Regrets About not Going to Corporate Finance?

Anonymous Monkey's picture
Anonymous Monkey

I'm sure most of you here have a passion for real estate, and that's why you work in the field or are trying to get into the business. But I have a controversial question... Skip to the last paragraph if you don't want to read my rambling examples in the middle.

For the Brokers, do you ever wish you were taking 2-5% fees on massive acquisitions like Amazon's purchase of Whole Foods, Microsoft's acquisition of LinkedIn etc? What if you were the advisor to Vornado in their acquisition and subsequent spin-off of JBG? Is that not more complex / interesting to you than brokering the sale of the $20mil apartment complex down the road? The two jobs are similar, yet the fees are higher and the work appears to be more interesting on the IB side.

For the RE lenders, do you ever wish you took more finance classes in college and ended up financing M&A between major corporations, LBOs for jumbo private equity funds (sometimes 10x the size of a major REPE Fund), distressed loan acquisitions etc? This would net you more fees as a senior person, and a higher junior level / mid level salary. Simultaneously, you'd get to learn about tons of industries instead of focusing on real estate.

For the private equity / owner /operator guys, how many different ways are there to execute a turnaround plan and re-lease an office building? What about an apartment complex? The turnaround strategies are likely the same from property to property, city to city, cycle to cycle. Re-do the kitchen and bathroom in the apartment complex, Remodel the lobby in the office building and hire the best agency leasing guy, bring on a new operator for your hotel etc. Think of all the operational and strategy nuances to 3G Capital's acquisition (read about some of them here https://www.fool.com/investing/2017/12/09/is-the-3...), does this not sound more interesting to you?

What about when you get tired of the hustle / stress of doing the above? You can exit to a corporation in the area that you covered, make good money, and still have time for your family. In real estate is there an option like that?

I guess my question is this: Your job in real estate likely has a counterpart in private equity. That guy likely makes more money than you and has learned a great deal about business along the way. If you could start over and land a good job in an area of IB / PE / LevFin or whatever are of corp fin interests you the most, would you do it? Why not? Some of you will look through my post history and claim this is a troll account. And you'd be right. But this isn't a troll question. I'm genuinely a 1st year analyst at a cross-roads in deciding whether to stick with real estate or pursue IB, so I'm hoping you all convince me that I'm being a prestige-whore or whatever

Comments (40)

Best Response
Mar 22, 2018

When I was just starting out, I was at the same crossroad you are at now and I chose real estate. Everyday I regret it. No discipline in real estate is all that complex, interesting, lucrative, or fulfilling. Every day I look in the mirror and think to myself, "What if I had gone into corporate finance? How much better would my life be?"

None of this is intellectually stimulating. I mean take an office building development for example: all you have to do is pick a piece of land (any old piece of land will do), find some guy who's got the right licenses to oversee the construction, and have a team of guys build according to the rough sketches you have. If it's a tall office building, then it's the exact same process, but you've gotta rent a crane. Then, once it's built, you sign some sucker to a 10 year deal 10% over market and voila, you're done. It's time to sell the fucker. Everything is just rinse and repeat. There's no nuance or variation to any of it.

If I had gone into corporate finance, I'd definitely be making way more money, I'd have better exit options, and I'd be more fulfilled. If I had gone into corporate finance, I'd be smarter. If I had gone into corporate finance, I'd be 6'5", 250 lbs with six pack abs (that are visible while sitting) and I'd look like Ryan Gosling. If I had gone into corporate finance, I'd just be better.

If I were you, I would go into corporate finance. Don't make the same mistakes I did. You'll be much better off.

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Mar 22, 2018

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Mar 22, 2018
EliteStudent11:

I guess my question is this: Your job in real estate likely has a counterpart in private equity. That guy likely makes more money than you and has learned a great deal about business along the way.

As a development manager I'm not entirely sure what my counterpart on the "other side" would be - a start up entrepreneur? Or I guess, more specifically, a product line manager working for a start up entrepreneur? I'm not sure that's a solid comparison in my case and the skillset between building apartments and coding the swipe right feature in the next cool dating app and hoping it IPOs don't overlap all that much.

I went back and read the rest of your post and your thesis seems to be that real estate and "real finance" are the same thing, but real estate is simple and boring and not intellectually stimulating. In reality, real estate can be super simple and super complex - that just depends on the company and the individual deals. "Boring" and "not intellectually stimulating" are more opinions than anything. If you're not personally into real estate, and work in real estate, that's more a problem with you than the industry. I geek out over door latches, kitchen finishes, bedroom square footage, LVT innovations, etc. because I like the industry. If you don't, why are you in it? Seems odd.

I think your thesis, that real estate is some sort of sub-finance, is incredibly flawed.

Edit: I see now you have an IB tag, so I'm assuming you don't work in real estate. That makes this thread somewhat pointless, no? It could be titled "Person Who Doesn't Work In Real Estate And Doesn't Like Real Estate Doesn't Understand Why Other People Work In Real Estate" You say you're a troll account - I think that's probably accurate.

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Mar 22, 2018

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Mar 23, 2018

I've never really understood people who have a particular fascination with the public real estate markets. The beauty of real estate, IMO, is that a large portion of it trades privately so it's inefficient.

Also, to your original post, real estate accounts for more millionaires than any other industry in the United States, so I don't know where you're getting the idea that you'll get out-earned by corporate finance peers. You'll make more as an IB analyst at 99% of firms, but mid-late career comp in RE is off the charts for the cream of the crop.

I come from down in the Valley, where Mr. when you're young, they bring you up to do like your daddy done.

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Mar 22, 2018

Lol... So your asking why I would rather develop a luxury condo in South Beach than work on a share repurchase for a large Potato Chip company?

Everyone has their own preference in what they find interesting. Personally, CF sounds boring as fuck. Also, don't forget that RE can sell for just as much $$ as a business depending on the product/location. Just becuase youre in a VC group that lends $5-6M to some indian guy in California doesn't mean youre making more than the guys at Blackstone who are buying $2B hotels in NY.

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Mar 22, 2018

These are all things I've thought about too. Some large deals are way bigger than VC deals I know of. But the opportunity to quadruple your equity is more limited in RE compared to VC so there are trade offs

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Mar 23, 2018
EliteStudent11:

These are all things I've thought about too. Some large deals are way bigger than VC deals I know of. But the opportunity to quadruple your equity is more limited in RE compared to VC so there are trade offs

Replied to you above, but I have to point out that that there is also significantly more opportunity to completely lose your ass on an investment in VC than RE.

I come from down in the Valley, where Mr. when you're young, they bring you up to do like your daddy done.

Mar 22, 2018

Elite,

Over the past few weeks I've noticed that you've been spending more and more time on the real estate forum, and have been more vocal. This leads me to believe that this may be a genuine question it just sounds kinda douchey the way you asked it. Either way:

This question depends on who you ask. For me personally what attracted me to CRE was the entrepreneurial spirit, and the hustle of it. You hear stories all the time abou guys who graduated bottom of their class from a no name school breaking in to the top firms all because they had hustle and drive (somewhat happens in investment banking but I would argue that these are lottery picks and not the norm). You also hear about guys with barely a high school education worth 50+ million because they know how to invest in real estate. In this business a lot of people pay their dues and a lot go out and make a name for themselves.
You have to figure out where you fit. Like the old saying " get in where you fit in". Do you like you work? Do you find it interesting? Would you rather open up a development firm one day, or run a hedge fund? These are questions you need to ask yourself. If you think you would prefer IB I would start reaching out to people and talking about their day to day. Try to get a feel for what they do and see if you would like it. Also beware that some of this may be a normal first year burn out thing.

Mar 22, 2018

Bazooper. Corp Fin > RE

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Mar 22, 2018

What about REIB (entity level)? that way you can get IB work with a real estate basis. I've looked at some of those and that would probably be "sexier" to you. Although people Ive talked to say you basically sit on PP all day and night, no real deal experience, plus you're training to be a business salesman as opposed to property salesman.

Theres also CMBS securitization. But I had an informational with a guy at GS a few months ago. He basically told me to stay where I was at though... He left a month later.

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Mar 30, 2018

I think if you want to be "blown away" by RE, I'd suggest you look for an acquisition shop that'll offer carried interest. Judging by your comments on this thread, I think you just might be at a really boring RE shop imo.

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Mar 22, 2018

Troll account

Mar 22, 2018

We got a detective over here

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Mar 22, 2018

Kind of sounds like you're particular real estate job is boring. I can't possibly imagine how corporate finance could be more challenging or intellectually stimulating than development. You have to know a little about architecture, engineering, and design. You need to be able to underwrite a deal, figure out comps, understand the financing side. You need to be able to vet what your lawyers are doing. You need to be able to interface correctly with politicians, community groups, lenders, contractors, etc.

I'm not in corporate finance so I can't speak to that experience, but it's tough for me to imagine it's as stimulating. Also, if you're really good at what you do in the real estate world, its much easier to go out on your own, and that's where the real money is.

Mar 22, 2018

OP's whole account is a troll shtick that goads high-maintenance prestige whores into getting indignant. It's frankly really excellent work.

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Mar 22, 2018

TY I appreciate the recognition. This will likely be my last thread with this account

Fuckin my way thru nyc one chick at a time

Mar 22, 2018

Putin is impressed

Mar 22, 2018

I know REPE firms that put in less than 3% of the equity and get a 20% promote above a 12% IRR hurdle, and that's on top of a 1% acquisition fee and a 1% asset management fee. If you're just purely interested in the dollars, that seems pretty exciting to me.

I came from corporate finance, and absolutely would never want to go back. I think for most people that are passionate about real estate, it is more than the transactions and the dollars. The thought of being able to make a significant and lasting impact on my local community some day personally gets me going. But if you like feeding your ego and are a prestige whore - your neighbors probably won't give a shit if you put together a graph for the Amazon/Whole Foods pitch book, but they will definitely remember if you put together a deal that significantly alters the skyline of your city.

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Mar 22, 2018

Did you come from literal corporate finance like working in CF at a Coca-Cola? If so then I get your point. However, I've yet to hear from someone who worked in IB for two years, went to PE as an associate and made $300k a year, hated it and then got into real estate

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Mar 22, 2018

I did my UG in corporate finance, and interned at an IB doing M&A. I didn't need to work for 5 years to realize that it wasn't what I was passionate about. I imagine that most people that go the real estate route from IB choose to exit in CRE rather than go into traditional private equity

Mar 22, 2018

Real estate is legalized gambling--the kind that could leave your city better than your found it and make you very rich if you're entrepreneurial and find a little luck. Wouldn't trade it for anything, and working at Amazon or Dr. Pepper Snapple would make me want to gouge my eyes out like that chick who did meth outside her church a few weeks back.

Quality of life is great, and the business is all about people and deal making. Also, people are typically working for you if you're a principal.

Mar 23, 2018

Some days I don't feel smart enough to work in commercial real estate. I'd imagine in corporate finance I'd feel that feeling every single day.

I like to carve a niche. Become an expert in that niche and dominate.

Real estate is a niche business for dumb guys like me.

Also i'd take 50% less salary to have 50% more free time in my 20's and 30's. I guess I value my time a little bit more than I value my money.

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Mar 22, 2018

See here's a guy who tells it like it is. I think real estate at the senior level and junior level are totally different animals. At the senior level, youre more involved and some of the nuance of doing deals will make your job more interesting. But at the junior level, the work is less difficult to wrap your head around compared to IB

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Mar 25, 2018

I was an IB Analyst and I'm now an Analyst at a top developer. I find the work is far more intellectually stimulating. In IB, once you've gone through your first year / seen a few deals, the work gets very repetitive. Pulling comps, plugging figures into template DCFs / LBOs and formatting slides for 15 hours a day gets old quick.

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Mar 22, 2018

Couldn't agree more. I'm not in finance to feel special, I like working on cool deals with chill people and leaving the office by 6:30 every night. I sure as hell can't complain about 90K a year as a 22 year old and still having time to hit the gym AND the bars on a week night. If anything I feel like I'm beating the game lol.

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Mar 26, 2018

damn dude. 90k at 22 with a solid work life? Do you mind telling me what you do? Development?

Jun 6, 2018

I started my career in real estate acquisitions & development but pivoted to corporate banking during the recession. I went to get my MBA with the hopes and dreams of landing back in real estate. Unfortunately, my MBA program is a none target school for the big grand real estate firms (still a top 10 school). I networked like hell, did case competitions and I crushed my real estate classes. End of the day, three of my classesmates who found full time opportunities got it through their network.

I was highly leveraged and couldn't stomach waiting until the school year ended so I took an opportunity in corporate finance at one of the big tech firms. Initially, I was pumped to land the gig and it was the only non real estate opportunity I had applied to. Looking back, it was the biggest fucking mistake of my life! I am fucking miserable and I hate it. I am on excel all day long doing a job I find meaningless. I have to be at the office between the 2nd and the 15th of each month to tell YoY, budget miss and forecast BULLSHIT numbers that don't mean a fucking thing!!

I would do anything to get back in CRE at this moment and I am going to leave my company next month for a boutique REPE. I would 100% advise anyone to stay the hell away from Corporate finance. You are a back office bitch making 6 figures to a soul sucking job. It's almost 8:42PM and I am still at the office.

If you are in Real Estate, there are only 2 ways to make money. Take risk by being a broker pounding the pavement or have an ownership stake in the investments. If you work for a PE FUND, try to source deals and show you care. Don't be a bitch analyst who just runs numbers! You have to add value to get rewarded in CRE. Most owners are greedy and don't want to share their wealth. An analyst is just a number cruncher. Most owners know before the number is crunched if they are going to buy into a deal or not, the analysis only lets you know how much additional risk you are taking in a SHIT market like this when every one is buying assets at PROFORMA.

Stop bitching and find a job you find meaningful while working hard. No broker or developer is going to pay you if you are just collecting a pay check and building financial models in excel.

GET AFTER IT AND IT WILL WORK OUT.

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Mar 22, 2018

Good point but this post was about IB. Not back office finance at Google. Obvi real estate development is better than doing accounting for Apple

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