I am currently an associate in real estate team of a top private equity firm. Should I switch to traditional PE? Real estate is ok but I am not that interested in it.
I am thinking about this in several aspects:
1, Pay in traditional PE is higher.
- I am not sure how much higher, but from what I heard, total comps may be 30% higher. That make sense to me because, as you may know, most REPE's IRR is around 20%. In comparison, IRR for traditional pe is much higher, top PE could hit 40%-50%. When you make more money, you get more. Make sense. (would be better if you guys could quantify the comps difference)
2, Broader exposure and sense of accomplishment in traditional PE.
- In traditional PE, you can feel you are really helping a company to grow, rather than just earn your return. You talk with the entreprenuer, you think about strategy for the firm to grow. But in REPE, we (our fund) are acting just as a financial investor, earn the 20% return, and that's it. It's very project-based, and no need / also no expertise to help RE firms to grow.
3, However, hours for traditional PE is a question. I know KKR/Blackstone's hour are really bad, but some other top PE firm seems ok. By "OK", I mean 9:00-20:00 average. I know some people in top firm go back home at 5:30PM everyday.....what's a happy life....
4, But, sometime I do think that maybe I could have a better career in real estate, if later in my career I could focus more on the Asset Management side. Many buildings are operated in such an inefficient way, and this may be an opportunity. Generally speaking, I feel there is less competition in RE than in traditional PE. (am I right? there are so many traditional PE firm chasing for a few good deals), so less competition means existing opportunity if you dig deep down and work hard.
So, what do you guys think? Would like to hear your advice!
Note: I could switch to traditional PE if I want. I have some connections.