Real estate on the principal side

I have worked at a small RE investment fund and in general I would say it is a good thing. You will be involved in all aspects of the company, for example in addition to my 'day job' of investment analysis I helped with fund raising, meeting shareholders, dealing with banks/brokers, Asset Management etc. Depending on the company you may have a lot more free rein as well, expected to do more off your own back rather than just being handed work from various levels of management. So you really shape your career.

The downsides are the fact that you are unlikely to be promoted, which may mean eventually you have to leave to move into a more management-esque role. However with the experience you will have picked up there it should be easy to move to another company or a REIT.

Id also add shops like this probably wont pay well

Thanks for the comments, guys. Just to quickly hit on the pay side, it seems pretty good for real estate and for the location. I'm actually pretty pleased with it.

I have 7 years of banking and GSE experience, mostly in multifamily but most recently in commercial. They are filling the position because their current guy is moving over to Kettler. They said they are hiring me specifically because I'm much more experienced than the guy that is leaving (he has 3 years of total experience, 2 at this firm), who they thought was good but not great--they are looking for a guy to proactively formulate and implement cost savings and revenue generating items, negotiate leases, identify refinancing opportunities, and do virtually everything or anything one can imagine regarding the portfolio. So they're basically hiring me at a fairly senior level.

I definitely get the impression that they only acquire maybe 1-2 properties a year and are definitely focused on maximizing cash generation.

Does anyone have any commentary on what it's like to work for such a small group on a daily basis? Is it, ya know, weird?

Oh yeah, another question for you guys. I'm kind of thinking of making this a "career" move, by that I mean joining this group and becoming THE man of the organization over time. Did you all get the impression that these family investment groups would ever pay up the big bucks to keep top talent? Did you get the impression that they would have ever been willing to give you a piece of ownership--1-3%--on some investment deals? Or did you really feel like you would never be anything more than a temporary means to an end?

Hmm sounds like more Asset Management than acquisitions. I would figure out which area you want to be in

Correct me if I'm wrong, but I was under the impression that these family operations do everything in their power to keep the "top" positions within the family? It's obviously absurd and reason enough to avoid them all together. Perhaps it's different there though, idk. Probably something worth watching out for. I personally wouldn't touch a place with gross nepotism with a 30 ft. pole.

This may sound common sense, but do you like the family and the small group you'll be working with? I worked at a company similar to this (except we purchased assets on the other end of the risk/return spectrum - although without leverage) and you'll be around them 24/7. I ultimately left because there was no room for growth, they were stingy keeping everything for the family, and I wasn't able to learn anything more from my boss. However don't let that make it sound all negative. It was an amazing experience for someone fresh out of college, we did some really cool/interesting shit, and I was given a ton of responsibility.

Great comments. Keep 'em coming.

I'm not sure about the nepotism aspect of it. The family owners number maybe 12-15 and they have delegated all management responsibility to two guys in their late 30s. These guys hired the guy I would report to (who is also in his late 30s) 2 years ago from the outside--hyper prestigious real estate background; he makes virtually all decisions with little consultation and is not family associated. I really don't think there are "positions" at the firm other than generic titles that help the outside world--brokers, lenders, investors, etc.--know who you are.

This is a tough one for me because I get the impression that it is hit-and-miss with these types of companies--some are awesome to work for, others not so much. It's tough because I can't exactly go on glassdoor and read reviews. As far as liking the guys, yeah, I've enjoyed my interactions with them. We're all white males with the same politics, some of the same friends (a mutual friend's reference sealed the job offer for me), and 3 of the 4 of us go to the same church (well, I go once a quarter..ha...).

They did tell me that their main concern with me is that the atmosphere is too laid back--that if I finish my work at 2 pm I can head home if I want, which is something I'm not used to. Office is located in a really nice area in a penthouse suite in an office building they own.

Considering you have 7 years of lending experience you must know someone who has worked with them before. Reach out to the network and see what type of shop people think it is.

This is a pretty big decision to make with little information on how the firm works or is reputed. If you have access to the information it would be silly to not inquire with a trustworthy individual.

I've known people who have worked in this type of family office environment in real estate and just overall general investments and it is almost completely unique to the actual family/firm itself. Some are very structured and others are completely loose and it just depends on the actual one you're joining. Tread carefully here but if you got along with the guys who are hiring you, ask if it would be ok to talk to a former employee or two. I say tread carefully because a few years ago I extended an offer to a more junior person and he asked for references from my firm and I basically told him to pound sand and rescinded the offer but he also asked in a dick way.

Having worked primarily in small firms for most of my career I would highly recommend that you like the fit of the office and people you'll be working with. Small firms of any type are very different than working with large companies in offices of hundreds or thousands of people. If there are 5 or 10 people (or even 20 or 30) at the office you can not get away from them. Ever. Make sure you not only work well together but that you actually like them. It can also be difficult if you're the boss because while you may occasionally socialize with them (grab a drink after work type of thing) you can not become friends with them or it will jeopardize your ability to be their boss. Even if you're an MD at a big firm there are most likely other MD's that you may become friends with. If you're the top dog at a small firm there are no other people at your level.

"They did tell me that their main concern with me is that the atmosphere is too laid back" Do you mean that their main concern is generally that it's too laid back or that they're concerned specifically with you that it's too laid back and you'll either get bored or not like it because it's not high pressured enough? If you're being paid well and like the work, leaving at 2 when your work's finished doesn't sound like a bad gig.

I'm loving the feedback here, guys. It's much appreciated. Hopefully this thread helps others in the future who stumble upon it.

@"SHB", I'm probably going to talk to an originator tomorrow who has worked with them for 20 years. I think I agree with your POV.

@"Dingdong08", they're a little concerned that I'm used to working in really stressful environments with long hours and lots of work with lots of structure. They basically said I will carve out my own work here and come and go as I please. They don't even have vacation time. They said to me: "Want to take a week off? Have at it. Just give us some heads up. Nobody is tracking your vacation time." My boss said he is in at 9 am and out at 5 pm practically every day--and he includes lunch as working since all the guys at the office have lunch together almost every day.

I work for a smallish "family-office" type of firm, the culture is good because its not too small but its not a large corp. I agree with above posters it's all about the fit with your coworkers because you can't escape them. I really like mine and it's chill but we get shit done we need too. I personally am learning a lot as well that I don't think I would have at larger shops (I turned down larger core RE shops for this reason as well as fit) and am exposed to all aspects of the deal process. The pay seems to be competitive too. It all comes down to IMHO the fit and if you will actually be doing true acquisitions.

@"JimboUSC", What's your ultimate career goal, if you've developed a plan?

It seems like the culture is awesome, but based on your job description, it seems like you'll be doing little to no underwriting of acquisitions. It looks like if its a pure PM role. Verifying leases, managing incoming cash flows, reporting, cost management etc. I understand your question is related to the size of the firm, but this is bigger issue I see personally. You have 7 years of RE experience in financing, I am guessing you been underwriting for borrowers. Based on the type of work and what you have said, my opinion is you'll be taking a step back.

DCD this also sounds like it would provide more freedom to pursue your own deals, right? That's a plus

And like @Gene Parmesan stated, and I believe I've seen you post about doing your own deals, you'd be able to do your own deals and perhaps even get them to invest in the future.

These are all great comments!!!

I work in a small shop as you described, my chairman is a legend in the MF space. It's a hybrid of a family office with private equity. I am with the PE arm.

Some of the challenges I found were in line with what has been mentioned above. You definitely grow up in a role like this if you have the flexibility to set your path and are not handed structured assignments. You have to love the family but also remember the balance that at the end of the day, you are an employee. But you will not be able to get away and if they have kids involved then its likely everyone is all over your business. It was hard for me at first but now I love it. You spend so much time at work - why not really enjoy working with people you respect and care for?

I also get to dream up crazy ideas (I focus on fundraising) and if I can execute them and show a likely return on my efforts, then I have complete freedom and support in my fundraising schemes. (Almost $20MM raised in a year from high net worth and ultra high net worth - this is my first fundraising gig too ;-).

My health has never been better, the office is very exercise and health oriented. I love that. I also get to take an extra day or two on trips if it works out and enjoy the city I'm in on occasion.

Regarding investment strategy - your firm sounds like a poster described above, likely going to be core assets. That is very firm specific and you will have to figure out if you will enjoy the AM work on those assets. We do higher risk deals, value-add and opportunistic so our stuff gets fun ;)

As for promotions - you can create your own path with the right company/family. While the job may not always be what you had in mind, you can actually develop and set your own career in these types of environments whereas in a structured firm you are pretty much nailed to a path with little wiggle room. Also - when you are in a small office you will meet everyone that comes through the doors and have exposure to amazing contacts in their network. That can become very useful to you one day.

I also have full support from my firm in my other initiatives (building a group of powerful women that are HNW investors, developing events for young professionals, championing non profits, donor development for their foundation, etc.) which is the cream on the cake for me because I get to get paid for my passions and actually feel like I make a difference.

I would try to talk to previous employees or some references to get a better idea if at all possible. I took my time and got to know the family over a three month period and accepted the offer when I was comfortable with my knowledge of them. I also spoke with former employees of theirs - that was a must for me. If I am going to put all my efforts and career with one family/firm - I want to make sure I'm making the best decision possible and that the culture fit is 100%.

Good luck - let us know!

Dagny Taggart Family Trust?

Sorry couldn't help it. Congrats DC.

This has been a great thread, guys. Thanks so much for the input.

@"TeddyTheBear", I do have some of the same concerns--that it's a step back if it's sole (or primary) focus is Asset Management (although principal level asset management is better than lender level Asset Management). I think where I ultimately decided that it wasn't a step back for me was in the much better compensation--23% boost to total compensation + I was offered a substantially discounted apartment in one of the most desirable neighborhoods in the metropolitan area.

In addition--and this was big--they agreed to a 1-year look-in period where the value I produce--new revenue generated, cost savings, improved processes implemented, and workload of my boss reduced--will be measured and they'll renegotiate my contract accordingly. To me that was huge--instead of getting the standard cost of living increase I can create real value and potentially get a lot more money. So for me it came down to comp, which is a little short-sighted, but I'm deep down kind of hoping this will be one of my last stops in my career--maybe over time I'll be able to negotiate some ownership in the 1 or 2 annual acquisitions. Who knows?

So yes, your concerns are definitely valid--just came down to comp for me and the outside, Hail Mary chance that I'll eventually be able to get a little bit of ownership in deals.

Dude just go for it, it sounds like you are already there. Like others have said working at a small shop cannot be generalized, each place will be different. If you don't need prestige and can work in an unstructured environment (its not for everyone), it could be great for you. It could also suck.

Best case - you like the gig, work is interesting, get paid well, define your own path, learn a bunch, and have job flexibility that those at a large company could only dream of. Sounds pretty good to me.

Worst case - jobs sucks, work is boring, you don't like your coworkers, no ability to make things happen, pay doesn't change. You leave after 1-2 years and when you get asked about it in an interview, you tell the truth and admit it didn't work out. You'll still have a solid resume.

No one here is going to be able to tell you there is no risk involved. You have way more info about the situation than anyone on here so if you are leaning that way, and it sounds like you are, pull the trigger. Put your head down and work for a few years, focus on creating value for the biz and not just doing what your told each day, then look around and reassess.

I was in a similar situation myself earlier this year. The company is bigger, but still has that small office environment and not a lot comes up when you google it. I wasn't totally sold going in either, but as the saying goes sometimes the bird in hand is better than two in the bush. So I took the offer and as of now I'm really glad I did.

I can't relate much beyond that as I have much less experience than you (basic analyst). What I can say is that though I was hired for acquisitions and that's still my primary responsibility, they've given me some Asset Management duties as well. Though I don't love AM, it's actually been helpful giving me a more hands on/ground knowledge of the buildings we work with and subsequently look for, which can be important depending on the shop and the kind of deals you're looking at. My sense is this could also be very valuable if you decide to start your own shop at some point. I've seen them do the same with more senior people they've brought on as well.

Wanted to follow up on this thread for everyone's edification.

First of all, thank you to all of those who commented and helped me make a reasoned decision. Just finished my first week and many of the pros and cons were right on.

TLDR: the place is amazing and I can see myself here for the rest of my career; however, I realized immediately that the financial upside is probably not going to be as high as I would have hoped due to it being a family business.

On the pro side, for me, it looks like I've gotten really lucky. I'm paid extremely well and I have about a 37-hour workweek—it’s insane. Office space is very nice and located in an amazing area. The owners/partners and my non-owner boss are all phenomenal and insanely laid back. Work is challenging and interesting—I’m literally working on everything—PowerPoint presentations outlining partnerships, investment analysis, strategy, refinancing offering memoranda, market research, financial analysis, property inspections, and ad hoc items (tracking down some office tenants to fill some vacant space, building some permanent Excel templates, re-organizing 60-year-old files, requesting and reviewing competing property sale offering memoranda). That’s in week 1. My boss told me on Friday that he’d eventually start delegating to me the really complicated tasks.

The company literally has $1 billion in real estate and 5 employees (including me), who also oversee a 120-person property management company (same owners). The tasks are utterly endless. They have leverage at about 10-20%, which means that I have almost perfect job security (as a result of economic or real estate cycles). This is the kind of place you could easily create $1 million in value every year and be compensated for that contribution. It’s the type of place a person could spend the rest of his or her life at. And having an insanely hot assistant doesn’t hurt either and a corner office overlooking the city ain’t too shabby.

The cons are that the organization is so backwards that’s it’s kind of embarrassing—typewriters are routinely used; they are so backwards that they don’t even have direct deposit for pay.

The biggest con for me was that only family members ever become insiders—there is virtually no chance that I will ever be given a “part of the action” unless I marry into the family. We share offices with several affiliated real estate organizations (same owners) and the employees are treated amazingly well—so many 20+ year company veterans—but NONE has earned his or her way into a piece of the action. Literally none.

And because things are so backwards there is endless reform of the organization required, and although I was brought on for the purpose of seeking and administering reform, I’ve gotten push back on literally every idea I’ve put forth thus far, big and small. I could be there 10 years and not see much change other than the computer operating system. For an ambitious person who seeks out excellence, indefinite mediocrity is a very difficult pill to swallow. Believe it or not, this is a huge, huge con for me.

Overall, my opinion is that this is the pinnacle of real estate (at least from a salaried, non-entrepreneur position)—high pay, easy hours, sophisticated and challenging work, and all at an elite and well-respected organization that basically built some of the most prestigious neighborhoods (not subdivisions—literally mini metropolises) in the Mid-Atlantic. It’s so influential that politicians of both parties routinely visit the office (saw a state senator on Friday). However, the opportunity to gain trust and become an “insider” does not exist and persistent mediocrity will follow me around and will probably cause me to eventually lose it.

Thanks for the update, this seems like a great place to learn Asset Management given the amount of capital under management and the small team. That's awesome that you'll get a cut from additional revenue generation/cost savings, I would highly recommend looking at their property taxes and consider appealing the largest assets yourself. I worked at a real estate consulting firm for two years and this was an area where 90% of companies left meat on the bone.

Sounds like you may need to build their trust before they allow you to implement any new systems, processes, or ideas. You may consider putting all of your ideas in writing, just in case you end up working there for a year and can't start modifying any processes until you've lobbied and earned support from the owners.

Given that they are a family fund and using low leverage, how much capital recycling is going on? Are they selling older properties and using 1031's to roll into new ones?