Would you move from real estate development to asset management?
I have been offered a position with a prominent PE firm working on the asset management side. I would be managing / overseeing our development partners and projects where we are the LP.
This firm invests in pretty high profile projects.
I am not sure about this move (because I seem to hear mix bag on 'asset management')... my interest is in real estate and real estate development , but ultimately on making the most money (with the least amount of stress hah..).
What are your thoughts on long term prospects?
For the first part of your quote, I'd say AM might make you more money in your first 5 years, but then a whole lot less money over the course of your life.
For the second part of your quote, re: stress, I'd recommend you go with AM over development.
Everyone is entitled to their own opinion, but I have to disagree with the guy saying AM is more challenging, etc. It's clear he is in AM and has probably not had any experience in acquisitions and/or development. I am responsible for all three in my current position and AM is by far, and I mean a long, long shot, the easiest portion. In terms of learning the most it goes development>acquisitions>asset management. In terms of challenging, enjoyable work it goes development>acquisitions>asset management. But I do agree, in terms of job stability, it goes in reverse - asset management>acquisitions>development.
To recommend someone starts in AM and uses their nest egg and experience to get into development is a recipe for disaster. Managing a stabilized property will not prepare you for running a development. Don't get me wrong, operating/managing the asset once it's stabilized is important, but not nearly as difficult as development or even acquisitions.
But to OP's question - leaving development to go to AM when your actual goal is development does not really make sense to me. You will learn more in development. Now if it's just a personal choice of wanting the type of work and job security, then that's a whole different discussion.
Like RE Dev, I also cover all three and agree with most of what he says. That being said, I would say AM can be the most challenging due to the fact the acq guys hand you a bag of shit i.e., give you a deal they PF a 5cap and that's what IC is expecting when in reality, it's barely at a 4.
I've also noticed when things are hot, everyone wants to do acquisition/development. When the economy hits the shitter, the traffic is in the other direction. I'll let you judge where we are in on this cycle.
I was waiting for someone to comment on this. Depending on how the shop operates (i.e. if acquisitions and asset management are independent silos) yeah you could be in for a stressful job. Your acquisitions team pulls the trigger on a crap investment and leaves it up to you (AM) to figure out how to make it perform as underwritten. You're playing from behind from the start.
Also I would argue that right now AM professionals are super stressed given where we are in the cycle and with COVID impacting almost everything. 2020 budgets are shot. Long term pro formas are probably shot. AM might be running around like chickens with no heads trying to save properties, portfolios, or a whole company whether acquisitions folks gave them a great deal, horrible deal, or somewhere in between. Probably having uncomfortable conversations with their deal team/capital markets group, investment committee, tenants, and probably lenders too.
Generally I would say AM is much less stressful than other areas of CRE (especially development) but can also be incredibly stressful in certain situations and certain constructs.