When does pay get "good"?

I've been in asset management / acquisitions at a Top 100 PERE firm in a high cost of living market (SF/NYC/LA) for the past 5 years. 

I started out of a "top" undergrad and the pay kind of blows the further I commit to this path. 

Out of undergrad, my friends were making about the same money (consulting, IB (they made slightly more, maybe $20 to $40K more per year), finance roles at tech companies). 

But now 5 years out, my friends are making almost double, if not triple what I make. 

When does pay get good in real estate? Does it ever? I've always been told by my bosses that the real money is at the VP+ level, but I'm beginning to doubt that...

As a point of reference my pay scale: 

Analyst Year 1 ($125K all-in)

Analyst Year 2 ($135K all-in)

Analyst / Associate Year 3 ($145K all-in)

Associate Year 4 ($160K all-in)

Associate Year 5 ($175K all-in)

Am I'm getting hosed here?

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Comments (74)

  • Analyst 1 in RE - Comm
Nov 21, 2021 - 2:41pm

Bump starting off at 95k all in as an analyst and sometimes reading comp posts here makes me feel like I'm being underpaid.

Most Helpful
Nov 21, 2021 - 3:16pm

If you want to become wealthy in real estate, the real money is made when you do your own deals. Real estate is fundamentally more entrepreneurial than consulting/banking/finance.

Maybe your shop has a pathway to principal and you can get a sliver of a large pie, but some of the wealthiest guys I know by 30 or 35 quit their jobs and applied all that they had learned to run their own smaller deals.

Whether it was a $5m deal where they made $1m, or a $20m deal with friends and family investors where they made $2m, the way to get to the next level is to stop focusing on W2 income. Nobody gets rich working for the man.

  • Associate 1 in RE - Comm
Nov 21, 2021 - 7:26pm

Really hate this response because it implies there aren't RE jobs out there that pay a ton of money. They exist, but they're every bit as competitive as the Corporate PE path. The titles are the same but acquisitions associate at Heitman, Greystar, Prologis does not pay the same as acquisitions Associate at Rockwood, Cerberus,  Fortress, etc.

OP likely just needs to move firms

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Nov 21, 2021 - 10:06pm

Higher paying jobs do exist. Maybe OP could find a gig making $300k somewhere, but my answer was to suggest if you want to make over $1m, you need to do your own deals.

CRE is full of guys whose egos think making mid six figures working on a $100m deal is more impressive than running a $10m deal themselves and making way more at the end of the day. Both options have their pros and cons, but if comp matters more than prestige, doing your own small deal wins.

Some guys claim to be able to do their own deals on the side while still getting a salary, though good luck performing well at either long-term if your attention is that divided.

Nov 21, 2021 - 10:27pm

While that is true, the hours are significantly worse at these higher paying shops. Keep that in mind as well. 
 

Real estate doesn't pay like corporate PE (for the most part), but your hours aren't as bad. $175k 5 years into working is a phenomenal salary as it relates to pretty much every career you could take in the US. It's just not as much as corporate PE
 

If you want to make a ton of money in real estate, you need to figure out how to get a portion of the equity and/or carry in deals or a portion of the fees your firm generates. 

Nov 21, 2021 - 10:35pm

Could you comment on how someone is taking $1MM in profits to the GP in a $5MM deal? I imagine to get that, you'll need to double the value in 1-2 years to get High enough in your waterfall splits to hit that? 
 

A $5MM deal, 35% equity, is $1.750MM. 5% GP co invest is $87.5K. To hit $1MM in profits, you would need to 11.5X your initial investment. Are the fees and/or promotes higher at these smaller equity checks as the sponsor still needs to keep the lights on and that's just a fixed cost?

Nov 22, 2021 - 8:40am

I know a guy who bought a crappy small strip mall that was half vacant at an auction, spent ~15 months doing some minor improvements (new lighting and signage) while finding a few new tenants and sold once it was stabilized.

Granted on that deal he already had the liquidity to not need a complicated capital stack beyond a senior loan, but he almost tripled in his basis in a little over a year.

Figure out what institutional guys can't do, and there's a lot of opportunity.

Nov 21, 2021 - 4:48pm

So your friends in consulting, I-banking, tech (fin roles) are making $350-$525k? Is that accurate? Curious... when you say "gets good" do you mean comp in that range?

To be honest, yes, some at 5 years out in real estate are probably making that all-in (heavy emphasis on bonus). Doubt that is the norm except in a few big buyside shops and for people tied to production/commissions in brokerage. 

Flip side, making $175k at I'm guessing age 27-28 with just an UG degree is not bad even in SF/NYC/LA. 

To be brutal, making above $300k in any industry, even real estate, is not easy. Frankly, people can make tons in this industry, but if that is really the motivation, this is not the best industry. IF you can get hired into BB i-banking, or certain tech firms (I'm guessing these big numbers are for a small set, includes incentive stock comp??), and maybe consulting (tbh, this is a bit above what I thought for MBB types), but in-line what i've heard for top performing people at big law (say 5 years post JD for sure). I'd think many in the "mega fund PE" and "hedge fund" world can get this (maybe more) with bonus, but again that's IF they get hired into it. 

You say "Top 100 PERE" firm... you realize there is MAJOR differences between the "top 10" and "bottom 50" on that list? As such, I really don't want to say if you are fairly paid or not. You have been in the field for 5 years, if you don't like it, you should find what you want. If you can stomach an expensive MBA (and can get admitted of course), you could do such to move to those other fields or level up to a higher paid gig in real estate. Either way.... I think you need to either get promoted at current firm or consider moving on or going to grad school... I think you are feeling stagnant (and the feeling is enough to make it a reality)... and with 5 years exp, you can legit go to market.

Let the market price you, then you can at least feel better regardless. 

Nov 21, 2021 - 5:09pm

Maybe my buddies are blowing smoke, but $300K to $400K all-in doesn't seem far off for 5-6 years down the IB/PE route. Could be a bit high for the consulting / tech finance route, but the consulting friends have moved into a corporate development role and the tech finance people are likely including vesting stock options along with the massive run up in tech stocks. 

I like real estate, never really hated anything about the job except the stagnation compared to peers. $175K is really good compared to the average 27-28 year old, but it's tough competing in a high cost of living area where rent is $3K/month and homes are $1MM+ to get a starter home.

I've been benchmarking my pay in real estate with recruiters and they seem to think $175K all in with 5-6 years of experience is about market for NYC/SF/LA; perhaps a bit below. 

The only "great" paying firms I've seen in real estate are firms that are private equity companies that have a real estate arm (i.e. Blackstone / Carlyle / Apollo). There you could be looking at $250K to $300K all in, but it's a 2 year and up / out type of situation.

Nov 21, 2021 - 11:56pm

They're not blowing smoke. 300-400k is very realistic for MBB and IB, even more for boutique firms. Maybe try to move to a BB or PE firm with a real estate group, or go the MBA route like other's have conveyed. 

Array
Nov 22, 2021 - 9:15am

I'll agree with the recruiter comment that your pay is "perhaps a bit low"... plenty at your level are making $200k+, no question. 

As others seem to have mentioned... WLB and overall hours need to be factored... the places that pay people above $200k and even $300k with 5 years exp from UG tend to make them work A LOT of hours, like 80+ standard with peaks above 100 per week. You have no life, so like getting paid "double" for doing two jobs. That's a trade off some are willing to make, but not all, and I have met several people who walked away from such jobs as they hated their life.

I would note, in the "prestige" IB/PE world (and I'd assume MBB world, not so sure personally), it is rare for someone to be "kept" 5+ years without a grad degree, most leave or get rotated out and go to grad school.... SO if someone gets the nod to stay... they are probably very badass at their job, and thus the high pay is more justified (meaning, at 5+ years, performance factors a lot in those industries, more so than in CRE at same timeframe tbh). 

In CRE, you make "good" money when you really drive value (i.e. make the firm money or are part of some mission critical function).. for most this will never really be the case at any analyst/associate rank, just not the real world. 

  • Associate 2 in RE - Comm
Nov 21, 2021 - 8:13pm

I'm around this too and its pretty infuriating. Money isn't everything sure....but people making 2x as much cash comp is tough. 

Nov 22, 2021 - 12:01am

You will most likely see the biggest bump when you become a VP/Director and start running your own deals. Until you are fully a income generating member of a team vs. an expense, you aren't going to break ~250k.

Also, I know you feel poor in that HCOL city, but given you as an individual is 3x the median household income of those cities (avg household income is around 60k with 2.5 people), hard to feel sorry for you at 175k all in.

  • Analyst 2 in RE - Comm
Nov 22, 2021 - 9:07am

Switch companies. Pay bumps you are experiencing aren't that great. Also, a lot of PE shops with RE arms are not 2 and out on the real estate side. That's more on the corp PE side. I'm in NYC and people def clear over 250-300k 4 years into their career. Your comp started out great but since you've stayed, naturally it hasn't grown 

Nov 22, 2021 - 3:40pm

Real estate is a lot more variable than IB, and far more opaque because a lot of compensation structures are based on carry/equity which isn't just going to be a % of income cash bonus. For example I work in development, the pay will change drastically if you work at a small shop, a large family office, a national developer or run your own deals. And within that it can depend on asset class, region, participation, seniority, etc. in ways that aren't entirely obvious. 

Nov 22, 2021 - 10:26am

As others have said, the money in real estate is really made once you start receiving carry (one-off deals, funds, etc.) and you begin to snowball your money. Cash comp is never going to be equal to some other industries, especially if you're not the primary driver of new sources of revenue (you say AM/Acquisitions, but how much of your value is AM vs. acquisitions). Some of it is a function of time and you being younger than 30, but a good manager once said to me that very few people build real wealth off of a salary. People get into real estate because the opportunities to build real wealth are so broad. Pick a small market in a flyover state - guaranteed there are a surprisingly large number of people worth $20M+ because of real estate. Can't say the same for tech/finance in those markets. I get what you are saying about your friends in tech because I've felt the same at times. The cash comp for people in tech is usually very strong and then when you layer stock options, equity, etc., it can feel like you picked the wrong industry. And truthfully, that might be your answer. But if you are going to stay in real estate and want to make real money, you have to get yourself in a position where salary becomes a smaller and smaller percentage of your all-in compensation. If you can get a piece of the promote in a deal and make $50K on the first one, re-invest that into another deal that returns you $150K, and on and on and on, that's how you end up with a lot of money in the bank when it's all said and done. Real estate has many advantages - it's local, it's far from an efficient market, it's an inflation hedge, it can be highly levered, it's tax advantaged, etc.. But if you are an asset manager at a PE shop with no carry in your funds, you aren't going to make what your friends make in tech. 

Nov 22, 2021 - 6:58pm

CRESF

 Pick a small market in a flyover state - guaranteed there are a surprisingly large number of people worth $20M+ because of real estate. 

Cannot emphasize this enough.  You don't hear about these people because they're at "small" privately held shops, and there is probably some reticence to announce what's being made, but the way to make "real" money in real estate is to do your own deals.  With ten years of experience it's not hard at all to go start building small projects and growing from there; ownership is a lot easier than places like banking.  So yeah, moderately successful MDs at bulge bracket banks might pull in seven figures of all in comp in good years, but there is a cap on what you're making there.  The Bob Greenhills and Ken Moelises of the world are really rare; I'd bet a lot of money that it's far more common to find people in the real estate world who are in the mid 8 figures net worth status than in banking.  It's really easy to lose track of that if you live and work in NYC or SF or whatever, because finance jobs ae very concentrated there so you see a lot of very wealthy people on that side.  But your not finding many people in banking who make $1mm+ a year in Tulsa, or in Cincinnati.  But I guarantee you there are some very successful real estate developers there that you'll never in your life hear about.

Nov 22, 2021 - 10:44am

BrandonWilliams69

But now 5 years out, my friends are making almost double, if not triple what I make. 

Associate Year 5 ($175K all-in)

I would argue your pay is a bit low (especially for a big market) but honestly I think you are just lucky/unlucky enough to have some absurdly successful friends. Pulling down $350,000 to $525,000 a year at what - 27? 28 - is not normal by any stretch of the imagination. 

My advice? Stop comparing yourself to friends in other industries and go get yourself a VP role. It really doesn't matter how much money you make compared to your friends. It only matters how much money you make in 2022 versus 2021. 

Commercial Real Estate Developer

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Nov 22, 2021 - 11:38am

Are you sourcing business and/or driving your own deals? That's generally when you break $200k, broadly speaking, at a smaller shop, so hard to say whether you are underpaid. MBA or MSRED are costly but if you are committed to working in a high-finance/corporate environment the masters seems essential these days. You could become a CIO at a large REIT or REPE firm once you get some progressive management experience on the acquisitions/portfolio management side and demonstrate you are better than the rest. You didn't say what you are actually good at or like about your job. Figure that out, then set your sights on someone whose job you want in 10 years and learn how to get there.

Nov 22, 2021 - 11:40am

Making just over half your comp with the same years of experience & living in HCOL (LA, NYC, SF) city.  

My "trump" card on my buddies who are in similar positions to you is I have a much higher opportunity to go to any number of the top 150 cities in this country and hustle into a local shop, and still maintain a ceiling based on RE's entrepreneurial aspect alone. Now, others probably don't see it that way, but there's a comfort you can find in that if you're willing.

Nov 22, 2021 - 3:12pm

You're pulling in less than 90K all in with 5-6 years of experience in a NYC/LA/SF market? 

I've seen property managers with 1-2 years of experience pull this much in at a Tier 1 market....

You need to find another job brotha.

Dec 4, 2021 - 9:38pm

I think your comment missing some context, or just doesn't make sense (I didn't MS, just guessing for you). But, are you suggesting you are in a superior position because you could leave your job in LA making 90K and go work in Ames, IA (I'm guessing a top 150 in the US), and be happy? I think I am getting your point, but may work edit/explaining more. 

  • Associate 2 in PE - Other
Nov 22, 2021 - 11:46am

You're being underpaid given your market, which should be somewhere in the $300K range. At your next end of year meeting, negotiate a higher increase in comp and/or title. If they refuse, find a new job.

I absolutely hate how people on this forum encourage others to take on low comp for "the experience". Fuck that, make them pay for good talent like every other industry does (tech, IB, consulting). As someone who did IB, IB is the most brainless job you can have and they pay $$$$. Real estate isn't rocket science, but at least it's a buy-side job where you actually have to use your brain to analyze different investments. 

Nov 22, 2021 - 11:57am

I think you are entering the realm of the RE career where things really get muddled. I think 5-6 years in, its all pretty consistent up to that point and you are learning, learning, learning along the way. But once you hit about ~30 +/-, a whole new world of opportunities can come up which of course are comp'd differently too. There will be people with the same titles who may make $200k or $1.2m. So I think you can go find other jobs that have different comp structures that offer up more opportunity and pay. 

Nov 22, 2021 - 3:53pm

I don't know a thing about you or RE. But I do know about (1) taxes and (2) COL and that's a big part of what you posted. I'd like to suggest that you are focusing on the wrong things. 

There is a massive advantage to being in a no/low income tax state. When I was in my 20s and living in CA I sat down and projected what I'd be paying to the CA FTB and then what that money could do for me at even 5%/year for the rest of my career (20-ish years) . . . I started packing my bags the next month. 

And, the old saying is true, you can't out-earn your bad spending habits. Living in a high COL area is a bad spending habit. If you don't plug this leak, it will just manifest further into lifestyle creep when you do end up making the big money that you seek . . . which means it will never be enough money. 

Focusing on your pay is just like the person that goes to the gym every day but refuses to give up their daily Big Mac for lunch. You'll just never get ahead like that. 

  • Associate 1 in RE - Comm
Nov 22, 2021 - 10:26pm

I have been battling this comment on another thread. I just moved to a major city with high taxes for a $240k/year acq./AM job without any prior buyside experience. How can I get that same job and pay in Dallas, Miami, etc.?

If I have to take even a $30k haircut, then it's a wash. People really overestimate the cost of expensive cities because you have to take a haircut when you leave 

Nov 23, 2021 - 7:47am

Nothing to battle here. It's obviously circumstantial based on the math + career opportunity + goals.

The rule is a fair guiding post although not an absolute in every circumstance.

Just had my trade dispute rejected by Schwab for a loss of 35k. This single issue alone should be a gigantic red flag to anyone who trades on their platform.

If they have a system error, and you do not video record your trading (they actually said this), they will not honour their fuck up. Switching everything away from them. Fuck this company.

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Nov 23, 2021 - 9:11am
  1. I don't think the income differences are as big as you make them to be. It's not like things are free in Dallas and Miami, they have high wage jobs there too. 
  2. You have to take a long term view to all of this. You'll be paying (or better yet, saving) that same 30k for a very long time if you have any sort of career
  3. There are opportunity costs associated with those payments. For me, my projected difference was well over 1 million dollars and I viewed it as being that much poorer during my retirement. That is a massive difference to accept in your life just to avoid a "haircut". 
Dec 4, 2021 - 9:43pm

The way to do this is to gain experience in the major market, then trade "up" for a better role/title and hopefully even pay in the smaller city. Of course Dallas/Miami aren't really all that far from LA/NYC, so maybe like Austin/Orlando are better comparisons. The point is the same, be strategic on the move and leverage your experience and "cool factor" of being someone from the big city...

Clearly, this "up" move will be less than the "up" move in the big city, but I think this is the most enjoyable way to make this shift in all reality! 

  • Associate 1 in CorpDev
Nov 22, 2021 - 4:06pm

You need some perspective. At 5 years of experience, you are earning more than not just the general population but better than on average vs. most elite MBA grads. Think about this reality.
 

Moreover, career growth and in effect compensation is lumpy for almost anyone - no one gets $100k extra a year continuously  from associate to group head and then just becomes an exec making $1M+ a year in a linear fashion. In the corporate world, the bare minimum it takes to make seven figures is being effective and being liked PLUS luck. Do you understand this concept? It doesn't matter what company you work at, and maybe you need to change where you work at to get a bit more incremental pay, but this concept holds everywhere. Making $180k vs $500k doesn't matter if that $500k is not sustainable or able to grow. 
 

Your friends are doing good at $400k -$700k a year. But guess what, this high pay and the regular comp increases occur only to a point in their careers and stops unless they start bringing in business or reduce costs. At this point, most of them get forced out to other jobs making half of what they were making before. You need to be thinking a bit bigger, especially 5 years into your career, in how you drive revenue or efficiency. In your case it'd be though deal flow, smoother deal processes, or favorable negotiations.

i have friends who are now worth $5M+ through their startup work, all employees and no founders to be exact,  but I'd be miserable comparing myself against them if that's what I chose to do. I know what I need to do to position myself for success and that's what everyone needs to concentrate on.

Nov 22, 2021 - 5:46pm

I would say once you get to VP / Director level + you start to see tremendous upward mobility in terms of your comp but it also varies by company as your comp also likely include carry or promote. It is tough to say if you are getting hosed unless we know what type of work you are doing. If you feel like you are getting under compensated it might make sense to reach out to headhunters or apply for jobs to see what the market is paying. But as many people have said on this forum you don't truly start to make good money once you become a revenue generator for a company.

To give you context I am a VP at my company with 8 years of experience for a REPE fund with $3 AUM. I am around $400k cash comp + 2% promote in our funds. 

Nov 23, 2021 - 9:21pm

9 am - 5/6 pm with 3-4 travel trips per month.

The nice thing about being on the principal side when you have a fund is that it is rare that something is due the very next day that makes you stay up all night. You tend to know when offers are due on deals and B&F typically take a few days to materialize. 

Nov 23, 2021 - 2:42am

Perhaps reflected in other comments but let's be real for a sec - you are in AM not working 100h/week and definitely don't have the lifestyle of a Banker or Consultant. You want to make their salary? Move to IB. Otherwise enjoy your lifestyle. It is not just about money

Nov 23, 2021 - 10:18am

Analyst comp seems pretty close to market. Big issue I see here is you got a promotion and only the same raise as going from AN1 to AN2. Most firms you should see 30-50% raise at least when reaching Associate. Have you talked about potential carry with the VP promotion? That could really help total comp.

Array

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Nov 23, 2021 - 5:19pm

came here to say the same thing. usually you see a bump when you go from analyst to assoc to vp etc. analyst to assoc bump is mostly cash (agree w the magnitude in above comment), assoc to vp mostly carry. as others have said comps seems to be very shop specific. seems to correlate with WLB but not always.

Nov 24, 2021 - 1:16am

Where did you start with your $125K first year Analyst pay?

Best regards, DoingItInNYC
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Nov 24, 2021 - 1:11pm

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