Anyone else not for that deal life?
I get it, its sexier, probably higher paying, and more prestigious. Personally I don't think its worth the stress, I'm looking for a way out very soon, maybe still in real estate but something on the management or operations side of things.
Curious to hear if anyone has made a similar transition
This happens to a lot of people, not just in RE but in IB and PE. I began in real estate investment banking in a very small boutique firm that basically lived and died by fees generated from closing deals. It was very stressful all round, I left right before the 08 crisis hit (more or less saw it coming, at least with respect to what we did). I am now in research and strategy, like it a lot more (this is really a super personal thing, it fits my own highest and best use, not for everyone).
Since I work for a principal investor/developer, still get to be part of the fun, but I'm not as directly in the line of fire. You always have options, going to asset management is usually the easiest transition point and I'm not sure the pay structure will be that different (a lot of firms reduced the difference post 08, still 'sexier' on acq, but many firms leveled the bonus structures substantially).
Good to hear that it happens more often then I thought, I'm also at a small firm (10-15 employees) so wear many hats which I think is pushing me over my limit.
I'm actually surprised some people in this thread mention development as less stressful. In my eyes I was looking at it as even more stressful with LPs hitting you up for updates, tight deadlines, etc.
Go look at the IB board, they talk about 'exit ops" before even starting the job, they basically know they will probably hate it.
Development is generally 'slower' compared to any transnational deal business. There are still deals, closings, due diligence, and all the rest, but it is far more infrequent. Further, the developer has more control and options. It's very different being on the buy side than the sell side to put it bluntly. Developers have to worry about raising capital and securing loans, or however else they finance their deals, that is probably the most stressful task. Other stressful tasks are getting city approvals, sales/leasing, etc. But all of those are 'slower' and the developer has more control, hence why people say it is less stressful.
It is VASTLY overestimated on here how many people are going to be "deal makers" or the next Sam Zell. Reality is MOST people in the real world are going to have a salary plus bonus structure earning around 200-300K range. Real estate might be entrepreneural but look around you, excluding brokers, most of your peers are getting paid a salary plus bonus. That is the harsh reality.
Harsh reality of $200-$300k/year? I'll take that, thank you very much!
Haha, actually though you're right. First everyone thinks they will be the top analyst/associate anywhere, memorizing any and all modeling questions/formulas, can write the best IC memo out there, and can underwrite any type of deal structure with ease. Then comes time for the VP stage and those same analysts/associates who were freaking out about who was the best at excel or Argus, now are stuck holding the bag because they never enhanced their production skills and that's what carries you from VP and beyond.
Also, OP thanks for writing this. I'm sure there are more individuals out there with the same mindset, but were hesitant to say anything since everyone on here appears to be that deal-chasing nut.
Haha, I will take it as well, that is solid middle/upper middle class in most areas. Underwriting or asset management in the debt or equity side is a solid gig with good work life balance . Ride it out for a while and you will be in the 200K+ range. Not sexy as development, but again most people are not developers, they are development managers and get paid a salary+bonus.
What do you mean “production skills”? You mean like sourcing?
I think people also underestimate the time it takes to advance, get good at a job/skill/role, and actually add value. Too much, 'they want to hire me because I went to X school and worked at X firm'... total bullshit. They only want to hire you because you will add X value or make X money for the firm, delivering massive value isn't something someone right out of school is likely to do (nor really expected to do).
Being high up in the property management side seems like a good life.
Does anyone have any insight on how people would start their own property management shop, and what that would look like?
One way would be to own a few properties and manage them yourself. Then you meet a few investors and they hate managing their own properties so you offer for a monthly fee. You really have to scale quickly or not need a ton of money to live on because it takes a lot of units to make it.
My current property manager did it this way. She managed about forty or fifty rentals for her fiance and when he died he had never written her in his will so his ex wife got all of his properties. She was left dry and started managing properties for a few other investors she knew in the business.
The "deal life" definitely lends itself to a type of person/personality/worker, usually on-the-go and always on the lookout for an edge, etcetc.
That being said, the other side of the coin has its own issues. In my role I get to work on acquisitions, development, & asset management (+ little bit of property management). Each function has pros and cons, and you'll likely be stressed out by something going on in any role. (Stress has more to do with your perspective on life & work IMO.)
Acquisitions: trying to get a deal done Development: managing City, managing consultants, managing costs, managing construction, managing timelines, managing leasing AM: dealing with investors, monitoring property performance, looking for efficiencies to safe cents on a psf basis, dealing with tenants
Regarding compensation... if you bring revenue in to the firm, you'll be compensated appropriately, and that is true across any industry in the world. In general though, you can get paid decently well if: you add value &/or you are hard to replace. Typically those require expertise, and expertise requires experience.
These days asset managers live a pretty sweet life with how more comparable their pay is getting to acquisitions. The difference is not big and they will have the experience to go off on their own if they really wanted to cause they understand how to get a property to perform.
They get a perfect work/life balance.
I feel like asset management is way more important than we talk about it on here. Acquisition guys just buy an asset and move onto the next deal. The asset manager has to make sure the asset performs well over the holding period.
The acquisition team pursues heavy value add 15% IRR deals, then underwriting stupid f**king assumptions for CapEx, TI, leasing, etc that in reality, as an asset manager I know is BS.
Then as an AM, every week we go through the struggle of not being on track to meet the business plan.
Everyone is going to need to be at least a little about "that deal life" on the principal side or you'll top out eventually.
I will readily admit it isn't my favorite part of the job as a developer, and I couldn't imagine being an analyst just cranking out model and memo after model and memo day after day, but I'm not going to have anywhere to build cool stuff if I don't find the dirt or someone I work with doesn't find it for me.
You can always try to find complimentary partnerships down the road, in which you partner with someone who excels in an aspect of real estate you don't or at least don't like, but finding dirt or buildings to buy is a pretty essential part of the business one way or another.
Asset Management is underrated on this forum. Acquisitions is sexy and all that, but if you want to own a portfolio yourself, AM experience will serve you better than acquisitions IMO. If you know how to keep a property's expense ratio low, then you've got it.
OP, I admit that I'm not that great of an analyst (there are certainly better ones out there). Somettimes I wish I was just doing my own deals buying up small homes (
Thanks for the responses everyone, super helpful to see I'm not alone in feeling like this. Going to start looking and applying to other positions, with less guilt now ha.
Seriously, so called IB life has nothing to do with life. I intend to live longer than rest of the cohort, period.
What are you even talking about? This isn't he IB forum and has nothing to do with longevity.
I did 3.5 years in acquisitions for a distressed MF in NYC. The dealflow was insane back then (now almost dead). I loved the job but the hours/deadlines were too much for the long term. Did the switch to AM for the same firm but in London and never looked back. It's been almost 4 years. 9am-6/7, a few crappy weeks during reporting cycles but that's it. Job is fun. Love the culture there, can cheaply travel in Europe during the weekends. Maybe I took a small paycut, I don't care... I'm still making too much money for my lifestyle
You aren't alone. I've done a little bit of everything over my 15 year career and I figured out long ago that while I loved RE, I wasn't a deal junkie. For the last 8ish years I've been working in debt AM. Things are a bit crazy right now, but generally speaking, I make good money, have great work/life balance and really enjoy both the deals I work on and the borrowers/teams I work with.
What do you like about debt more specifically than being on the principal side?
The array/volume of deals I get to work on plus I find the legal and structuring side of the equation interesting.
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