What does it take to break 500k in Real Estate?
As the title suggests, I'm curious as to what it takes to pass 500k all-in compensation in real estate positions.
If you're in commercial development, brokerage, RE PE or RE IB, at what level of experience could you expect to pass 500k? Do you only see this figure at the very end of your career or is it possible to be earning this in mid-30s like in other industries (IB, tech, law, etc).
The reason I'm asking is that an article published by CELA associates (can't post due to my account being new) says that executives earn 300k and only the CEO or board members could hope to earn 500k. Is this at all accurate?
I know several people who pull in >$500k in RE. One is in his mid 30s and works in Development. I've spent my undergrad years as a residential broker and I know several agents in their 40s-50s who pull in >$500k. So I would imagine CRE Brokers can do the same. I recently read about Darcy Stacom who is with CBRE in NYC and she earns well into the 7 figure mark every year. There are debt brokers who do the same.
I would imagine you're talking about the CEL Associates breakdown that shows the averages per industries. Another poster on this forum talked about how inaccurate it was.. can't remember the poster or thread. My understanding is that once you get a participation in deals, your income shoots up drastically. And commission based jobs in RE are a function of your client list.
VP-level real estate employees in primary markets (think NY/SF/LA) at **SOME **private equity firms and hedge funds break $500k all-in (base, bonus, carry - placing a reasonable value per year to this). I know of a few in their late 20s/early 30s, but these guys are flat out crushing it.
The closer you are to the capital and decision-making the higher the likelihood you will make it rain earlier in your career. For example, if you are crushing at a buy-side shop at the Vice President level you should be able to clear $500k all-in. Additionally, investment bankers, top lenders, and brokers should all clear $500k all-in with 10 years of experience.
I know many guys who cleared $500k-$1MM by their late 20s - albeit they were in brokerage roles (investment sales and debt/equity placement).
On a consistent basis? I feel like unless you're at a rainmaking team, like top 10-15 in the city, it's tough to break half a million consistently in your 20s. Sure, you might have that killer year, but you might make 100-200k the year after.
Rule of thumb is the real money comes from carry (and/or risk), so if you've got a couple points of the promote, or you've got some actual risk and are in an ownership position, your in a much better place to make a ton of money. Though that being said, the same caveat as above applies; it'll only pay out after a capital event.
Yes, consistently. There are two guys I'm referring to, and neither of them are gun slinging morons - I'm talking about highly methodical guys who have backed into the data and quantified their business plans in order to map out what they need to do, and who they need to be working with in the market in order to create a meaningful pipeline. Both of them run their own respective teams in Socal.
What I have gathered from spending time around them, in addition to several other mid-7 to low-8 figure producing brokers is that there's a lot of factors out of your control in that line of work - all you can control is constantly staying in front of clients with something of value. You're going to consistently make money if you do just that.
It varies so dramatically from development, REPE, IB, etc.. They are completely different business models. If your a developer than comp varies wildly based on your ownership/fee structure and when dispositions occur. If you can negotiate a respectable piece of ownership there will be years when you make several million and there will be years when you only collect salary and development/acquisition fees.
bump
The key in your question is "all-in", someone could have a base of $250k with potential for bonus of $250k, and may get it in many years, but not all (like maybe this one for some firms..)
In general comp goes like this
Salary + Small Bonus Salary + Large Bonus Salary + Large Bonus + Small Long-Term Comp (carry or stock, etc.) Salary + Bonus (may actually decline or may grow) + Large Long-Term Comp
So, it really depends 'how' you earn it. If you are a broker who is 100% commission, then when you hit $500k and above is at the market at your effort. Otherwise, for most in the principal side of the business in institutional firms, it's a matter of seniority and risk baring (or luck of payout).
I'd venture to guess that 'most' people who are consistently breaking $500k (or could with bonus) have 10+ and even 15+ years plus. Clearly higher end markets and higher end firms get there faster (and I'm sure some hotshots at the BXs of the world get there after 5 years). But in reality, a lot of people will 'top out' in that $300-350k range in a lot of fields/firms/markets. People on forums tend to exaggerate the value of their long-term comp and even bonus potential, so take everything with grain of salt.
Is this true for senior level positions in RE? I can understand people who "top out" in their position and don't/can't take on more responsibility, but those who continue to climb? IMO it would be slightly depressing if I knew my comp would top out in the $300k range...
There are only so many slots at the top which is why he said "most people," It all depends on where you consider to be topping out.
Senior level, meaning like C-Suite or head of major office/market, or fund manager, portfolio manager, etc.... can be very different. At many large and even medium firms, those roles are often going to be $500k between base and small bonus.
With long-term comp, payouts can be in the multi-millions if the fund/deals/etc. are successful. That is the big shift, the comp gets big but is tied to equity payouts in the deals. I've worked for people who have had 8 figure pays, it totally happens.
Even in firms where there is not promotes or equity in deals (i.e. more corporate like), top senior folks will sometimes crack the 7 figure mark between base, bonus, and long-term. Sometimes that is in the form of restricted stock. Overall same deal, the big pay out requires longevity with the firm and it to stay alive and successful.
I took the question more form the standpoint of, 'when can I make $500k in the normal line of work', promotion to the top senior ranks is a whole other thing. But clearly, fewer spots for those roles.
I would say at the Director/VP level and above at a MF REPE (in terms of base and bonus). Where bonus is at least 50% of that number. Carry will take several years to churn, so you would have to have at least 5 years before carry starts kicking in (think 7-10 year fund life).
1 You're misreading the survey and looking only at base... the first dozen or so roles on the first page are all 500k+ including incentives/bonuses. I would say the comp on there is nothing to sneeze at ... the mid-range for a 'top asset mgmt executive' focused on retail/shopping centers is a BASE of $266k and all-in of $430k+, honestly that's pretty sweet for an asset manager if you ask me
2 As everyone else here seems to have touched on, the CELA survey is a fairly rigid perspective on a highly fragmented industry where all kinds of morons make way more than 500k in "eat what you kill" type roles etc. Yes there are definitely young ivy league guys in REPE in NY who make that but there are many others who quietly work for themselves or are at small shops who do as well.
harder than it seems
To break $500k:
1) VP level at large LP 2) Successful broker 3) Partner level at GP
Fairly common in major markets.
As many said this could be senior associates/vp/directors (high 20s/lower 30s) in brokerage, REPE, debt originations/finance (REPE RED, mreits, CMBS etc), CMBS banking/DCM/securitization... pretty common to hit mid-400s / 500s at ~vp level.
Some brokers (debt and IS) and high producing originators could easily be at/above a million (up to multiples) at the above levels/ages. More all-stars but fyi.
I know a couple partners at CRE appraisal firms that make over 500k. However, it took them 25+ years of being in the industry and creating a pipeline of clients. In addition, the work they do is very unique and hard to break into.
The real question in RE is what does it take to break $500k/year while sitting at your vacation home.
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