For those of you in brokerage, what do you think is the better career path in terms of max earnings potential and upward mobility: IS or D&E? I'm interested in both, but would love to hear your perspectives on why you enjoy what you're doing and why you prefer it over the other.
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Both can be extremely lucrative. Brokerage depends on volume, and there is probably more volume on the debt/equity broker side as opposed to the investment sales side due to debt/equity brokers being able to advise on new acquisition debt / equity as well as refi and recapitalization of debt and equity. While the investment sales teams focus on solely equity sales. With more volume comes more potential. In the end though, it’s 50/50 and by that I mean it really doesnt matter, do what you enjoy, there’s boatloads of cash in both.
Both could be lucrative but the fees on I/S can be much higher. In the small balance space, I/S guys sometimes earn 3% on deals while it's pretty much unheard of for D/E brokers to push for more than 1% unless it is for Equity/Mezz/Pref.
From a per building basis, if we used a $10MM (30,000 sq. ft.) office building as an example, the I/S broker may earn 1-2% on the sale which can amount to $200k while the D/E broker may charge 1% on the debt which will amount to something along the lines of $60k. I/S brokers are often involved in leasing so they may be earning leasing commissions on the building which can be about 7-9% of the value of the lease. Let's say that the building had 10,000 sq. ft. vacant and the original loan was a bridge loan. If we assume that the I/S brokers a new lease at a rate of $25/sf NNN for 10 years, then the broker should earn ~$200k from leasing. The D/E broker will refinance the property for $10MM and will earn $100k.
Additionally, many larger shops have capital markets desks which do most of their financings and many individual property owners will deal directly with their relationship banks. Most REITs for example have unsecured LOCs which finance their deals (in which case it's a fee for an investment banker). While a similar statement could be made about shops/owners performing their own leasing (although I don't know how the ratio of building owners doing their own leasing and their own financings compares), most shops still rely on I/S brokers to sell their buildings.
Stud/group head debt brokers in NYC probably hitting 5-10m+ annually fwiw. Not sure on IS. But I'd assume higher flow in debt broker?
You'll do way more transactions on the debt side but won't get as deep into the deal as you would in IS. For example - I'm on the debt side and our team will close 10+ loans this month. One of my best friends is a IS Broker and his team will sell 3-4 buildings this month. We make about the same $.
Not saying all things are equal obviously, but we work on similar product and work similar hours. We're both in our late 20's and are well compensated. When he gets paid its a fairly large check, whereas my fees as a percentage are lower but fairly consistent since we've built up a pipeline and do so many deals
The reason I went debt vs IS is because I didn't want to be tied to one region in terms of living. Some may argue this changes later in the game when you're operating at a high level, but I feel like you need to be fairly planted in your market to do IS well. Again, I don't work in IS so take that with a grain of salt, but I can't imagine trying to sell buildings in a market you don't operate in day in day out
On the debt side, I get deals all over the country every week. No one cares if you live there, they care about your terms and ability to execute. I've moved around quite a bit in my life and will likely continue to do so, which is one of the reasons I went debt. I also really enjoy the finance side of things
With that said, you should do what interests you more. You'll do better in the long run. Just my $0.02
What type of comp are you both making in your late 20s?
Interested in this too. Do you and your buddy that does IS work at one of the bigger shops?
Not the guy you replied to but I'm an analyst on a highly functioning debt team in nyc and I took home a little over $170k last year.
2020 was a very good year for us. 2021 not so much.
I had lunch with a friend in that age range who is a debt broker from jll yesterday, he’s currently somewhere around $350-$400. He’s looking to go to the buy side and looking to make around $250k. I don’t understand it but he’s tired of the broker grind I guess
Being in sales it obviously varies but this year I should do close to $200k all in. May be able to hit $220k but it depends on timing of a few larger deals we have.
To clarify - I started at a boutique brokerage but moved to a direct lending role a couple years back. My hours are a lot easier now, the last few weeks they've been 55-60 but typically are more like 45-50 with limited weekend work. Production wise we are flipped from the guy below that is at JLL in NYC. We got crushed last year, we've already closed more through June than we did in 2020, obviously due to COVID. We'll end this year doing at least 2x our numbers last year. Just depends on timing... Service side of the business (Appraisal, underwriting, etc.) is really slammed right now which is creating bottlenecks in the pipeline
My buddy in IS - He used to be an analyst at a large shop (Not quite CBRE/JLL but close, think NKF/Colliers/Cushman tier) and had a base/bonus type structure. Two years ago he moved to a smaller shop but is a jr. producer now and will probably do a little over $200k this year. He get's a small split on deals he helps his partner with and larger splits on deals he sources. He has to pound the pavement/phones a lot more than I do since he moved shops and has to build his business. He's a hustler, though, consistently working 60 hour weeks and dials a lot
EDIT: We live in HCOL city but not quite NYC cost
I would agree with this. I think one thing a lot of people just breaking into brokerage should understand that if you want to do IS just make sure your in a market you will want to be in or are from originally. Bouncing around markets probably wont fly as a young IS broker, so just something to consider.
I'm in debt brokerage...typical comp at our shop is:
Analyst - $45K + 20K Bonus
Senior Analyst - $65K + 30K Bonus
Here is where sales skill comes into play
Director - $120K - $400K (all-in)
Senior Director - $400K - $3MM (all-in)
This is how our shop is as well.
Is there anything between Sr Analyst and Director at your shop?
Any idea on updated 2023 comp numbers? Thanks!
Not really, there is a difference between the director that manages the analyst pool (no sales responsibility) and a director who is out in the field generating new/existing business.
Is a production analyst role at a big bank a good place to start if you want to be a debt broker down the road?
I'm in a production role at the Brokerage (Director). My recommendation would be to try to go for a a production analyst role at a Brokerage directly.
Otherwise, you could do a year or two at a lender (BB Bank, Lifeco, or other institutional lender) move to sales role and try to make the jump as a broker/orginator...
My recommendation is get into a brokerage early if thats what you want. Be prepared to be thrown into a high-pressure commission environment.
The big advantage of IS is that you’re selling a one of one asset. The downside is you need to find a suitable buyer. So you get stuck in your lane to a certain extent. Someone who is a middle market player may have a $100MM deal come across their desk. But it’s going to be difficult to execute, since your pool of buyers would be primarily middle-market guys. And not really capable of taking down an acquisition that size. Couple that with the fact that buyers agents cut into your commissions heavily. Prospecting is…challenging. In the middle market, sellers are small timers that maybe inherited the building, have no idea what it’s worth. Shitty record keeping and financial reporting. It’s a mess usually.
Debt side is way more commoditized. Any debt broker can blast your deal out to 60 or so lenders. So…that means borrowers tend to do business with whoever they like personally/believe to be competent. It’s much harder to bring new clients in for sure. A lot of networking, playing the long game, giving out analysis and data for free, etc. But once you have a book of business, you’re golden. There’s no real need to prospect for new deals because you get to a point where your existing relationships continually have loans rolling over and NEED refinancing.
Short answer, what I’ve seen is: superstar IS brokers make more than superstar debt brokers. On balance, debt brokers make money more consistently though.
I personally fell into the debt side naturally since I came out of banking. I strongly prefer it because debt brokers are also a client of the lenders in a way. Brokers wine and dine borrowers…and in turn lenders wine and dine debt brokers to get to the borrowers.
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