Becoming a stud Investment Sales Analyst

First off, this site and particularly this board has been huge for me over the past couple of years of lurking, so thank you all.

the fish isn't completely in the boat yet, but I am very close to getting in with an investment sales team (C&W, CBRE, JLL) in a major market (NYC, LA, Boston, DC, Atlanta), and I want to prepare as much as I can and really hit the ground running.

If anyone has any insight as to what helped them work through the learning curve, what types of reading/publications to follow, work habits, anything like that please share.

Also, a few questions regarding comp.. I know this has been discussed ad nauseam and the only real answer is 'it depends' but..

what is the lowest base people have seen for these shops/markets? the guys I met with mentioned it would be low base, but I have a feeling their idea of a low base and my idea of a low base are different. They mentioned they weren't sure if bonus would be on an annual basis, or per deal basis, but it will be part of all in comp.

Also, again I know there is no real answer, but can anyone speak to fees these guys charge per deal? I know half usually goes to the house, and fees usually lessen as deal size goes up, but if anyone can comment what kind of fees a 15,000,000 trade vs. a 50,000,000 might pull in that'd be great.

FWIW I have 1.5 years experience as an analyst at an operator/developer, in more of an Asset Management type function.

Thanks all

 

Regarding your question about comp, I think a "low base" would probably be anywhere between $45-$60K. Bonuses for Brokerage can occur on an annual basis, per deal basis or both. I know IS fees are usually 1-3% of the total size, higher than Debt Placement. Your bonus will definitely depend on your team, but I would assume they will throw you some change for every deal you close.

 

$45,000 in ATL is completely different than $45,000 in NYC. Kind of hard to say what "low" is with both of those in the mix. Don't worry about fees. You won't be grabbing 10%, so it won't matter. If you get a bonus per deal, it is going to be around $1,000-$3,000 - really small compared to the fee. And the fee is different every time, you could see 2.5% for a $15,000,000 or 2%. $50,000,000 might be .5% or 1%, or 1.5%. It depends on the relationship, how bad they want the deal, if it will lead to future business, etc.

 

Fair point - the other 4 should come mask it enough so ill just come out and say its not Atlanta. Thanks for the responses though. Just curious about the fees as they said the goal would be to eventually turn me into a junior broker down the line, not so much because I think i'm going to be taking home huge chunks of any deals in the first couple of years or anything.

 
Best Response

Fees are dependent on so many factors. Don't worry about that part. If you are good, you will make money. If you are working with institutions, chances are you won't be able to source your own clients as you will be too young - you will be brought onto the deals to execute. The fight you are going to more likely have is if you can take home 35% of the total commission or 20%, etc. Versus if the commission is 1% of a $50,000,000 deal or 1.5%. The difference in fees here are $250,000, ($500,000 vs $750,000) and 35% will bring you a lot more than 20%, but either way, its a lot of money.

But what you might see is $0-$5,000,000 you will see a 3%-5% fee. Probably closer to 3%. $5,000,000 - $50,000,000 will be a fee of anywhere from 1%-3%. Probably see 2% around $20,000,000, and it also will depend on how hard it will be to sell the asset. For instance, 2% for a $50,000,000 - no way will that happen, but $12,000,000 deal, yes, it happens. A lot of it will come down to so many factors it is really hard to pinpoint it. The market the asset is in will make a difference and the firm you are at will make a difference.

 

ding ding, paging dr sutton!

i can't talk too much about IS comp because i do not work in that field. same with fees, but from underwriting experience i have seen 1-4% of gross sales price.

from day 1, ask intelligent questions. try to answer your own questions first before asking others. "excuse me, what does this mean" is a horrible question vs "based on my research, this is what i think this means...however not entirely sure because i also came across this...i'm leaning towards this side, but what are your thoughts?"

here's an idea. immediately after starting, pay attention to your team's processes and think of ways you can help improve things. maybe slight tweaks to their models, databases or something else. after you prove yourself (say within the fist 3 quarters), pitch an idea and a rough plan for something, or pitch a special bus dev project you want to get involved with.

there are so many publications out there, dean. subscribe to bisnow and realert to keep up with markets and deals going on. also, if you're working at a top IS shop, definitely take advantage of full access to their research.

i'm off to have tea with ms mcgill. good luck to you.

 

First off, congratulations! This was me last year in the top shop (C&W, CBRE, JLL) in a secondary market. For comp, take your idea of a low salary and divide it in half. Even with financial experience my base salary last year (my first year) was $20,000 a year. Going into my second year, it just doubled. There are barely any competitors that even touch my company in market and dollar volume, so they had/have an enormous amount of leverage and would not negotiate (and still don't). To my polite explanation about my market value and experience, they just laughed and said, "We are PAYING you to learn investment sales from the world leader. People kill for that opportunity." Unfortunately (or fortunately), they are right, so I'm still here a year later. Everyone said the first two years are the hardest, and you can expect to make no money. Which is why so many people drop out. Somewhere I read that in brokerage you can expect to earn $0-30,000 the first year and 30-50k the second year, 100,000+ after that if you can last the first 2 years. In a primary market like you're in, I would hope you would get more than I based on your cost of living probably near double what it is in a secondary market. The good news is that 2 years in a top IS shop will let you go anywhere and command anything, even if you don't want to stay in IS (you can easily jump to acquisitions from IS).

As for what you can expect, a lot is really teaching yourself unfortunately. It's true that you absorb a lot just by living and breathing IS each day, but commercial real estate is notorious for not teaching - you really have to learn the nuts and bolts yourself. As for work, expect to work on market research for tenant profiles, rental rates, and sales comps. A lot of the work is just trying to get more clients for your brokers - researching building owners, cold calling, and hooking them up with your Sr. broker.

I don't know how much experience you'll be coming in with, but if I have any advice for you, it is to forget that you know anything. With my financial experience I really sort of expected to dive right into doing my own deals, and was sorely disappointed. You're a glorified researcher and you'll like it (or you'll both be miserable). Good luck and let us know how it turns out!

 

Make sure that you underwrite the team that you will be working with:

Does the team specialize in a certain asset type/class/size? Do you like that asset type/class/size? Is the team in Chicago (or any market) limited to deals only the Chicago MSA? If the role is focused in office real estate, does the team dominate the office market? Is the team focused on exotic asset types (self-storage, student housing, data centers, etc.)?

The opportunities that the MDs produce and eventually close will not only dictate you earnings but also your professional experience. By example, if you only touch office deals in Atlanta it could limit your exit opportunity if you only plan to stay for a few years.

As for comp, expect a base of $40-50k. You might be able to ask about commission splits on deals you are handed to work vs. deals that you source yourself. Potentially, you could get a higher share of the commission if you are able to (by the grace of god as an analyst) source an opportunity for the MDs. Sure it's unlikely, but asking the question will show your hunger to generate business and that's what investment sales is all about.

As for reading material, check out PEREnews. Follow HFF on LinkedIn. Set up some Google Alerts with keywords like "REITs", "cap rates", "institutional real estate", etc. Read the WSJ on Wednesdays - see the Money & Investing section, subsection Property Report.

Hope this helps.

 

Good points, thanks. I am very comfortable with the team - we seemed to see eye to eye about the role both in terms of what they expected out of me and also the experience I would be getting.,They stressed that while I will obviously be responsible for BOVs, pulling data, market/financial analysis and producing OMs, I will also get to participate in calls, site tours, and start making contacts in my particular asset class (which is one i am happy to be working with).

They seemed like friendly, smart, and fair guys that i would have no problem busting my ass for, which is something I value highly.

Deal sizes this team has completed ranged from 15,000,000 to 150,000,000 with mostly institutional clients so I'm happy with that. As for market, the city/region i am based in is the wheelhouse but they have done deals in other cities based on industry relationships - another plus.

 

We talked numbers a bit and the base was surprisingly low at 40k. I still want to take it for the experience, branding, etc but that is a pretty big cut. Now i am starting to worry that this might not be an ideal time to get into investment sales, given where we at least seem to be in the cycle. can anyone speak to working in investment sales in a down market? the thought is a little scary especially if things really slow down in the next 2 years or so. very possible that i am being irrational, i don't know.

 

In a major market, yes. a tier below SF and NYC, COL wise

bonus was kind of ambiguous. He said they might throw me 5-10% on deals occasionally, and that if I'm killing it for them and putting money in their pockets they'll take care of me. but it wasn't very clear in our last talk at least. They seem like decent guys so I think ill be alright. I don't think they have ever had an analyst before (which could be why they weren't sure, but they seem like they would hold there word.

 

Do you mind mentioning how you got in touch with this team? I've been looking pretty hard for analyst roles in IS without much luck. Made a good connection with a major broker but unfortunately he was/is in the process of switching shops so he couldn't bring me on

 

Senior year of college i reached out to an alum who had a career path i was interested in. I talked to him about his path and how he got there and how i can break in etc. Eventually I landed an interview for my current job and he helped me out with relevant things i should know. always kept in touch with him. maybe about a 3-4 months ago i reached out to him again saying I've been doing xyz here at _____ and I've learned a lot but what i think id like to get into is abc and so on. I actually was looking to move cities which was part of everything but this new job is where i am already located. Though i feel like id still like to relocate and experience a new city, id be much more marketable and have an easier time with it after a stint in this role, if I choose not to be a career broker.

Something that is said a lot around here but it really is true - real estate is all about networking and relationships, and if you do the little things right (have you're story straight, follow up, play the 'game' right, present yourself well, etc) people will help you along the way.

 

Seems like you are in good shape if you are practicing modeling and have already had significant exposure to Argus. I don't have time to type out the entire process however I would keep doing what you are doing and maybe try and stay abreast of a target market so that when you do have an interview you can speak intelligently to what has been going on.

 

I work as a broker in investment sales. HFF and Eastdil are really top notch and somewhat secretive. Get in as an Analyst or internship position. HFF actually posts openings frequently in the LA and SF Markets. If I had the proper qualifications at the get go, I would have preferred to start with them. They will teach you Argus so don't worry too much about that if you do not have experience. Just be ready for lots of excel type questions and your knowledge of cap rates, irr etc. Do you want to move into the sales position?

 

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