Why do people stay/like being in RE?
My goal since college has always been IB -> MF PE, but my first job out of school ended up being in a CRE acquisitions role (where I still am now). Honestly, I don’t really get why people enjoy RE or choose to stay in this industry long-term. The comp always seems lower compared to IB and PE, and the work doesn’t feel nearly as exciting—especially when you compare it to something like tech M&A. For those who are passionate about RE, what do you like most about the industry? I’m working on pivoting to IB, but I’m curious to hear what RE folks have to say.
For some, real estate is simply a more entrepreneurial route. You can realistically do your own real estate deals or open your own real estate shop. You are not going to realistically do your own mergers and acquisitions or start your own investment bank. No one goes into real estate for a fat W2.
For others, they're probably a lot like you and me - they initially wanted a "high finance" job but didn't have the grades or pedigree for Wall Street. Commercial real estate is far more accessible but in a way that doesn't diminish your success. You can still be the fancy businessman you dreamt about as a kid and the career path is still obscure enough that the people back home won't have any idea what you do.
Speaking of Wall Street, not having to live in New York is another huge attraction of commercial real estate. In any single region of the country that appeals to your cultural preferences, political preferences, weather preferences, geographical preferences, food preferences, sports team preferences, family connections, etc. you will find a city large enough to have commercial real estate activity, and as a result, commercial real estate companies.
Along those lines, the quality of life is just flat out better. No one is dying at their desk from overwork in real estate. No one is doing 80+ hour weeks unless there is STUFF HAPPENING and when it does happen it's usually fun stuff with a fat check at the end of it so it flies by. Most front office people, including high performers, aren't working past 7pm and definitely aren't pulling weekends. Do you want an actual relationship with your kids? Do you want your wife to not cheat on you with your personal trainer? Do you want to duck out at noon on a Thursday to play golf and have your bosses not only not be mad, but be proud of you for networking? Real estate is great for that.
And then finally, people do the job because of preference. For some, including me, the "grunt work" in real estate is far more passable than the "grunt work" in something like banking, where you're spending 80 hours a week rotating PDFs, fixing obscure cells in models, and doing a 5th draft revision on a powerpoint slide that no one is going to read anyhow. I spent my "grunt work" days walking nearly finished units with blue tape pointing out deficiencies that clients (tenants) would actually care about. I built personal relationships with blue collar city inspectors that were the sole reason why I got TCOs on time. I handed out stacks of cash to god knows who to work past "quittin' time" because I knew that if I didn't have the shit done before morning, hundreds of thousands of dollars could be at risk. I'll still, to this day, walk around a property with the staff and pick some trash out of the bushes with my bare hands to set an example that if I, the owner, can clean up trash, they sure as hell can—because old heads hit me with that move when I was in my 20s.
Banger reply @cre. There can’t possibly be a better bearer of the CRE handle.
Everything CRE said is right on, especially as somebody else who didn't attend a top finance college and has never had much desire to live and work in NYC.
I'd also add that I generally find CRE work to be the perfect mix of finance/analytical and sales/relationship work for me. I'm never spending too much time behind a screen crunching numbers or hitting phones and attending meetings trying to move business forward. I tend to ebb and flow between feeling introverted and wanting the intellectual challenge of working through problems alone and then feeling extroverted and wanting to spend hours on the phone and then attend a happy hour or client dinner afterwards. CRE gives me the perfect balance to do both and makes me feel like I'll have a lot of longevity in this career without ever burning out. Also a lot of people in CRE I interact with have a good mix of being smart and ambitious without being pretentious assholes or insane workaholics, so I meet a lot of people I genuinely enjoy spending time with and aren't on some speedrun to being a resentful alcoholic 3rd marriage midlife crisis NYC banker type.
This is a good answer, it’s perfect for ambiverts.
Thanks for the thoughtful response CRE. The WLB part is definitely true from what I've seen among my college friends & the work is more meaningful compared to moving logos around. Tbh, I'm not particularly passionate about either RE or IB/PE, but I go to wherever there's lots of money to be made (as with most ppl). I know people who have built significant wealth in RE by owning multiple properties, but my understanding is that acquiring these properties requires substantial upfront capital. Wouldn't it make more sense to work in IB/PE, where I could earn $300K+ within 3-4 years, and then come back to the RE space & start investing in properties? It seems like it would take far longer to reach a $300K+ salary as a RE employee (I'm also in a LCOL city). Am I understanding this correctly?
My previous CEO @ boutique REPE had a son at T1/2 PE in NYC (and PJT/EVR/CVP previously). Guy used his income to buy a property or two every year through the firm. Very solid wealth-building strategy.
Very well said
This might be the single best answer I've ever seen as to why people gravitate to CRE. This response checks every single box for me as to why I love CRE.
I oddly see a lot of parallels between tech and RE. The goal is to move from being a W2 to a founder that solves a business need. Have a lot of friends that do the RE hustle. It's a lot of hard work, but you can make a killing in it. Funny enough, you can still make tons of money in NYC, it's just the price points are different and there is more red tape. Liked your answer a lot. Very nice take.
Having switched from IB to CRE, 100% agree with this. For the first few years after switching, being home around 7-8pm was bewildering. Now, if I'm not home by 8pm, I'm mad.
This is probably the best comment I've ever seen on this site. Couldn't have said it any better. The not having to live in NYC part might fall on deaf ears with this crowd but that is so underrated.
Incoming "entrepreneurial" and "bruh you don't make the money in RE as an EMPLOYEE"
Ask them what their take home last year was.
I mean, you're saying this on a site targeted to people in their early 20s who are just starting their career. Yeah, my guess is that someone working on Wall Street as a 23 year old will have far higher pay than basically anyone else in that age cohort.
It's also funny (and revealing) that in the same fucking breath you acknowledge that the entire appeal of real estate vs finance (from a pay standpoint) is that in real estate you have the ability to make far more money as an owner, rather than a W2 employee, and then implicitly say all we should do is compare W2 income.
What was your take home last year?
I mean what kind of answer are you looking for? It's obvious that there is good money in real estate...ever heard of Sam Zell? Ben Mallah? Jonathan Gray? I mean these are billionaires and multi-hundred millionaires in the top 0.00001% of real estate, but as with any other industry, there are guys in the top 1% or 10% who do well also and then there are guys in the bottom 10%. Just because one of us provides you with our take home, doesn't mean you will be able to achieve the same success. It's no secret that at the analyst/associate level IB/PE can make more, but they also work way more hours. As CRE said, how many real estate analyst have you heard of died from overwork? Also, on the point of real estate being more entrepreneurial, this is true. The only reason you think this answer is a cop out is because you're too much of a pussy to take any entrepreneurial risk. I would much rather work a 9-5 job in real estate making less, but having the knowledge and free time to pursue my own deals on the side with friends and family than slave away working IB hours. You know why? Because I have the knowledge to make way more money in real estate and that knowledge gives me access to investors, which I've been approached by many times. I can make at least an IB senior associate's entire take home pay in 6months to a year in 1 project and I would consider that a very small project.
Fred you just put Ben Mallah in the same sentence as Zell and Jon Gray lmaoooo
Just to be clear - you've never actually worked in IB or PE, but you think you're qualified to discuss which roles are the most "exciting"? Especially as a junior employee?
If you don't like being in real estate that's fine, not every job is for every person. But the breathtaking arrogance, not to say idiocy, of not only presuming that your preferences are more valid than others, but that you have any worthwhile insight into any other possible job, is honestly impressive in a real dispiriting sort of way.
I like the fact that my job involves creating things of actual value, instead of shuffling logos around on a screen or pitching the same half baked, unnecessary advice to clients in the name of generating fees. The end product of my job is a home, and if I do my job well, it's a cleaner, safer home than someone had before. Advising some company to buy another one, gut all the things that made the acquisition target valuable in service of generating short term returns for investors, and then waiting ten years to advise the original client to divest from the company they ruined just doesn't seem as fulfilling to me. But to each their own.
I genuinely didn’t mean for my post to come across as disparaging or arrogant—I apologize if it did. My intention was simply to ask for insight from people who are actually passionate about RE, unlike me.
To clarify, I interned at several IB and PE shops throughout college, but I ended up in a RE role because I didn’t get an IB return offer. My main concern with RE is pay—almost all of my college friends are now working in IB/PE, and seeing the kind of compensation they’re earning in their early 20s has made me reconsider pursuing IB again. 1st yr PE assoc can easily clear $300K+ these days, but I don’t have a clear picture of what pay progression looks like in RE. My coworkers don’t talk about compensation much, so I’m genuinely curious about how people in this industry view long-term earning potential, since it'll probably take me many years before I even clear $300K+ at this firm.
RE comp will undoubtedly be lower than IB/PE in general, but there are still lots of opportunities to make an excellent living especially for people that are unable to get a foot in the door at a top IB/PE but are still pretty smart and disciplined, and WLB and geographic flexibility will generally be much better as well (as CRE already pointed out). You just need to do some introspection and figure out your interests and priorities, and maybe make a career change after a few years if you make the wrong decision. It sounds like your top priority right now is pay, so perhaps focus on IB/PE for now.
You're also not going to get a clear answer on how we view long term earning potential in RE. Everybody here knows people clearing $1mm/year and people who stagnated early in their career and left the industry before ever managing to clear $100k. It's all over the place, and generally people making $300k+ are getting a lot of their comp through bonus/carry/commission not base salary.
To provide a different perspective than what’s been discussed so far, there are also plenty of RE opportunities in RE private equity/debt that do have compensation on par or marginally under traditional PE and follow a similar comp structure. You can absolutely make a lot on a W2, and there are plenty of shops in HCOL markets (NYC, LA, SF) where this is the case, and it’s not restricted to megafunds, there are mid sized and even small shops where this is true. CRE’s take is great and applies to many in the industry, as the barrier to entry, especially in MCOL/LCOL markets, is easier than traditional PE/IB and can provide a more feasible pathway to finance. That being said, there are plenty of people who have had the choice between IB/traditional PE and CRE or left one of those industries for CRE because 1. It can absolutely be lucrative and competitive. Just go take a look on LinkedIn and you’ll find plenty of shops where all the associates went to target schools and have IB backgrounds, or take a look at REPE comp reports 2. It’s a unique vertical of finance. It’s a cliche answer but when you ask me why RE, it’s because it’s a tangible asset. I love the fact that small details in my model such as increasing capex budgets based on physical deterioration that I saw in person, and being able to look a skyscraper that impacts the day to day lives of people knowing that I know it like the back of my hand is way cooler to me than looking at buying some small business. This is unique to value-add shops and those that do development, but unlike some PE shops that add “value” by cutting staff, there are many CRE shops that work on unique opportunities like office to resi conversions in cities that truly need additional housing supply and yes, the goal is to make money, but it also genuinely benefits the broader area and the work CAN be a net positive to society (that being said of course there are slumlord shops that just buy existing multi and just drive up rents).
You're correct that there are firms that pay on par with PE, but the number of these seats is limited. They generally prefer to hire bankers rather than people already on the buy-side. To be an "associate" some firms will require more than just two years of REPE experience. Comp at REITs is shit and any "family" is going to underpay you. Real estate is a "passion" industry and anything people are passionate about pays less on average. For example, look how much a video game developer vs a SWE makes. Or how much a back office finance role for your favorite sports team vs a random F500 company pays.
I have three YOE in REPE and part of me regrets not just trying harder to go into banking. My risk tolerance is way lower than when I graduated and I just want to maximize base + bonus. I'm underpaid for real estate, but it's not offensively low. Doing your own deals isn't complicated unless you're doing multi-tenant office or development. People bullshit and make due diligence sound so complicated, but you literally just order a few reports and have your lawyers and accountants do the rest. Carry isn't even reliable despite real estate being a "safe" investment. I watched my coworkers carry dollars over the past ten years go up in flames. It only takes one or two bad deals for a fund to blow up.
I'm an associate (ignore my title) at a family office that has institutional sized AUM, and I am paid above market. This is a sweeping generalization.
To your point about carry going up in flames, that comes with the territory. In real estate you have the opportunity to make significantly more money down the road, but that comes with assuming risk. Even investment bankers are not impervious to deals blowing up or having a bad year. No profession will offer the opportunity to build significant wealth without assuming risk.
How is any of this unique to RE though? The high-level, lucrative seats are always limited no matter the industry. Similarly, bad deals have the ability blow up any fund, no?
Why I still derive income and spend time in RE
- near monopolies: yes, while a certain product type can be found all around a city, within a sub market or neighborhood you can garner a monopoly or near monopoly for several years to several decades. There’s a bigger possibility of monopoly power than compared to selling a consumer good.
- creative finance: it’s the combination of finance and creating something new.
- hometown: if you came from a non-finance centric hometown, like myself (Honolulu), RE development was one of the most exciting and prestigious finance jobs growing up. At least in your social circles, it’s a great field - and that’s really all that matters anyways if you’re seeking validation. I enjoy helping my hometown and nonprofit board with my RE knowledge.
- customized career: I’ve been working from home since 2016. I got great experience working for big and small companies. A couple strong relationships and you can literally create your own job for the latter half of your career. As mentioned, the bigger money is in risk taking ventures, which RE has in small and big sizes.
- leaving RE: I’m no longer as passionate about RE as I was before. 20 years is or will be half my career. It’s served me well. My risk appetite is a lot lower. I think people can churn out and that’s fine. Find what interests you. I’m mainly still in it because I still am part of investments and I enjoy my work with people I like. But the fire to create more, risk more, is largely gone for this industry. I’ll still help others be successful.
I thought that Hawaii has really strict RE development laws due to nature preservation? Unless only Honolulu is allowed to be developed due to tourism?
I went through my analyst years doing IB at a top M&A group, now am ASO1 at a MF real estate group expecting to clear 300k comfortably. If you compare apples to apples you get comped the same as any other PE sector, so not sure what point you’re trying to make other than that there are fewer seats so it might be more competitive.
Boring? Maybe for you, but to me, buying out a hotel or a retail center is infinitely more interesting than investing in the nth SaaS or car bolt company. If you’re not cut out for it, you should leave, as with any other job. I disliked my SA stint in tech PE because I realized diligence and underwriting lacked grounded fundamentals. My IB stint even more so, with the added bonus of going braindead moving logos and populating VDRs.
As for why real estate, there have been endless threads about this and everyone has their own reasons. It is intellectually stimulating, I get paid well, I have a roadmap to go entrepreneurial one day and build scale, and to paint in broad strokes, I believe many unique aspects of real estate as an asset class position it optimally for future growth in the medium to long term. There are reasons it’s the largest asset class in the world, and always will be.
what do you think positions it well for the future?
My best friend studied architecture and is doing RE (more specifically REPE at a MF) because he wants to build his own house one day 🔥
There’s a path to making very good money in RE as a W2 without having to go off on your own. I’m a deal lead for a region and clear $650k - $750k in cash per year + points in a fund that’s over $1B with 12 YOE.
I'll tell you what. You show me a pay stub for $650,000 , I quit my job right now and I work for you.
Lol we are hiring an associate if you are looking.
Hi DM me as well please. Went to target ivy with 2 years at well-reputable shop in acquisitions. Thanks
Compensation is dependent on many variables. If you are at a no-name RE acquisitions firm, don't be surprised that pay is lower haha. Additionally, more notes on compensation below:
RE, like every other industry group, attracts people of it's own kind. The people who like RE usually happens to enjoy the tangibility of these assets and how connected these assets are to their everyday life. Additionally, if you get bored with vanilla multifamily RE, there is a whole alternative/niche RE subsectors that are more on the lodging and leisure side such as investing in ski resorts, luxury hotels or more hairy deals like take-privates, distressed debt, opportunistic deals.
It's not our job to make you like the industry, you just have it in you or you don't. And there is nothing wrong with that!
It’s really unhealthy how you kids are absolutely obsessed with these financing tracks. A tiny part of the population of successful wealthy people are “high finance” folks. The vast majority create a product or service that customers love and need and it makes them wealthy. Finance is a percentage fee business… it creates huge revenues on the back of people and business that actually create tangible value in this world. If you’re good at this and can get in… great but I highly suggest not drinking the kool aid and joining the shallow values and mindset most of these folks have. It’s a good idea to get some perspective and stop thinking “high finance” is actually as respectable as you think it is.
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