Long time lurker, first time poster here.
I'm a recent college grad and have been lucky enough to land a gig at a development shop (NYC), product is multifamily - both value add and ground up. I love the job although things can get crazy at times as my firm is small and we have to wear a lot of hats (which is great from an experience perspective but can get pretty hectic). I am really liking CRE and how different the day to day is at my job. I feel like there are a lot of opportunities for creative problem solving and entrepreneurial thinking in the industry especially working on the ground in deals as a developer, which I like a lot.
Anyways, I'm pulling 60k and living in NYC, which is pretty tough given the COL here. I am saving zero money whatsover and have pretty substantial student loans to deal with. I pretty much live month to month and i'd by lying if I said I wasn't a little bit envious at times of my friends who went more traditional finance routes and are making twice my salary by now.
I don't mean to complain because it's overall been an awesome experience and I feel very lucky to be working in Dev right out of college. But serious question for the development guys on here - when should I expect to start seeing higher comp? I feel like it is very difficult to find reliable data on typical progression / salary for this kind of position (I do understand that comp in development isn't clear cut and varies widely from shop to shop). Have heard anecdotally that at the 2-3 year mark comp improves a lot. Since I am putting in the time now without saving anything I would like to get a better sense of what I can expect if I stay the course. Iv'e read everything I can find on this forum and looked at the CEL survey etc. but still feel like I am in the dark as far as what this career will look like as I gain more experience.
Thanks in advance for any insight!
First off, congratulations on even getting the job straight out of college. I think the knowledge you gain from working at this shop will enable you to eventually start up a development firm of your own. That is, if your current firm doesn't offer you a piece of their deals once you've become more seasoned.
My partner and I are currently looking at a small piece of land in Brooklyn to build a 10 family on. I used to be in commercial brokerage, and I quickly found out that most of the developers that I sold land to made the most money. Good luck on your career in development
Would you mind elaborating on how you made the switch from broker to developer? Just personally curious
It's not really that big of a step if you are in the right field of brokerage. I'm working as an infill land broker right now, and can see a very direct path to development when that time comes.
I spend 10+ hours a day talking with developers and property owners of all sizes (think Greystar all the way down to a small local townhome developer), learning acquisitions criteria, digging up development sites, gathering DD to get the deals through IC and entitlements, working with cities to determine site feasibility, and basically doing anything required to put development deals together. Working with these groups/people all day everyday putting together deals for infill developments of every type (multi, office, hotel, mixed-use, etc), and having a developer database of 500 development principals and MDs will make the transition very easy comparatively.
Real estate development is far more about networking than formal credentials and preftige. If you have the exclusive on a compelling site that makes financial sense, have the ability to work a project through entitlements, and have the connections to accomplish the financial, architectural, construction, legal issues then you can get a deal done. You may need to partner with a more experienced development manager at first to get financing comfortable, but you can get going that way. Lots of broker/developers get their start this way.
Alternatively, I do have the basic qualifications to land a role at a larger institutional shop (Finance degree, public redevelopment/planning experience, and ability to build the development models/pitch books), but lacked the connections and private development/live deal experience after moving to a new booming city from a blighted and dying area with no private development happening. Now I'm working with these groups on a daily basis helping them find sites and put deals together. No doubt that I would have a much easier time with that transition now than back when I didn't know anyone and didn't have deal experience.
I'm not even at a large institutional brokerage (local boutique that mostly does MM multi-fam IS and some land), but am in daily contact with the preftigious institutional developers that everyone fawns over. The key is to get in a position where you actually get to talk, pitch, and run deals quickly as opposed to spending 3-5 years in a back office putting together models that no one believes or OMs that nobody reads. Real estate is all about networking, and is the only way to get the deals and connections needed to be of real value to principals. The sooner you can do that the sooner you can make the jump. No need for an expensive MSRED or other superfluous credentials. Just hustle and wit
The conversation won't hurt you. If anything, if you approach it in an intelligent and reasonable way, it might help you, even if they turn you down.
I would start gathering now a list of things you've learned/improved on, things you've knocked out of the park, extra/new responsibilities you've taken on, etc. I would personally respond well to "I've excelled at X, taken on Y, and improved dramatically at Z. Other people with my responsibilities in the market make $XX,XXX. I am respectfully requesting $YY,YYY."
Just don't make it sound like you're entitled to a certain amount just because some friends of yours make that at other firms. Boomers are very sensitive to anytime a millennial (or younger) fits the media stereotype of a millennial.
That salary does not surprise me. At the end of the day RE is a pretty low skill industry. Depending on the path you go down there are skills to be gained but those skills are rarely intelligence/scholastic based but industry experience and deal based. This means RE companies have a plethora of candidates for entry level positions. This is why the ramp up in pay is so large in NYC RE. Once you prove yourself in your company, prove that you fit well, take on responsibility and have an eye for the business raises come on quickly.
After my two years in brokerage I moved to a family owned company making 50K + bonus (low bonus), the next year I got a raise to 75K, the year after than was 85 or 90 but a much larger bonus (50 or 75%), then another raise in to the 100's. Six years into being with my company and I'm around 300K all in.
This also mirrors my friends experiences as well. First year always seems shockingly low compared to other numbers you hear but that's because you jump up pretty quickly.
You have a leg up on me because I had to do two years in brokerage before I made the jump. Just put in work, learn the business and the raises should come. If they don't then move on but do not get stuck on this number in year 1. Just work on proving you "fit in"
I would say 2-3 years of development execution experience is generally enough to warrant a $100K+ all-in comp package, assuming you are at a fairly reputable shop with real deal flow. From there, you may get to $250K all-in at a VP type of role, and maybe slightly higher ($400K) in a senior role. Salary compensation is (generally) capped around these numbers, and I think part of your question concerns equity participation in deals. Most shops don't offer equity until you are at a senior associate+ role. The payout on carried interest on development deals is usually longer term--5+ years (entitle, design, build, lease, then sell for profit), but can be big bucks.
Work hard...make contacts...and the rest will fall into place. I know that seems like generic advice...especially when you're first starting out...but it's true. Each step in my career has been completely unexpected.
As others have mentioned...you should be able to hit $100k fairly quickly. A straight-line progression could look like this...
Development Associate Development Manager/Project Manager Director of Development VP of Development
I know someone who just took a development manager position. The starting salary is $110k...with an opportunity for bonus (which likely won't be too robust). He previously worked as a development analysis for a couple years.
A director position would probably require anywhere from 5-7 years of experience. The salary range is likely anywhere between $120-170k...with opportunities for bonuses.
A VP position would probably require a minimum of 7-10 years of experience...depending on the size of the firm. The salary range is likely anywhere between $200-300k...with opportunities for substantial bonuses.
Once you start to reach the upper levels...I suggest paying close attention to the bonus structures. Depending on the firm...you can negotiate this aspect of your compensation package.
Some firms will offer a bonus for each deal that you complete...others will do an annual profit share...others will allow you to co-invest on the sponsor side equity contribution (this gives you a share of the promote and thus favorable cash distributions per the waterfall structure)...others will offer a small carried interest position.
Again...this varies from firm to firm...but once you reach the VP level and above...some places expect you to contribute some equity for new deals.
Ultimately...the way you generate true wealth is through participating in deals.
If you want to create true value when first starting out in the development space...source a deal...and negotiate a payout for yourself for bringing that deal to the table. When you consider the economics...it becomes a no-brainer. For an institutional grade MF development...a developer could end up making $5M (that includes development related fees and cash from the proceeds of a disposition).
In this market...access to deal flow is the obstacle...not the capital. So bring value through bringing an opportunity. While there's greater value in providing a deal opportunity...there's also value in bringing the debt or equity to the table as well. In such instances...you could get a small percentage for placing the debt or equity.
I do institutional grade MF. I would gladly pay $100k to someone who sourced an opportunity that I ultimately closed. It doesn't matter to me if you're a 18 year old or seasoned real estate veteran. Btw...that's not a solicitation...just a piece of advice on how you could create value. And the quicker you can start to think like a developer...and how the overall business model works...the better positioned you'll be to exceed in the space when climbing up through the ranks.
So...how to do you pull all of this off? Let's say you have a friend who's an analyst at a PE shop. Ask that person what kind of deals their firm does. And maybe you find out there's an alignment there between your firm and your friend's firm. Have a friend who's a broker associate or research analyst at a real estate brokerage shop? Let them know what kind of deals your firm is trying to do.
And here's the easiest way to source deals...share deals with other firms. An example: a peer from another firm looks at a deal that a broker brings them but it doesn't work for them. Now...that doesn't necessarily mean the deal is bad. It's possible that it just doesn't hit that other firm's investment criteria for whatever reason...could be due to the density...capital requirements...geographical location...etc. Anyway...perhaps you can get that peer to share that opportunity with you...and it works for your firm.
Big caution here...always be ethical...always respect NDAs...and don't do anything that would constitute you acting as a broker. That said...there are ways to pull this off. One way could be for your peer to simply tell the broker that the broker should consider contacting you and your firm as you might be interested in the opportunity.
This response certainly became a bit lengthy...but in conclusion...if you want to make more money and rise through the ranks quicker...go above and beyond...be resourceful...bring value.