How pigeon-holed would I become by working in Real Estate Investment Banking?

okay24's picture
Rank: Gorilla | 594

So I have an offer for a Real Estate IB Group at a MM bank. I have spent the past year in a "regular" industry group. Although I am interested in Real Estate, I don't know if this is what I want to do for the rest of my life. Just how pigeon-holed will I be by working in REIB? How easy would it be to jump to a non-RE PE firm?

Can anyone provide any color on the matter? Did some searching but didn't find anything useful.

Will Working In Real-Estate Pigeon Hole Me?

Real-estate has a specific skill set that isn't traditionally considered transferable to finance at large. A career in this field will make it harder on future job searches outside real-estate. You start to be seen as 'a real-estate guy'. There's no way around this unfortunately so before you commit to it, you want to be as sure as possible.

User @Scandal explains it like this:

The valuations in real estate are not as complex as other industries (arguably), and you'll develop a very specific skillset. If you want to be in RE long-term, then take it; however, in IB you'll eventually want to move around or switch more often than not, so I would suggest you move to a group that's more cookie cutter.

If you decide to go into real-estate and decide it isn't for you, it's better to leave it sooner rather than later. Early in your career, as user @prospie points out, it will easier to fall into banking than later on. Early, you haven't learned enough yet for it to be a hindrance:

Agreed. It will never get easier in your life to change careers than right this second. If I were you, I'd take what you can get:

  • MM or boutique i-Banking (even if you have to join a lodging/RE group and later, lateral to something like tech banking)
  • Corp banking or other products in the fixed income/debt world (this could be a decent angle given your current role on the debt side)
  • Big-4 M&A-related groups
  • Even Corpfin at XYZ Corporation
  • If you have any interest, you might be able to get a look from a 2nd tier strategy consulting firm

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Comments (18)

Aug 7, 2013

I can't comment on how easy it is to move to a non-RE PE shop but from my experience working in REIB i would say you are quite set to be in RE for the long term career. Although the M&A modeling in stuff doesn't look too different from what I have seen for other, non-RE M&A there are other things that are RE specific and I guess a branding on RE should be understood as a long-term career choice.

it is by no means bad as there is lot's of stuff going on in the market (talking about EU here) but you will need to make that choice i guess.

Aug 7, 2013

Will definitely be harder on your search - no matter what skillset you have, the fact that you're in real estate WILL pigeon-hole you, similar to any other industry group; a lot of my buddies are trying to get out of anything real estate related because recruiters and headhunters will still see you as a real estate guy, no matter how amazing your valuation skills may be. Though, you will have traditional exits to REPE and other real estate-related firms.

The valuations in real estate are not as complex as other industries (arguably), and you'll develop a very specific skillset. If you want to be in RE long-term, then take it; however, in IB you'll eventually want to move around or switch more often than not, so I would suggest you move to a group that's more cookie cutter.

Aug 7, 2013

You will get a skill set specific for Real Estate but some skills are transferable, eg valuation.

Aug 7, 2013

The valuation skill set is a bit of a turnoff to headhunters for PE; real estate doesn't have the traditional cookie cutter valuation, so it'll be specialized - of course, no industry is without it's specialized valuation, but you'll see different metrics used for RE IB and RE PE.

We may think the skills are transferrable, but at the end of the day it all boils down to the headhunter, and no amount of persuasion can get their initial impression of your resume/RE background out of their heads.

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Aug 7, 2013

I would say first choice should be RE PE analyst at a large shop (there are very few that hire analysts, but the three I've mentioned before are MSREI, Walton, and Starwood). Then RE IB analyst at any of the bulge brackets. Then RE PE at a smaller shop. Then investment sales brokerage. Development and research are pretty regional...not necessarily a "bad" thing but does limit your options.

Office is probably the most vanilla investment class that involves a level of analytical complexity due to the leases. Multifamily and industrial are a little "too easy." Retail and hospitality are sometimes seen as "nichey." Best to go someplace that let's you play across property types.

Aug 7, 2013
re-ib-ny:

I would say first choice should be RE PE analyst at a large shop (there are very few that hire analysts, but the three I've mentioned before are MSREI, Walton, and Starwood). Then RE IB analyst at any of the bulge brackets. Then RE PE at a smaller shop. Then investment sales brokerage. Development and research are pretty regional...not necessarily a "bad" thing but does limit your options.

Office is probably the most vanilla investment class that involves a level of analytical complexity due to the leases. Multifamily and industrial are a little "too easy." Retail and hospitality are sometimes seen as "nichey." Best to go someplace that let's you play across property types.

Is analyst above associate in REPE?

Aug 7, 2013

Thank you re-ib-ny, much appreciated.

Aug 7, 2013

Generally private equity titles follow investment banking titles. So associate is above analyst. Some PE firms (particularly privately owned ones) will add the title of principal. And sometimes principals outrank MDs, whereas at other times they are an intermediate rank between director and MD (or MP).

I've tended to see the analyst title outrank associate only in hedge fund/research organizations. With that caveat, I will note that there are a few hedge fund-esque real estate investors (which blur the line with PE; eg Baupost, Farallon, Angelo Gordon) where that title flip may apply.

Aug 7, 2013

Cool. Thanks for the clarification.

Aug 7, 2013

............

Aug 7, 2013

I'd be hesitant to focus solely on multi-family assets. From my experience, I'd argue that this asset type is the most "nichey". Typically apartments are not underwritten in ARGUS (we use Excel). I'd agree with re-ib-ny, the best to go is someplace that let's you play across property types.

  • Canadian Bacon
Aug 7, 2013

analyst at Blackstone, Starwood, MSREI, etc. would be the best, and all of those hire analysts. Second best is probably REIB at a bulge bracket bank. Beware of the very small real estate PE fund analyst role, it can work out, but it can also be hard to move to a different firm if the shop isn't well known. Analyst program at Tishman Speyer or another top developer/investor company would also be a good place to start.

Aug 7, 2013

Off topic but mind me asking what it is you don't like about it?

Aug 7, 2013

I echo what previous poster said. Why do you want to leave? If it's because you don't like real estate then it certainly isn't a regression. Repe is not like true private equity in that regard. If it's because you don't like the product within repe, then I would say that it is a big regression and that you should try to lateral, perhaps after toughing it out for a little longer at your current shop.

Aug 7, 2013

If you don't like real estate, do want to work in finance, and can get a good banking job, why wouldn't you do that? You've only worked for six months. You haven't learned shit, except that you're pretty you sure don't like real estate, which, incidentally, might be the most valuable thing you could have learned. That's not regression, that's just being smart about your life.

The one piece of advice I would offer is to avoid a "grass is greener" mentality. Before you leave, think about why you don't like the work. If you don't like the business as a whole, don't like the job you see 2 years down the road, etc., then get out. If your day-to-day job sucks, you should realize that pretty much all entry-level jobs suck, and changing won't necessarily fix that.

Aug 7, 2013
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