I just think real estate highlights this better than other industries.
Former IB'er: "Hi RE Firm, I gunned all my life for IB or PE, and ended up hating it or couldn't cut it."
RE firm: "Please, please come in and have a seat, golden child. We were just looking ahead at recovery rate projections based on xyz."
Former IB'er: "What's a recovery rate? It sounds so... tangible."
RE firm think to themselves without words: "He/She is glorious"
I majored in RE and intend to go back when my analyst stint is over, but I more or less fell into an IB offer out of school and took it before RE recruiting picked up.
Reasons that it's a better mouse-trap below:
(i) It is generally good to work in an industry, particularly on the principal side, which is inefficient and is as essential to the broader economy as labor and capital. RE is that industry. (ii) As a general matter, the actual finance component of the job is both much more tolerable and valuable in RE than it is in Corp. Fin. I would never spend time on out in the weeds on GAAP pension accounting so that I could un-GAAP and re-GAAP an income statement if I were underwriting the acquisition of a multifamily property. I would be able to cut out all of the bullshit and be able to focus on the actual applied economics. (iii) Mid-late career ceiling is much higher. I guess that you could get to C-suite or partner level and be doing as well as the top earners in RE, but you could throw a dart out a window at a ULI annual meeting networking event and semi-regularly hit a guy who could buy and sell my MDs. (iv) No suicide-inducing hours. Pretty self-explanatory, but it's generally good to have a job where you never have stretches where you're consistently clocking out at 3-4am. (v) RE people are generally more enjoyable to be around. There are some IB associates or VPs who are just wired for the job, but most are miserable fucks because they have miserable jobs. (vi) Way more interesting and fulfilling to have the end result of your work be something tangible instead of being a deal toy which represents Company A trading a piece of paper to Ad Hoc Creditor Group B in exchange for a new piece of paper which Company A winds up defaulting on 6 months later.
I could go on, but these are the big ones.
True. If we use the respective WSO forums as a crude proxy, I'd take r/wallstreetbets over the participants in the IB forum any day.
promoteseeker shot!
I have nerworked heavily over the past few weeks and have landed 2 informational interviews/phone calls with Carlyle and Cerberus. Both interviews/phone calls will be conducted by 2-3 people with at least one of them being alumni. What should I do to prepare for the interview and going forward, what resources exist for me to make sure I land a REPE role this recruiting cycle.
EDIT: pls explain why MS. I am a noob.
I'm assuming it's because your comment is 100% irrelevant to the topic of this thread. It looks like you just found a thread with a lot of activity and decided to post an off-topic comment in it, hoping that you'd get replies.
Becoming more institutional (increasing comp, prestige, etc), id argue comp can be unparalleled at more junior levels for major market slaying teams (or at least more quickly if one can start deal flowing earlier), also maybe tied to the structured fin aspect (CLO, etc.), which has been around but I guess more pronounced recently ... probably also tied to the current COVID shit... everyone trying to grab "underpriced" r/cmbs/clo securities and/or distressed debt... also maybe ppl are finally realizing how much more interesting it is than IB, etc... (buying/developing or financing real assets vs financing or investing in a widget maker lol).
As dumb as it may sound, it just seems to be a more accepted or "normal" finance oriented role for new hires/young profs. Years ago many ppl (clowns) thought "working in RE" meant you were a realtor vs owners/developers/BB debt or CMBS shops/structured fin/debt shops/REPE, etc. Historically (and even still), all RE new hires had some sort of industry link.. they truly wanted to be in RE and were groomed for it vs any other industry... usually all because their family was in it. I swear every new analyst/associate has family/ties in the industry... many times they're big swinging dicks. But now its definitely just opened up ... more consistent with new hires as any IB/ER/PE hire.