Career Path to Real Estate Private Equity

hornedfrog123's picture
Rank: Monkey | banana points 61

Quick question. What would be everyone's suggestion for the best career path to end up in real estate private equity for someone starting off? Just graduated from college and want to start somewhere. Real estate development? Real estate acquisitions?

Comments (55)

Aug 3, 2017

Why do people here for whatever reason think REPE is somehow different than "acquisitions"....acquisitions is part of REPE

the best route would be either REIB or an analyst at a top brokerage shop.

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Aug 4, 2017

I've always considered "REPE" to be the LP side (or Pref Equity, or even Mezz), and "Acquisitions" to be the GP (operator ) side. All REPE have "acquisitions" teams, but most REPE firms are not the direct buyers of a deal (unless they put up JV equity).

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Aug 4, 2017

Putting up the majority of JV equity is very common for REPE acquisitions teams to do, so your characterization that Acquisitions=Operating Partner isn't correct at all imo. Having said that, lots of "REPE" shops do debt as well, but by definition that isn't private equity.

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Aug 4, 2017
hornedfrog123:

Quick question. What would be everyone's suggestion for the best career path to end up in real estate private equity for someone starting off. Just graduated from college and wanting to start somewhere. Real estate development? Real estate acquisitions?

Probably investment banking, but we'll ignore that for now. A lot of REPE firms like two years of banking analyst positions.

Working in investment sales at a flagship brokerage firm wouldn't be a bad start. Development would be useful in theory but that can be as difficult to break into as REPE. A commercial lending position would give you insight.

Really you need to think what you would want to do for your theoretical REPE career. As others have said, there is REPE that buys property as a GP and there is REPE that invests in property as a LP, and a lot of firms that do both. You also need to figure out what draws you to "REPE" beyond the term sounding cool. Why do you want to own as opposed to develop? Do you want to own core? Core+? Value add? Do you want to be a GP or a LP?

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Aug 4, 2017

Probably useful to note that there are scarcely few senior level jobs in PE. By "senior-level" I mean the type of job you'll have when you're 40, married, and have 3 kids. For one, relative to the population of talent, there are hardly any REPE firms, and there are hardly any REPE firms that are hiring; and the ones that are hiring are usually hiring in that entry-level-to-7-years-experience level. After that, unless you get lucky you are basically on your own having to start your own fund. In other words, REPE is a pretty excellent career but a pretty crappy career track.

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Aug 4, 2017

I was thinking about that, dont the number of REPE firms pale in comparison to the number of say law firms? What do the senior analysts with 6-7 years of experience do if they dont start their own fund- which something like 80-90 percent of them do not. Do they tend to be remain at senior level roles in acquisitions, Asset Management, etc and jump from firm to firm every 5 years?

Best Response
Aug 4, 2017
jimmymc:

I was thinking about that, dont the number of REPE firms pale in comparison to the number of say law firms? What do the senior analysts with 6-7 years of experience do if they dont start their own fund- which something like 80-90 percent of them do not. Do they tend to be remain at senior level roles in acquisitions, Asset Management, etc and jump from firm to firm every 5 years?

I'm 10 years in my real estate career, which includes appraisal, lending (originating, underwriting), loan asset management, portfolio asset management, development, investment, and commercial banking, with some elements of property management, too, and I have a master's degree in real estate and I honestly have no f*cking idea at this point. Like, none. I'm currently in talks with a partner for going full entrepreneur, but I basically have brass balls when it comes to business (as in, I've already started and failed with several companies and I keep coming back)--90% of people wouldn't do what I've done, so I have no clue what non-entrepreneurs do at, say, 35 or 40. I've been debating between full-time entrepreneur and applying for true senior level jobs but the number of senior level jobs (in PE, development, brokerage, investment banking, commercial banking) is incredibly few. INCREDIBLY few. It's a brutal pyramid. I wish I had the right answers to give you.

My worst fear is ending up at, say, Freddie Mac or Fannie Mae as a middle manager, enduring the most corporatey, bureaucratic career ever, pretending I care about what I'm doing because there were no jobs in the organizations that I want to work with. I'll kill myself.

Aug 4, 2017

From my understanding, REPE is simply value-add / opportunistic acquisitions in close-ended funds

So why not starting as an analyst in a firm that does core / core+?

Aug 4, 2017

That is the most hilariously inaccurate thing I've read all day. What would make you think REPE is exclusive to only certain areas of the risk/return spectrum?

Aug 4, 2017

It is the definition provided by perenews when it makes its PERE50 ranking.

If I am totally wrong, could you please explain to me what PERE is and give examples of firms that do PERE and firms that do not? I would be very grateful.

Aug 4, 2017
PEREtzel:

That is the most hilariously inaccurate thing I've read all day. What would make you think REPE is exclusive to only certain areas of the risk/return spectrum?

it absolutely is. core acquisitions is not REPE.

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Aug 4, 2017

Starting off in investment sales at a top brokerage shop would be a great way to learn the industry and make the right connections. REIB would be just as good or better. Your network is going to be the most important aspect here by far.

Funniest
Aug 4, 2017

pretty much required steps to REPE:

father and grandfather in commercial real estate in NYC, then
--> Dalton through 8th grade
--> swiss boarding school through 12th
--> AB from dartmouth
--> 2 years in Real Estate Group at Goldman Sachs (one in NY, one in London)
--> 2 years in b-school at Wharton

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Aug 4, 2017

REIB and investment sales/debt brokerage is where the majority of folks at my shop came from as well. They also made some direct from undergrad hires as analysts, but this was all done primarily through networking/family&friends of the partners.

Aug 4, 2017

Thanks for the great responses everyone. It sounds as if pursuing real estate investment banking might open and leave the most doors open for exit opportunities. Now if I could only make a job appear out of thin air

Aug 4, 2017

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Aug 7, 2017

I've said this before in other threads but I'll mention again here. There's a big difference between true REPE (meaning, you work at a private equity shop that focuses on acquiring REOC's or real estate related companies) and a value add investment advisor/manager (acquires the individual assets themselves, builds portfolios for internal partnership and external clients with different buckets of money/different fund strategies, and then operates them for a while before monetizing the fund or assets in the fund at a later date). If going for the former, IB is 100% the way to go. If you are going for the latter role/track, I say investment sales is better on a good team since the skill set is more directly related. IB is solid for that too, but I started as an analyst at one of the large brokerage shops and I'm pretty happy with the exposure I've gotten. Anecdotally, every person I've hired/worked alongside from IB that I've seen has had more ramp up time than the people coming from the sell-side RE shops.

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Aug 4, 2017

You're right that there's definitely a difference between the two, but isn't the former just real estate investment banking and the latter real estate private equity?

Aug 7, 2017

Unless I'm misunderstanding you, which is possible, then no, I don't think so. REIB in my mind is dealing with company valuation/NAV, etc. of real estate operating entities, and bringing them to market/brokering a transaction of some sort (same as any 'traditional' IB). REPE in the true sense would be on the buyside of said real estate entities/companies. The latter track/firm I mentioned is really just a REOC. You are buying individual assets and managing them/flipping out of them eventually. The target strategy/capital stack/etc. would be different, but in my view REIT's, core funds, value add/opportunistic funds (sometimes referred to as REPE) are all the same by way of the job function/skillset. In other words, an acquisition officer at a REIT could theoretically jump to a similar role at a value add fund, although some of the relationships/knowledge retained from the previous shop's strategy might not be directly transferable. For example, if you are at a value add shop and looking at some VA deals, the brokers that you work with might not be entirely overlapping if you moved to a core fund. You may need to make new relationships. But, the sourcing process, underwriting, DD process, closing process, etc. is the same even though the type of deals themselves may be different.

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Aug 7, 2017

I get it, that's the textbook definition. I don't disagree with that. My assertion is just that in one case you have a more traditional ownership/holding company looking at different metrics, and in the case of acquiring/managing the assets themselves it's more of a real estate operating company. It doesn't really matter, at the end of the day you are getting to the same place - owning real estate in order to make a profit/return. Just the way you go about it is different. A firm like BX is a good example IMO. They do both. They own several operating companies that specialize in different strategies/property types like Brixmor/Indcor recently. I would say that the guys that started/acquired those two entities were private equity, while the people working for those two operating entities buying / selling the underlying real estate were CRE acquisition guys. Again, not a whole lot of difference, but there's at least somewhat of a differentiation there.

EDIT: Meant that as a reply to the above.

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Aug 10, 2017

As some others have said, working for a couple of years in IB or a top brokerage is a decent way to start if you want to get into REPE early in your career. This will give you the technical skills you need to perform at the lower levels of a PE shop.

Now, if you'll indulge me in giving some advice that doesn't answer your question directly, I would add the following: The most impressive REPE guys and gals I know started in other fields. Law, military, RE development, C-suite....

They accumulated fortunes and then leveraged their assets and expansive networks to get into the PE game at a high level. It's not rocket science, after all, so having people skills/relationships/a stellar reputation can be enough to launch you. And being at the top of the pyramid is much more fun than being at the bottom, so if I were advising my own progeny I'd say go be a badass at at something else and move into PE later in your career. Just depends how you want to grind out your 20's.

Good luck!

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Aug 4, 2017
DCDigger:

Now, if you'll indulge me in giving some advice that doesn't answer your question directly, I would add the following: The most impressive REPE guys and gals I know started in other fields. Law, military, RE development, C-suite....

They accumulated fortunes and then leveraged their assets and expansive networks to get into the PE game at a high level. It's not rocket science, after all, so having people skills/relationships/a stellar reputation can be enough to launch you. And being at the top of the pyramid is much more fun than being at the bottom, so if I were advising my own progeny I'd say go be a badass at at something else and move into PE later in your career. Just depends how you want to grind out your 20's.

Good luck!

henry cisneros baby

Aug 11, 2017

The RICS accreditation is a good one... go after it.

If you want to leave your job earlier, I am assuming you could just pay back the course fees? That could probably be a negotiation point with a new employer.

Aug 11, 2017
MogulintheMaking:

The RICS accreditation is a good one... go after it.

If you want to leave your job earlier, I am assuming you could just pay back the course fees? That could probably be a negotiation point with a new employer.

I'm sure it would just be a pro-rated portion that you would have to pay back if you were to leave before the contract is up. They certainly can't force you to stay, and you can probably get your next employer to buy you out of the deal as Mogul states above. I'd jump on it.

Aug 11, 2017

Ask if you could pay back on a pro rata basis should you elect to leave your firm prior to summer 2016. Four yrs exp is not too senior to be considered for an Associate level position at a REPE fund.

Aug 11, 2017

Thanks guys. That's really good to hear. I guess you're right, they obviously cannot force me to stay and as far as the money is concerned, the overall tuition is not ridiculously high. So that should not be a huge problem in the future.

Does anyone have experience in REPE recruiting in general? I only know about "normal" PE recruiting as I have interned in investment banking two times and spoke to several analysts about their plans and the recruiting process in general. Is the process in REPE different? How important is it to have this standard two to three years analyst experience (in Europe it's often three years)? And does it become more difficult to recruit afterwards?

Again thank you so much for your help. I really appreciate it!
Cheers

Aug 11, 2017

Appraisal absolutely does not set you on a path to acquisitions. Investment sales, debt/equity capital markets, lending (e.g. credit underwriting/originations) should be your target roles

Aug 11, 2017

I respectfully disagree with the above poster. Appraisal can most definitely be a path to acquisitions. Appraisal teaches you how to understand the supply / demand drivers of a market and underwrite an asset. Pretty much the exact same thing you will be doing in investment sales, debt / equity brokerage, etc.

Being an investment sales analyst can also set you up to get an acquisitions role. If you go the investment sales role, I would recommend being an analyst over a salesperson. As an analyst, you will focus on running cashflows all day.

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Aug 11, 2017

can't say appraisal is the best path... but it worked for me (very small appraisal shop to acq REPE in 1st tier NE city) and a few others at my shop. another guy at my current firm also came from appraisal incidentally. no MBA/MSRE here, but i was also in my last level of CFA, so that also helped.

personally, i think working in a small shop (8-10 ppl) vs big helped me a lot. it gave me exposure to a wide range of asset classes, and we were also responsible for each report front-end to back-end so i knew every step of what was going on in each job. i contrast this by saying some ppl i know who went on to larger shops like cbre/cushman etc got segmented within specific asset classes, and even within frontend / backend reports. you just don't get the same breadth of experience in larger shops because they chop everything up, but that's also how you scale production so it makes sense. In terms of learning, going small was a huge blessing, which was all that i was interested in because i had no plans of staying in appraisal for one minute longer than i had to (not gonna lie, appraisal sucks. we had to cold call brokers constantly to validate information, and they act like you're dirt beneath their feet. lenders treat you as just a checkmark to cross off before making their loans. at industry functions people dgaf about you because you're just "the appraiser").

However, the background absolutely helped in the interviews when they asked about how to value XYZ types of assets and i could comprehensively discuss it start to finish, or when they asked about what were some of the more memorable appraisals i'd worked on and I was able to tell them about the time i had to appraise a marijuana cultivation / distribution warehouse or an airport hangar owned by an eccentric old war vet. if you're able to tell those stories well and convey what you learned, then you'll have a better chance of selling your interest in real estate, which, for an entry level acq position, seemed to be the main thing they were interested in. everything else in the role you're pretty much able to learn on the job (argus which you do in appraisal anyway, debt modeling, packaging IC deals, DD, credit analysis etc etc), but given the amount of hours you put in and the pressure involved in large scale acquisitions, i think they want to know that your interests are fully aligned with what you're working on.

maybe we all just got very lucky, but another guy at my appraisal shop moved on to a REIT where he later joined acquisitions internally, and another went on to become an investment analyst at a developer. otherwise, 90% of our REPE analyst hires are from the intern pool. at the end of the day, it sure as shit wasn't how i drew it up, but it worked out.

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Aug 11, 2017

All the ex appraisal guys I know had to go back for a masters to get to acquisitions FYI

Aug 11, 2017

Property management

Aug 11, 2017

Appreciate the feedback everyone!

Aug 11, 2017

Use major GPA

Aug 11, 2017

Get a job as an analyst at an investment sales team. You will learn the ins and outs of argus quickly and can very easily network your way into acquisitions at a name shop. I had a very similar background as you ivy school, 3.0 gpa, no internship experience and became fascinated with real estate end of senior year and just dove in head first and went after it. I would start networking, dig through alumni databases and find people that are at shops you want to get to and start developing the relationships. Cannot overstate the importance of building up a network.

Aug 4, 2017

What Stan said. Look at brokerage firms. Perfect for your profile. Ivy league guy who had too much fun in college and didn't know what he wanted to do with his life (half-joking here, but to the OP: don't give up).

Aug 11, 2017

Personally I simply would not post your GPA on your resume. It is very possible that it will come up on your interview however If you have internship experience guide the conversation toward that. If the GPA comes up be honest and emphasize the work that it took to get into whatever school you attended and make sure your passion for CRE comes off well in the interview. There is absolutely no reason you shouldn't be able to work for a REIT/REPE out of school assuming you interview well and have done the necessary prep work. Maybe target small to mid sized firms.

Aug 11, 2017
CREPATH:

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p>Personally I simply would not post your GPA on your resume. It is very possible that it will come up on your interview however If you have internship experience guide the conversation toward that. If the GPA comes up be honest and emphasize the work that it took to get into whatever school you attended and make sure your passion for CRE comes off well in the interview.

This is good advice that may get you past an HR screen at smaller firms, but be ready to own it/spin it, as mentioned. Any time I see a resume for an entry-level job with no GPA, I assume the GPA is below 3.0. In an interview, I will ask for the number. If you can say you got a 2.8 with a straight face and still seem sharp, you probably have a chance.

Aug 11, 2017

You should have no problem getting into an investments role, regardless of coming in with no RE experience, if you go to any of the schools you mentioned.

Aug 11, 2017

Thx! Just to be clear, I'm referring to an REPE role