Two questions :
1 - in your opinion who makes the most money in the real estate industry? Blackstone acquisitions, small operator, development principal, investment banker, mortgage broker, GP or LP?
2 - Who has the best work to reward ratio, aka great lifestyle and also really great money? I imagine this is where family offices and small owner operators shine.
1. It really depends on the deal structure and how well the deal performs. If you have a killer project with a favorable waterfall, the GP will make out like bandits, if your project is marginal the GP could barely come out with its capital but the LP would make its pref, so it's all relevant. I'd say on balance GPs do better (economically it makes sense, their work is more value-add).
2. It also depends haha, sometimes working for a developer can be brutal hours and running around like a chicken without a head, but that hasn't been my experience. I've worked max 45 hour weeks, usually it's closer to 35-40, but I work at a family office, can't speak to people at institutional shops. I think dev shops tend to be more variable in time commitments whereas LPs, brokers, etc. tend to have more steady hours. If you have a steady stream of deals coming across your desk your workload is going to be fairly consistent, but when you are on three projects there are lulls that can drop your workload before picking up steam the next week.
The wife of a principal at buyside shop or a developer
This
I work at a repe fund and the wife of the principal comes in about 2 hours a day and literally does nothing. She adds quite literally 0 value besides saying good morning and wearing tight dresses (splash). She is considered a Partner and lives in a 20 million dollar penthouse lol. Being a hot girl might be the best WLB position out of anything
Agency mortgage brokers, developers
Developers make most money. I would argue brokers in at the top of the food chain in their niche have best lifestyle.
Very senior level brokers who have such deep connections they just take clients to lunch and make like five calls a day. Meanwhile they close deal after deal because they know everyone and are friends with clients. To me that's the best mix, sure when you go golfing its business but when your whole group is just your friends then it feels less like work.
This is definitely the best work to reward ratio path. Top brokers have arguably the best lifestyle in Finance. At that point it's just hanging out with friends, and you can make >$1m per year without risking anything but your own time. Enviable position to be in.
Brokerage is also the best place to make the most amount of money at a young age. Developer in a long-term good market will make more than brokers in the long run, but it's hard to beat the earning potential in brokerage at a young age for the right person.
I just want add, brokerage is great, but it is not nearly as easy as hanging with friends. Sure, you create friendships with clients. But loosing a listing is as easy as the CEO changing and your relationship at the company not being there, or the person who’s been giving you the business, their niece gets into the brokerage business, and guess who now loses the listing - you. Also, I know tons of brokers who made $0 in 2020. It’s extremely volatile.
Now, brokerage is and can be an amazing business, I just want to make sure we also talk about the risks. You can make a ton of money, but you can also make zero.
Basically everyone you mentioned except investment banker and Blackstone can have a great lifestyle + great money. But in all those roles *if you want* you can scrap the 'good lifestyle' and work as much as you want.
Money = Clearly large fund partners, managing partners etc - I'd say credit or equity too. Will top brokers, development, owner/operators every step up the chain (in most cases).
Successful executives make the most money. That can be an absolute rockstar broker, a big development shop CEO, a smaller developer who starts his or her own company, a top person at a REPE shop, someone who churns out small outparcel retail buildings, the head of commercial real estate lending at a regional bank, an owner of warehouses, etc.
Part of the beauty of this business is that there are many different ways to find outrageous levels of financial success. Some are more sales related while others are more project related. Some are more entrepreneurial while others are more climbing the corporate ladder. Ultimately though, if you're a senior player, the only thing holding back your earning potential is you.
Edit: Forgot your second question, OP. The best work to reward ratio is deeply personal, because of both preference and aptitude. It's a bit of common sense, but you're going to enjoy doing something that fits your personality and interests far more than you would enjoy something that doesn't. I started in this industry as a broker for a year and wanted to jump out of the window some days because it did not fit me at all. Meanwhile, a friend of mine just left a fantastic development gig to go work for CBRE to be a broker and he could not be happier with the move. To each their own, you know? Also, you're going to be far more successful at something (and probably also enjoy it more) when you're good at it. The answer of "what is best" is going to be different for everyone.
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What type of shop are you at and how long did it take to clear $300k?
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Excuse me, what?
MD in real estate investment banking at BB/EB regularly bring home 5mil - 8mil a year. Partners at top REPE like TPG, BX, KKR make similar amount
How true is this? I've heard that REIB MDs at BB/EBs are usually at $1-2mm per year, with more if you're really good or in a breakout year. Same with REPE partners, according to buyside comp surveys
Lol it’s not true in the slightest. While I’m sure there are people who do make that money, it is by no means all of them.
Power brokers. It’s crazy that brokers make the most in this industry and on Wall Street they became obsolete. How does that work?
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