Construction Lending vs Valuation
I just graduated from undergrad and recently received two offers from companies in NYC:
The 1st is a junior relationship manager position for a construction lending team at a commercial bank in NYC. It’s a small team of experienced guys that have been in the industry for a long time. Good benefits, would be working with large national developers as well as mom and pop developers.
The 2nd is a valuation tech startup with ~100 employees. Pay is basically the same as the 1st job but the team is much younger (they are bringing on a class of young associates) and the culture is phenomenal. They really value their employees (unlimited vacation, happy hours, etc).
Seems to me like both have pretty decent exit opportunities. Working construction lending seems like it would be a good move if all I cared about was the $$$ and was purely focused on gaining experience from veterans in the industry. On the other hand, valuation is also a good place to start in CRE as it gives you a good understanding of the market and what drives value. The office would also be way more fun at the valuation company and I’d make friends much easier.
Is construction lending a better starting point for my career than valuation?
How important is office culture?
I started in valuation and while it was a great base of knowledge, myself and others on here will tell you that it feels more difficult to move from valuation to the investments side of the business at a later time.
It also isn't going to help if it is some sort of fintech startup with no brand recognition.
I'm probably more conservative so would go with construction lending, but if you really care about having fun at the office and want that startup atmosphere, then your decision is easy
I started in valuation and while it was a great base of knowledge, myself and others on here will tell you that it feels more difficult to move from valuation to the investments side of the business at a later time.
It also isn't going to help if it is some sort of fintech startup with no brand recognition.
I'm probably more conservative so would go with construction lending, but if you really care about having fun at the office and want that startup atmosphere, then your decision is easy
Construction Lending is where I would go. You are going to learn so much it will pay dividends in 5 years.
Also, unlimited vacations days is BS, especially at your level.
Second the unlimited vacation days thing. All that really means is that they won't have to pay you out when you leave.
You say construction lending, but sounds like you will be on the relationship management side. You’re not going to be doing the underwriting. The credit/risk team will be doing that. You’re not going to learn the technicals like you would in valuations.
Really depends on what you want to do. If you want to learn how to underwrite and value properties, the valuations. If you want to lead relationship management/originating/sales, then the junior RM role.
I could always pivot into underwriting once I have my foot in the door. Valuation seems a little more siloed than the junior RM position. How valuable is the experience gained in the RM role compared to valuation?
Be careful with the last comment about the startup - "and the culture is phenomenal. They really value their employees (unlimited vacation, happy hours, etc)". Unless you KNOW this first hand, take it with a grain of salt. I spent the first 5-6 years of my career working in fintech startups and they're definitely very high energy and can be fun, but tend to sell their culture by "investing" in their employees in this way. What I mean by that is non-cash benefits such as food, events, "Unlimited PTO"... Most of the time this is a gimmick.
For option # 1 - Do you want to work in originations? That's what the construction gig is, a RM position (read: sales). Small team, experienced, long term guys... Working with national developers. Someone said that you don't do much underwriting in originations - That's just not true. This just isn't the case and certainly isn't so in construction lending. You need to know these projects front and back before sending them up to committee
For option # 2 - Valuation is good place to start and people will argue that you can learn the technical aspect which you certainly may, but I would be curious what you'd actually be doing at this particular firm. This is a valuations start up with young people? What kind of young people are running a valuations business? All the appraisers I work with have AT LEAST 20 years of experience. Will you be working across a number of property types and going in detail on one particular asset at a time, or will you be doing one single job function along the conveyor belt that puts together their product? If you like the valuations side of things and think it will be a good fit culturally it could be a great place to start your career.
This question really depends entirely on where you want to take your career. Ultimately depends on what you want to do and your personality type. Sales and valuations are two dramatically different jobs. Take two people late in their career in either field and they will both be very accomplished, but seriously different people/personalities. That's not to say one is better, just very different. Just remember that you want to try and be here for at least a couple years, so make sure the environment you're stepping into is one that can set your career up well
Again, back to my first question, what do you want to do? Full disclosure, I work in lending, so I am biased. If I would've had these two options out of school, 10000% would pick the RM gig. Sounds like a great place to start and if you ever want to work in acquisitions or development, they're your clients so that'd be an easy switch.
Sorry if this doesn't make sense, typing with one hand while I eat lunch.
Thanks for clarifying about the underwriting. I’d be disappointed if I didn’t have the chance to do that.
I ended up going with the construction role. Sounds like I would gain more valuable experience and it fits my long term goal (as of right now) of working in acquisitions. Earnings potential is probably higher as an RM and the role is way more dynamic than simply putting together appraisal reports. That being said, my personality is probably more analytically oriented than sales oriented, but sales skills can be built, and I am not expected to be a producer in the first 1-2 years.
The bank I’d be working for is a client of the appraisal firm so if I really wanted to, down the line, I could try to make a pivot over. The startup is venture backed and has about 100 employees, several of the senior members have extensive experience in appraisals.
Can I PM you? I’d be curious to learn more about your experience in lending.
It's unclear what your interests are, but I would go construction.
Learning construction is more specialized than working with existing assets. I would take that opportunity. The caveat is that this is a Jr Originator role and that means a more "sales" oriented role. The traditional originator path is being a credit analyst first. As Jr Originator, I would imagine at first you would largely handle smaller loans that the big producers don't want to spend a lot of time on for efficiency reasons (So as a Jr Originator not having done credit, you would be skipping a step, just make sure it's not a high pressure production role). If you don't like originations, you can always transition at this stage...just make sure you know up front if you are held accountable for a production goal your first year. Someone mentioned not learning underwriting in this role...not true at all. The pros are, meet the principals (this is big), learn from seasoned originators (what the lending business is about), learn construction financing (a specialty that not everyone understands well). (I mentioned "sales" above. CRE lending is not "sales" in the car dealer kind of way, but it is client facing and there are production goals). I guarantee that you will learn a lot in this role.
As far as the "valuation" startup...I think of valuations as appraisals. If valuations means appraisals, only go into valuations if you want to be an appraiser or don't have another offer to gain experience.
The "culture is phenomenal. They really value their employees (unlimited vacation, happy hours, etc)" thing is what every startup says. "Company culture" fluff means jack shit at your first job, because you probably won't be there forever and as somebody alluded, you won't take 6 weeks of vacation. You do want to work with a good boss and co-workers though.
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