Shaking the Real estate handle - Why is Real Estate something that needs to be Shaken off?
What's up fellas.
I frequent this thread a lot but I have yet to get a solid understanding of why people say it can be tough to "shake the real estate title" especially when coming from REPE or REIT
Seems like real estate would be a cool field to be in. People will always need some type of shelter or place to congregate
I know that the models are a less complex when dealing with a business.. So that may be a factor...
But other than that... It seems like people look at real estate as a failure on this site..
I say that with a grain of salt because I know A TON of guys/gals on here are college students trying to follow the yellow brick road of Goldman Sachs M&A -> KKR -> H/S/W -> two supermodels on either arm while playing catch with Tom Brady in Manhattan....
And anything seen outside of that is a failure.
I just want to get your insight. I think real estate is kinda cool and it makes a lot of people a lot of money...
Also... What makes it so much harder to move from REPE to traditional PE?
You hit the nail right on the head. Too many people here are chasing the prestige dream of TMT at 200 West St or bust and think that anything else is failure. Real estate in general's a great career. You can make loads of money in it and have a better lifestyle. I also tend to think it's easier to break out on your own and invest. Maybe raising an REPE fund isn't too easy, but you can do a few one off's of a decent size and make good money doing it.
The reason it's tough to make the jump and not get pidgeonholed is that real estate analysis is simply a lot different than a traditional IB M&A or lbo model. The models in RE are easier in some ways, but you're also looking at a completely different type of asset. And it's not that you couldn't learn the modeling part but you just develop a very different view on how to invest and what you're investing in.
1) A majority of REPE analysis is performed at the asset level and traditional IB/PE is at the corporate level
2) The second portio sounds facetious but the URL is "wallstreetoasis.com" not "realestateinvestors.com." The majority of members on the forum are exactly as you described. If you went to a "NBAhoops.com" you would find a bias towards basketball and an opposition to other sports.
3) We like it this way, less competition
As a current college student I def agree with your point #3, at a recent job fair nearly everyone overlooked this Development company that was offering a really good internship experience.
OP I agree, Real Estate gets a bad rep on the site but anyone who lives in Manhattan or LA knows that RE Development or REPE are good fields that can make you a lot of $$$ (especially if you're running the firm).
You can make the same argument about credit vs. equity investing. You find that someone who has been in credit long enough tends to have a different vision than someone someone who looks at the equity case.
I don't know why people crap on RE. It is fascinating and tons of money to be made in all aspects of RE.
I would echo everything said above. When you say "real estate" I assume you mean buying physical assets, and not RE companies, which is derided for two reasons:
(1) it's not as an exclusive club to get into. there are fund managers who went to state schools - or, in some cases barely got out of high school, making a few million per year without getting an MBA (the ignominy) and don't understand regression analysis. the industry is also watered down by tens of thousands of real estate "investors"/brokers/appraisers/whatever that do not approach the business from an institutional framework, and billboards of cheesedick RE agents, trying too hard to impress people, come to mind.
(2) lack of exponential growth makes it less sexy. In the last decade, companies have figured out how to connect to millions of consumers, with billions more surging toward middle class. Cheaper technology, internet of things, etc. will fundamentally alter civilization... whereas a 30-year old industrial portfolio in LA has some really functional roll-up doors! obviously over-simplifying but real estate is lower risk/reward because you're buying actual property.
Well... now I feel like I should defend real estate investing. my favorite part of the job is understanding a complicated economic and social ecosystem to invest in. It's fun identifying trends in a nation, region, city, or a small submarket (I prefer macro but that's just me); what companies are growing; how are the demographics changing; what will people want - before they even realize they want it; and most importantly, what would I want if I lived there*.
For the young monkeys only worried about comp and prestige** in real estate - (1) please stop caring about this; but (2) as an analyst my experience with salary was in line with other areas of banking/PE, there was a slightly lower bonus but way less 90 hour weeks. I've tried to focus more on $ per hour over the years. Hope this helps, just my two cents
*strip club with a buffet **can't remember where I read this, but if you want to make ambitious people do tedious stuff, bait them with prestige
It's like totes prole, bro.
But seriously, @Gene Parmesan's answer really sums it up.
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