CRE Development to Acquisitions?- Pros/Cons
Been working in Development as Sr Analyst/Associate at a top shop (Hines/Brookfield/Related/Avalon Bay/Ventas) straight out of college for the last 3-4 yrs & looking to make a jump into Acquisitions. I've been going through the past posts on this topic but most of them have been dated so looking for a fresh outlook based on my criteria. Reasons why I want to make a jump, Pros & Cons
Pros of Leaving
- I have always enjoyed the financial aspect such as proforma creation/underwriting more than working with architects/construction managers/designers/contractors.
- Fell like I'm pigeonholed in the asset class I am in even though my new job would be in a specialized asset class as well. However, I want to really get out of the one I'm in now & the product really doesn't excite me.
- Feel like I'm being underpaid compared to the market & have never really put myself out there to know my worth. Acquisition comp offers coming in around at 20-30% more than what I currently make with more than 90% of places setting up 2nd round interviews. Firms range from large institutional shops to less than 50 & 20 employee shops.
- Current comp is $90-$105k all in
Cons
- Don't think they're enough people in their mid-20s who work in Development, especially straight out of college & feel like I should be grateful for this & not let a good thing go. Don't plan to get an MBA/MRED as well
- Haven't had too much Project Management exposure to run my own deals, especially past feasibility so I may be righting off Development without really having the experience to say I don't like it. Assuming within the next 9-12 months ill get to this stage.
- Work-life balance. "Crazy" weeks for my current role are around 50 hours & think I've only worked 3/4 weekends in my career. Have heard acquisitions can be more of a grind given the nature of the deal flow & turnaround time associated with the role itself & wondering how this shift would be to a lifestyle I'm very accustomed to
- Robust pipeline, access to institutional capital, & credit along with the name brand associated with the firm.
Any thoughts would be appreciated on your experience or advice you may have for me. Also if I can help you in any way by answering questions don't hesitate to ask!
Congrats on having a great gig straight out of school. Some questions came up after I read your post:
1. What is your end game? Sounds like you want to be an investor, but where? Have you thought about giving it a few more years and then starting your own development shop like everyone on WSO talks about doing?
3. You said the product type doesn't excite you but what product does? Do you think this could be a case of the grass is always greener?
4. Have you considered taking on a more acquisitions/transactions-focused role at a development shop? Basically dealing with everything that goes into closing a deal and then bouncing onto your next deal before the project breaks ground. I've seen roles like these in the product types I work in.
5. I bet you can get that 20% pay bump by just jumping to another developer. You don't necessarily have to go to an investment shop. Companies these days just don't like giving current employees fair raises in my experience so they force you to jump ship.
6. I think you have a great role right now and would recommend you write down a 5-year plan so you can see where staying put will take you versus where your various opportunities will take you.
Good luck.
Appreciate the insight, I guess my biggest takeaway is to see where I want to be long term
1) I honestly don't know, to be honest, some days I feel like this what I want to do while others I always think maybe the grass is greener. I don't think I want to start my own shop tbh, I like the idea of rising up at a firm that is already well established & has no problem raising capital.
2) Good point, but this sector has been what I've known my whole career & I just don't find it appealing anymore + it's not really doing too hot.
3) Any idea on the types of firms that do this?
Re: #3 - typically smaller, scrappier shops. General rule of thumb is the more corporate/institutionalized a firm gets, the more siloed the work becomes. The smaller companies let you get your hands on everything.
They are inherently different roles and I am not sure you can really do a pros / cons. With that said, if you have any inkling you may enjoy development as you get more senior, maybe try to jump to a developer where you do both the acquisitions and the development management. Keep in mind, the private equity firms doing 15 deals per year and the developers doing 1-3 are inherently different businesses. Sure, they are both 'investing.' But the private equity firm generally invests in operating assets/developments, moves faster (by accounts of transactions, not necessarily in operating the deal itself - both can move fast here), and seeds GPs for development / opportunistic deals (some PE firms do these deals themselves and have inhouse teams to manage). The developer (if they develop and raise LP capital) builds and operates the deal, and gets paid for this service. In a sense, one can think of developers as the service providers. They want to buy good deals, but if there is an LP who will do the deal there is probably a developer willing to build it for them. Why? Because although you don't want to lose money, if you can put 5% into the deal and get cashed out via fees in 2 years, the rest is gravy. People may not like me saying this, but everyone needs to keep the lights on. There are some firms who wouldn't use this method, but other 'service provider' firms who will.
I am saying all this because I also think you need to think about what business you want to be in. Do you want to be in the private equity fund model business or the development model business. In some ways its 'six of one, half a dozen of the other' but in other ways, it is inherently different.
Thank you & to be honest I really don't know what my 5 yr plan is.
I do know that I enjoy my work-life balance but feel like I can have the capacity to be putting in more hours, but does this justify working 20hrs more a week for like $20K more? I've spoken to other people & bosses who have moved on and they are all supportive of me and encourage me to see what is out there if I don't feel challenged anymore.
I just don't want to be regretful 10 yrs down the line knowing I could pivot in my career vs being older & it being harder to do so
You can always make the pivot to a fund, and if you decide you don't like it, move back to development. None of this is career defining so do not worry. No job will be the perfect fit, but some fit better than others.
So, if your 3-4 years as Sr. analyst/associate in development, you are (in theory) getting close to being a good candidate for a development manager type role. Whether via internal promotion or jumping firms, that seems to be within grasp, and if you are at a legit top shop, you should have options within the development world.
"Jumping" to equity type acquisitions should be totally feasible, and you could do with a title bump in theory, but may be harder (honestly, without testing the waters, I don't think you know). Still, more risk of a "reset" by right of lateral move (kinda sounds like what you would be aiming for by the post tbh), thus, your timer to promotion could get dinged if not totally reset (this is really at the firm's discretion, and how you present/fit for the more senior role).
Personally, for someone with your level of experience, I'd only jump for a legit "move up", meaning a real strategic career move. Don't settle for any form a lateral at this stage, could be a total waste IMHO.
Somewhere in all this is a "Development" vs. "equity investment mgnt" type career debate, if you do leave development, I'd be sure you are making that in the mindset it could be a full career move. Not that you couldn't get a development job in the future, just that your loss of seniority points could make it really sub-optimal.
Final point, first few years of a career just generally suck, and being at a "top shop" by brand actually makes this even more likely. It gets better with seniority and promotions, so hold out for those (be it at your firm or a new one), resetting via lateral is like getting to repeat the shit part of career potentially, that is biggest thing to avoid.
Appreciate the commentary! One of the roles I'm eyeing is an Analyst title but would be for a company that really only hires people with 3-4 yrs of experience. Does this count as a lateral move given I'm a Sr Analyst as well?
Titles are too ambiguous in real estate to really know, you need to know what the actual job responsibilities are. Dig into those more to see if it's truly a lateral move or not, a lateral will just be the same job at a different firm (good for salary bump but not much else, other than culture stuff, location, etc. (which can be important but I don't think fit the scope of this conversation)) whereas getting a step up will have responsibilities you don't currently have. I hope I'm not just repeating obvious information.
So short answer... from a resume perspective, yes a lateral for sure (the loss of the sr. title makes it somewhat a downgrade, but if shifting fields, that's understandable, not really a bad thing, still, I'd fight for equal title if you take it if possible).
Long answer, a lot more "it depends". Ranks/titles are not all equal at all in the real estate world. An "analyst" at one shop could be an "associate" at another, and it only gets messier from there. Just look at the title VP, at some firms (like mine), it means 15+ years experience and is very senior, often close to full exec/c-level. At others (like most brokerages and I-banks), it is equivalent to "manager" at many firms (i.e. below Director). So, you need to be more discerning about level of work, effort, responsibilities, and pay to decide how "lateral" a job actual is. If pay is even or like within 10-15%, then it's a lateral, if you are getting a bump of 20% plus, its an upgrade (at least from the pay angle in my opinion).
Laterals can be worth it, but can be risky, that is really my point. If you love the firm, job and everything else from what you can tell, I wouldn't steer you away.
The question really is, how long till next promotion (and what is it)? You need to think a few moves ahead, does this new job set you up better or worse for the next move? If you stayed, would be be an associate or higher in a year? No easy answers, but that is how I would look at it!
Logged into my profile after a while, but wanted to follow up and say I stayed with my Development role and actually got promoted to Development Manager, 2-3 months after I made my initial post. Im the youngest manager at my firm by at least 3-4 years so I'm excited to learn as much as I can. I'm going to start looking to make a shift outside of my asset class once my bonus gets paid, but i'm content with the 20% raise I got with my promotion.
Sounds like you have an itch to scratch.
I was at a Dev Shop and jumped back into investment management as an acquisitions person.
I have ZERO regrets.
Hours are longer but they are enjoyable.
I have a transactional personality type. The long development timelines bored me. I wanted to do more deals.
So recognize what gives you energy and pursue that.
If you don’t like acquisitions after all, you can easily get back into development.
You have the skills and you can say you wanted to try out acquisition but all it did was deepen your passion for development. Easy to tell the story.
Best of luck
Thank you!
For sure, would love to. Hit me up!
Makes me think of Drake's lyric about rappers wanting to be NBA players and NBA players wanting to be rappers.
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