Why do so few go into Real Estate?

Theres no statistical evidence for this but, why is real estate second to most other financial services jobs? Most people in business school are primarily looking for IB, consulting, AM or corporate roles. And even on employment reports of many top b-schools, real estate is rarely even listed, although this could be due to it being merged with out categories.

Either way, why is real estate such an unpopular job destination? You dont have to jump ship as often, you make good money with chances at late 6 to 7 figures and work-life balance is better than most alternatives. Like its flat out better than some jobs like accounting for example. Same hours if not better and a higher pay ceiling.

Anyone know why this is?

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Comments (166)

Oct 8, 2018

It's not that real estate is an "unpopular job", it's that the real estate world is an extremely small world with very few players at the high level. Large amounts of capital and large amounts of property in the hands of few. There is also a limited quantity so this also limits the need for the number of people in the industry. It's an exclusive world where the work life balance is amazing, money is good if not better, and deals are just as intense when compared to IB. You typically won't see real estate investment companies at job fairs or posting many jobs because most real estate jobs are hiring through networking.

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Oct 8, 2018

So would you say getting into real estate and successfully climbing to a comp of something like 500k-1MM is harder than say becoming an IB MD or becoming a partner in MBB or Biglaw?

Oct 9, 2018

100% firm/shop/bank dependent. I've found from various conversations each firm/shop/bank operates differently when you get down into specialty divisions (to keep all things equal in the comparison).

Oct 9, 2018

Not only can one do this in real estate, one can do it without dying before reach said title/paygrade

Oct 16, 2018

Yeah but dying is prestigious

I think- therefore I fuck

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Oct 20, 2018
Bankerstreet:

So would you say getting into real estate and successfully climbing to a comp of something like 500k-1MM is harder than say becoming an IB MD or becoming a partner in MBB or Biglaw?

You rarely climb the corporate ladder to $500k-$1MM salaried jobs. In the vast majority of cases, you have to personally produce revenue well in excess of those figures to justify your salary. You're not going to politic your way to many high salaried jobs.

Oct 17, 2018

My two cents as a REPE analyst...

REPE is a niche industry that runs lean and doesn't typically hire a ton of students every fall like IB. I got into acquisitions at a REPE firm direct from college, which was unheard of. More firms are hiring out of college but usually aren't at career fairs, advertised on campus, etc. I had to figure out which firms to target in the one large MSA I wanted to live in and work my ass off to network and do it on my own. Eventually had 2 really solid PE offers (institutional groups with AUM of $40B+) and a few investment sales and development offers, but it took work.

In terms of work life balance and pay compared to banking, it's not even close. REPE (or just my firm) is WAY better in terms of hours...70hrs/week on average with typically no weekends for the first two years then can decrease to 50-60 until you're an AVP, usually around year 4. Drops off to 40-50 beyond that.

Salary is better than every one of my banking friends and bonus can be up to 50% for the first two years and 100%+ beyond that, based on personal and fund performance. Tons of upward growth potential on the buy side and the income trajectory is exponential (huge jumps in base YOY, bonus multiples, GP points at VP).

I think the work itself at a lower level is way better too.....closed several deals on my own in my first year and closing a lot of them by myself now.

REPE is a hidden gem that I hope IB hardos keep shitting on while they slave on pitch books for 100 hours a week.

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Oct 19, 2018

run the world,

Can I pm you? I am going through this exact process right now and have a couple questions on how you formed your pitch/research when networking

Oct 19, 2018

Would you mind if I PM you as well? Currently going through/trying to go through a banking to real estate transition myself.

Array
Oct 19, 2018

RIP your PM box. Hope you're prepared to get a million messages from people asking you for a how to guide.

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Oct 19, 2018

But why can't she analyze every detail of my life, understand my specific understanding/ lack thereof of Real Estate, my sociability and networking abilities, my school alumni, my GPA, my previous experience and give me an exact guide for how to become a VP at the specific REPE I want to work for??

I'll also need a specific breakdown of firm prestige and accurate comp structure (taking into account my negotiating abilities) so I can calculate how many APs I can buy.

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Oct 22, 2018

she*. The abbreviated guide 2018: work hard and make people like you. Ta da.

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Oct 23, 2018

Edited to she.

Congrats on the role. I'm working on the networking to get offers myself, good to see it is feasible and that you accomplished it.

Oct 21, 2018

You're basically saying RE is so desirable with so few seats that most people don't even bother. Even a kid who went to Harvard and finished top of his GS analyst class needs to settle for Blackstone/KKR/Bridgewater because he needs to pursue realistic dream jobs; who's got time for a pipe dream like becoming a rock star, playing in the NBA or working in real estate right?

Sorry, gotta call bullshit on that. If real estate was as uniquely desirable as you say, it would still appear popular. It would just be like the top PE and HF jobs that are difficult to get. It wouldn't be confused for unpopular, as it is today.

I suspect that reason RE is unpopular is because it might be seen by some as simplistic and/or boring at first glance. Boring is bad because, well, boring. Simplistic is bad because young finance people believe their smarts are what will get them ahead in life, and anything that appears simplistic will also appear to be less of an opportunity to get an edge. This view is probably supported by the fact that real estate, while full of talented people, is also uniquely full of superficial and mediocre people who seem to have more of a relationship/sales skill set than a critical thinking/investor type of skill set.

Again that's just my suspicion looking at RE from the outside. For those who enjoy it, more power to them.

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Oct 21, 2018
PteroGonzalez:

This view is probably supported by the fact that real estate, while full of talented people, is also uniquely full of superficial and mediocre people who seem to have more of a relationship/sales skill set than a critical thinking/investor type of skill set.

Uniquely full of superficial and mediocre people? High finance in general is literally stereotyped as being full of superficial, backstabbing, and greedy assholes. I am not saying that Real Estate doesn't have those, but to say it is unique is definitely wrong.

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Oct 21, 2018

I don't think it's wrong. I think there is a tendency for people who are a cut below the typical type A finance person to go into real estate. By a cut below I mean they are bright and normal people - in fact, above average in certain ares like sociability - by they are lacking a little something that that typical IB person has. Maybe it's a little less ambition, maybe it's a few less IQ points or work ethic. But there are definitely people who say "wall street isn't for me, I'll go into real estate".

I'm not saying that there aren't other people who go into real estate too . . people who had every option on the table and chose real estate. I'm simply saying there is a subset of people that are kind of schmoozy and intellectually lightweight that seem oddly disinterested in most of what you've labeled 'high finance' but also very interested in real estate. I bet most people know what I'm talking about.

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Oct 21, 2018
PteroGonzalez:

I don't think it's wrong. I think there is a tendency for people who are a cut below the typical type A finance person to go into real estate. By a cut below I mean they are bright and normal people - in fact, above average in certain ares like sociability - by they are lacking a little something that that typical IB person has. Maybe it's a little less ambition, maybe it's a few less IQ points or work ethic. But there are definitely people who say "wall street isn't for me, I'll go into real estate".

I'm not saying that there aren't other people who go into real estate too . . people who had every option on the table and chose real estate. I'm simply saying there is a subset of people that are kind of schmoozy and intellectually lightweight that seem oddly disinterested in most of what you've labeled 'high finance' but also very interested in real estate. I bet most people know what I'm talking about.

You should look up "Jonathan Gray" and listen to him speak. Seriously.. if you think he has a couple less IQ points and a little less ambition than someone else, then more power to you. But I think generalizing any group of people will always yield and incorrect answer.

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Oct 21, 2018

Maybe I should have spent more time emphasizing the point that high-caliber people also choose real estate. Also, low-caliber people choose IB. Every profession has lots of different kinds of people.

All I'm saying is, once someone has been out of college a few years, they've met a range of different stereotypes in finance. And one stereotype is 'frat star who is majoring in finance but was only interested in real estate from day one'. He's a type, and I meet him pretty regularly.

That doesn't take away from you or your accomplishments. Or Jonathan Gray and his accomplishments.

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Oct 21, 2018

REPE is just as complicated if not more so than traditional corp PE. The simplest reason I think it's just not as popular is economics. THink about it your unlevered rate of return or the cap rate for traditional operating companies is 1/EBITDA multiple of the buyout assuming 100% equity. Companies are bought at 5x EBITDAs at most in a buyout, that's an unlevered 20% IRR, whreas most REPE is in single digits. Now when you add financial engineering to the return, corp PE can juice their returns to 25-30% without ANY value creation! They're simply relying on the company to amortize the debt, take their fees and collect their fat carry. REPE requires more hands on work with less pay,..thus the return on the $/hr is lower and thus for finance people it's less attractive.

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Oct 22, 2018
zacksc11:

REPE is just as complicated if not more so than traditional corp PE. The simplest reason I think it's just not as popular is economics. THink about it your unlevered rate of return or the cap rate for traditional operating companies is 1/EBITDA multiple of the buyout assuming 100% equity. Companies are bought at 5x EBITDAs at most in a buyout, that's an unlevered 20% IRR, whreas most REPE is in single digits. Now when you add financial engineering to the return, corp PE can juice their returns to 25-30% without ANY value creation! They're simply relying on the company to amortize the debt, take their fees and collect their fat carry. REPE requires more hands on work with less pay,..thus the return on the $/hr is lower and thus for finance people it's less attractive.

About 5 years ago, I actually spoke to a high net worth real estate developer whom I was going to partner up with and he said the same thing. "You spend $100MM and make $5MM (5%)" that's real estate. "You spend $5Mm and you make $100MM (20x)" that's investing in companies.

The key is to own part of the platform. You almost have to be a founder, which is not for the faint at heart. At a REPE, I thought of myself as a real estate venture capitalist. Shhh don't say VC too loudly, might attract more competition. I like being in a "less prestigious". I think IB is harder to break in out of college (more emphasis on school), but it's more of a training ground for the finance industry where you then start to specialize. It's all good.

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Oct 22, 2018

I used to attend the Real Estate Club Night for the local, top MBA program in my MSA. Started going in 2006-2007 when I was just starting out. The networking venue was in a great hall in a top notch hotel. Fast forward to 2013, and the venue was a smaller, humbler room. What happen?

More choices. Big Tech in particular and start ups have attracted folks who are smart, hard working, risk tolerant (Big Tech not so much risk), etc. The operating margins of tech and valuations are exciting.

My theory of satisfaction has been to always work for the top group in a company. In Tech, the top group are dominated by engineers. At a REPE, it's the acquisitions/transactions side. I shunned tech. Only once interviewing for a tech finance position ($200MM valuation at the time, prob 10x that now).

The Big Tech and well positioned start ups are minting money. Marginal costs = zero. That's sucking the talent away from high finance. They pay signing bonuses, provide cafeteria and gym perks, stock. In Tech you are creating new industries, like being in Florence during the Renaissance. Real estate you are in a musty room working for a belt and suspenders guy. Just generalizing.

The other thing is market inefficiencies. Lots of liquidity (for now) so markets are more efficient. Big Tech has more runaway to eliminate jobs and destroy their less techie competition, so growth is in tact.

Karl Marx warned about this (owners of capital vs Labor) but that's for a different forum.

Stay away from real estate because I want less competition.

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Oct 22, 2018

Why do you discount soft skills so heavily?

Oct 22, 2018
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Why do you discount soft skills so heavily?

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Oct 22, 2018

I don't discount soft skills. I think soft skills are underrated.

Not sure why my comments are taken so offensively. All I'm saying is, one type of person who goes into RE is this particular type of person who seems a little shallow in his/her interest and knowledge in business and finance. Not saying there aren't plenty of brilliant and ambitious people who also do real estate.

I honestly came into this forum thinking no less of real estate than any other field. But some of the comments are so defensive (such as the first response explaining that RE is less popular only because it's too damn baller for most people to even consider) that it starts to look like a complex.

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Oct 22, 2018
SponsorPromote:

You should look up "Jonathan Gray" and listen to him speak. Seriously.. if you think he has a couple less IQ points and a little less ambition than someone else, then more power to you. But I think generalizing any group of people will always yield and incorrect answer.

Not to mention that he is the heir apparent. Guess Schwarzman is looking for a "superficial and mediocre" successor.

Oct 21, 2018

It's almost as if you know nothing of the industry in which you speak.

Acquiring, financing, building, and leasing up a building is an insanely complicated process, especially in major cities, such as, well, such as New York City. There are entire companies and/or offices--on Wall Street--dedicated to the insanely complicated process of MBS and CMBS. The laws undergirding federally regulated banks are disproportionately tied to real estate, which provides an outsized portion of bank loan collateral. There are two gov't-sponsored enterprises with something like 15,000 college-educated employees, many with PhDs, running the nations real estate finance business.

There are so many complicated pieces to the process of building and delivering and financing a piece of real estate that you have professionals who spend years becoming experts in tiny areas of the business--construction, appraisal, sales, debt finance, equity finance, LIHTC, EB-5, servicing, zoning, law, public policy, and all of the little subsets within those niches (underwriting, special servicing, multifamily/retail/office/etc., bank lending vs insurance lending, etc.).

The smartest people in an Ivy League school could spend 70 years in the business and learn something new every single day.

Oct 21, 2018

The butthurt is palpable. So is the logic fail. I didn't say top people don't choose real estate. I said there is a tendency for some lower-caliber types to choose real estate even when they wouldn't remotely consider choosing to pursue IB. That doesn't prevent the hardest-working, smartest, most ambitious person in the world from also choosing real estate.

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Oct 21, 2018

Quoting PeteroGonzalez verbatim:

PteroGonzalez:

This view [RE being simplistic] is probably supported by the fact that real estate, while full of talented people, is also uniquely full of superficial and mediocre people who seem to have more of a relationship/sales skill set than a critical thinking/investor type of skill set.

I'll take your follow-ups at face value. But I still don't see how the investment profession, by your own words marred by average performers, is any different than the real estate industry, which is also marred by average performers.

Let's be real for a second. The perceptions of real estate by college students as simplistic and boring is objectively wrong--it's actually a pretty ridiculous belief. But that's not the reason the elite students more often want to go into high finance rather than real estate. High finance is a low risk, high reward career path. The vast majority of the American wealthy got there through entrepreneurship--high risk, high reward. High finance uniquely offers a low risk, high reward avenue toward wealth. There is no other deeper reason that people with options choose high finance as a career path. And since demand for low risk, high reward career paths vastly outpaces supply of those jobs, those limited jobs go to people with the best schools on their resume. There's nothing deeper than that.

Oct 23, 2018
PteroGonzalez:

The butthurt is palpable. So is the logic fail. I didn't say top people don't choose real estate. I said there is a tendency for some lower-caliber types to choose real estate even when they wouldn't remotely consider choosing to pursue IB. That doesn't prevent the hardest-working, smartest, most ambitious person in the world from also choosing real estate.

This is not only absurd, but probably the exact opposite of what actually happens.

Hard working, slightly above average intelligence people will choose IB every time, because it's safe and it's easy and there is absolutely no risk. You know that if you go in, grind out your 80 hour weeks for a few years, and perform adequately, you'll climb a ladder and make mid six figures within a relatively short period of time. Yes, there are highly intelligent folks in IB, but by and large, most of them leave for better opportunities.

A lot of the folks in Real Estate are here because they know what they want to do and are smart enough and have enough hustle to get in a door that is orders of magnitude smaller than the one that leads to IB. Idiots don't advance in real estate; you need a specific and marketable skill set. Having spent some years at a large banking institution, I can say with certainty that there are far more mid to senior level bankers who are uniformly adequate and have unique skills.

Oct 23, 2018

RE definitely a smaller door. Also fewer people trying to get through that door. Less supply of jobs and less demand too. Ultimately I don't think it's more competitive to get in than banking, but I really don't know. You seem awfully sure that it is, and awfully invested in that being the case. Not here to disappoint you I promise.

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Oct 21, 2018
PteroGonzalez:

I don't think it's wrong. I think there is a tendency for people who are a cut below the typical type A finance person to go into real estate. By a cut below I mean they are bright and normal people - in fact, above average in certain ares like sociability - by they are lacking a little something that that typical IB person has. Maybe it's a little less ambition, maybe it's a few less IQ points or work ethic. But there are definitely people who say "wall street isn't for me, I'll go into real estate".

I'm not saying that there aren't other people who go into real estate too . . people who had every option on the table and chose real estate. I'm simply saying there is a subset of people that are kind of schmoozy and intellectually lightweight that seem oddly disinterested in most of what you've labeled 'high finance' but also very interested in real estate. I bet most people know what I'm talking about.

Haha, I actually agree with this. IB kids have a certain element of pyscho work-ethic to work the type of hours they work. I went in to real estate finance because I just don't have it in me to work 80 hours a week. I'm completely cool working from 9 to 6:30 every day, and in exchange making a little bit less money and having a little less prestige. I'm making just below 100K my first year out of college and still get home early enough on week nights that I never have to skip a workout or happy hour. Hell, most of the time I get home early enough to make it to both. I also have absolutely no doubt that my co-workers are not nearly as ambitious or wicked smart as the Goldman TMT or Point72 analyst classes. It's fine by me, I fucking hate hanging out with IB kids that literally only talk about finance and their jobs. I like having some some goofballs in the office and being one of the smartest guys in the room at any given time. It's fantastic.

Very few people aspire for real estate because it doesn't sound prestigious and it's a narrow career field. If you don't make VP in IB, you end up doing Corporate Development or something and still make good money and have great job security. If you don't make VP at a REPE fund, you're sort of shit out of luck.

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Oct 21, 2018

Almost as narrow a field as proctology ;) But in all seriousness yes I do think the more nichy nature of real estate makes a lot of people not choose it. For anyone in college who doesn't know much about themselves besides the fact that they will have an edge in anything they do (because the are smart and hard working), it makes sense to continually choose the most flexible option until one figures out their true calling.

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Nov 6, 2018

Lame. I used to think the same way but learned early on that if you're the smartest guy in the room then you're in the wrong rooms

Nov 8, 2018

Chances are if you're the smartest guy in the room, you're the dumbest guy in the room...

Oct 21, 2018
PteroGonzalez:

This view is probably supported by the fact that real estate, while full of talented people, is also uniquely full of superficial and mediocre people who seem to have more of a relationship/sales skill set than a critical thinking/investor type of skill set.

Ironic given how shitty investment professionals do at beating a typical 401k account held by a high school graduate.

Oct 21, 2018

Its a zero sum game made of winners and losers. The average will never look good. But that's a problem for those who lose, not for everyone.

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Oct 21, 2018
PteroGonzalez:

Its a zero sum game made of winners and losers. The average will never look good. But that's a problem for those who lose, not for everyone.

Ah, I see. Those who excel in your industry describe your industry but the average in real estate describes real estate. Yeah, makes sense.

Oct 21, 2018

Uhhh . . no idea what you mean there. All I'm saying is, you can't expect an above-average performer to accept the criticism that the average person in the industry isn't doing well. If the average investment advisor is losing his clients' money, how should the best investment advisors react to that? "No shit sherlock, I know all my competition sucks, I make money for my clients so give your money to me."

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Oct 21, 2018
PteroGonzalez:

Uhhh . . no idea what you mean there. All I'm saying is, you can't expect an above-average performer to accept the criticism that the average person in the industry isn't doing well. If the average investment advisor is losing his clients' money, how should the best investment advisors react to that? "No shit sherlock, I know all my competition sucks, I make money for my clients so give your money to me."

You don't understand what I'm saying because you don't even realize how moronic your commentary is. You're saying real estate is full of mediocre people; I'm pointing out that the investment professionals, on average, are awful and can't even beat a homeless person pressing a button on a Fidelity account, but somehow in your mind the average is only applicable to real estate and not to the investment industry.

Oct 21, 2018

Markets are inherently competitive and are zero-sum (excluding people who are buying companies and adding value . . we're talking liquid public markets here). It is true by definition that the average performer will do about the same as a monkey throwing darts. This is a common point made in the investment industry.

How weird, by the way, that you replaced monkey with homeless person. You flamethrowing real estate fans have a lot of hate in you.

Anyways, I never said what you're claiming I said. I said nothing about the average real estate person. What I said was (and I'm using different words now because it obviously didn't come across clearly the first time), that if you go to any finance undergrad program and focus on the softer set of students, i.e. people who find IB too competitive/type A/whatever, you'll find a good number of those who think real estate is still a good path for them.

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Oct 21, 2018
PteroGonzalez:

Markets are inherently competitive and are zero-sum (excluding people who are buying companies and adding value . . we're talking liquid public markets here). It is true by definition that the average performer will do about the same as a monkey throwing darts. This is a common point made in the investment industry.

How weird, by the way, that you replaced monkey with homeless person. You flamethrowing real estate fans have a lot of hate in you.

Anyways, I never said what you're claiming I said. I said nothing about the average real estate person. What I said was (and I'm using different words now because it obviously didn't come across clearly the first time), that if you go to any finance undergrad program and focus on the softer set of students, i.e. people who find IB too competitive/type A/whatever, you'll find a good number of those who think real estate is still a good path for them.

Your argument of finance undergrad students thinking real estate is less competitive isn't a good argument, you should know that. Real estate is very competitive. The problem is that it's highly nepotistic in big markets and there are very few desirable roles available at top shops and the pay, at most places, blows. Thus, it's not a high probability career path when compared to the tons of investment banking, PE, VC, jobs that are out there right out of college. Notice how the 3 aforementioned career paths share similar skills, but if you go into real estate it's almost impossible to transfer into one of those 3 roles.

To expand on the pay thing: I know people at top family offices in NYC and even if they run an acquisition from start to finish they get no carry, no profit share, nothing. I was making more as a broker than they are doing $100MM deals. Now, this isn't the case everywhere, but the fact that it's somewhat commonplace is a real problem for anyone looking to get into real estate. There just aren't that many associate roles at Blackstone real estate or comparable firms.

Now, I understand what you're trying to say. It's true that if you look at the rosters at top IB, PE, VC shops that the level of education trounces real estate. No debating that. I just think you're making the wrong argument. It's not because private equity is more intellectually challenging than building a 20 story building, partially affordable, as an entrepreneur in NYC. You can't make that argument with a straight face unless you have no clue what you're talking about. But therein lies the rub, that entrepreneur gets ALMOST ALL the compensation in real estate on the equity side.

So the problem is really one of both economics and probability. If you're smart, hard-working, and not prone to taking big risks, why go into real estate? 3/4 of the big jobs are in IB PE VC (probably more than 3/4) and if you do go into real estate and then want to transition into one of the big 3, you don't have a transferable skill-set. Then it's off to b-school and 200k of loans (if you're lucky enough to get into a top b-school because they don't take many RE folks).

Sounds glib. And it is unless you are smart and have the balls to execute on your own at some point relatively early on in your career. So there's a much greater trend towards a Price's law distribution for that reason and a couple others.

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Oct 21, 2018

So you're telling me RE is less popular for three reasons:

  1. Low comp
  2. Low transferable skills
  3. Real estate is only for tough, courageous people who have the balls to execute.

OK.

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Oct 22, 2018

Yes to 1 and 2, but you are letting your passive aggression get in the way of understanding 3. The entrepreneurs fit that category (3) and almost all the capital is earned by those entrepreneurs. There are very very very few $250k/yr salaried positions in real estate in proportion to the summation of IB PE VC HF and Consulting roles--all of which have much more transferable skill-sets so you can often move between them. If you want to make that type of money in real estate while still young then you need to be in a commission-based role.

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Oct 22, 2018

Passive aggressive? Maybe, but I was quoting you. According to your own post, real estate doesn't make sense "unless you are smart and have the balls to execute on your own early in your career." Reading it again, yes, it was indeed very passive aggressive.

I'll repeat what I said to another commenter earlier. I came into this discussion with no less respect for real estate than anything else. But seeing how sensitive everyone is, I'm starting to sense an inferiority complex. Can't even discuss the field without loud protests of "we do harder stuff!" and "we take bigger risks!".

OK, y'all win. I'm going to go back to my pedestrian desk jockey life now. You get back to your pillaging, plundering and general badassery that us mere mortals can only dream of.

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Oct 8, 2018

Most people I know who are in Real Estate (besides on here) are selling homes at their local realtor shop/group. I know only a handful who are doing the "Real Estate Investment" sector.

That being said, I agree with @DealCloser .

No pain no game.

Oct 9, 2018

I think it's also market specific. Large top 10 MSAs will have big comerical real estate presence.

Oct 9, 2018

There's nothing unique about RE finance really..

It's just a different asset class with the same players (i.e. investment sales and acquisitions agents in place of M&A, equity/debt placement agents in place of cap markets, mortgage lenders in place of corporate banks, REPE in place of normal PE and REITs and other asset owners in place of typical asset owners like E&Ps etc).

The difference is.. RE as a private asset class is niche. Most people don't know about RE beyond their local estate agent and people who do tend to come from well off families already involved in RE somehow.

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Oct 9, 2018

It's not that it's unpopular, just less opportunity, as others have noted. Major bulge bracket banks employ as many junior level employees as huge swathes of the RE industry.

And the following is my opinion, but having worked for several years in IB and now in RE, I think there is a lot of truth to it. First off and less controversially, the guaranteed money is better in banking. If you go in as a junior, you know you're making 75k or whatever, and as long as you're baseline competent, will get a substantial bonus. You also know that if you're good at it, you'll always have an upward trajectory in terms of increasing comp every year. That kind of safety blanket, to know that you'll be pulling in ~$200k+ by age 30, is a major appeal, I would think. This isn't the case in RE, where a lot of times your salary is dependent on how well the firm is doing, and your advancement is very much a function of space opening up above you.

Second, I think there is a "keeping up with the Joneses" attitude in banking, which makes the conspicuous consumption (and the associated salary) more obvious and more glitzy. You have a whole bunch of other VPs/MDs whatever that you're working alongside and competing with to a certain extent. Also having that peer group in place means there is just more opportunity to discuss comp and obviously more interest in competing to make more and be better than your pal in the office over. I feel like by nature of being much, much smaller, you are much less likely to have intra-company competition since you have fewer peers at your pay grade.

It also doesn't hurt that you have plenty of movies/books/other media about how much money bankers make, enough to have it be in the cultural consciousness, and almost none about real estate folks except maybe Million Dollar Listing.

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Oct 9, 2018

Average comp is lower than those other fields.

Things move slower than those other fields.

People are still traumatized by 2008.

Oct 9, 2018

When you take into account that people in non-capital markets IB and law work 80 hours and
consultants are travelling 60% of their life so it's normal they earn more to offset their awful work-life balance.

RE I'd say is more comparable to something like industry law jobs, corporate finance, accounting or corporate banking to which RE makes similar if not more than most.

Array
Oct 9, 2018

Producer and underwriter are traveling 60% of their jobs too

Oct 9, 2018

Most RE jobs will be compensated more than Corp Fin, Accounting, and corporate banking jobs in my experience. Especially as a career progresses or so I'm led to believe.

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Oct 9, 2018

I work in acquisitions and to most of my friends (who also graduated Finance/Accounting) think I sell houses or am a property manager. Love hearing that.

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Oct 9, 2018

I don't know, but let's keep it as is. I don't need to fight any more people than I already am for that one Analyst position posted every week.

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Most Helpful
Oct 9, 2018

Risk. People associate real estate with risk which is ironic. Millenials saw their parents lose huge savings in GFC which was a real estate driven event. Pay is not publicized to the degree that it is in Corp fin /IB / MBB / BigLaw roles, nor are big pay days guaranteed. The lack of transparency into the compensation picture IMO deters many folks right off the bat, in addition to the fact that recruiting at these firms is largely a black box. In b school, how enticing is it to go after a career path that doesn't really come on campus to recruit, has a mystery salary, and will likely not employ you until after all your friends have secured their jobs that they'll most likely be looking to leave 2 years out of school while you're just settling into yours? The road less traveled is named that for a reason, and herd mentality in MBA programs unfortunately drives people to make decisions that don't always benefit their true passions / goals in life. Fortunately for those of us who don't care what others think, there's real estate. I think if the career was associated with more stability, and folks knew just much money could be made, they might think twice. Working 55-60 hour weeks and being able to clear 7 figures in a year isn't for the faint of heart.

Oct 10, 2018
cpgame:

Risk. People associate real estate with risk which is ironic. Millenials saw their parents lose huge savings in GFC which was a real estate driven event. Pay is not publicized to the degree that it is in Corp fin /IB / MBB / BigLaw roles, nor are big pay days guaranteed. The lack of transparency into the compensation picture IMO deters many folks right off the bat, in addition to the fact that recruiting at these firms is largely a black box. In b school, how enticing is it to go after a career path that doesn't really come on campus to recruit, has a mystery salary, and will likely not employ you until after all your friends have secured their jobs that they'll most likely be looking to leave 2 years out of school while you're just settling into yours? The road less traveled is named that for a reason, and herd mentality in MBA programs unfortunately drives people to make decisions that don't always benefit their true passions / goals in life. Fortunately for those of us who don't care what others think, there's real estate. I think if the career was associated with more stability, and folks knew just much money could be made, they might think twice. Working 55-60 hour weeks and being able to clear 7 figures in a year isn't for the faint of heart.

100% this. Though I'm not sure why you say the "risk" part is ironic, since that is what RE folks are being compensated for. Your carry is far more risky than a discretionary bonus. If you are a producer at an IB position, you have a rough idea of how your bonus will track your revenue. And if you don't get paid, someone else will be happy to take on your clients and pay you that number. So yes, risk, but not the same kind of risk, since you're only risking an opportunity cost and not putting up actual guarantees or exposing yourself to capital calls.

Long story short I agreed entirely, but it seems to me there is real risk in real estate, and not to the same degree in IB.

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Oct 12, 2018

Buy side gigs will always encounter more risk than sell side in my opinion. Investing by nature equates to the risk/reward continuum so I agree with your point. Much of what we do though is really risk mitigation--to the point that contingency funds can and should salvage a good return in the event the business plan doesn't go perfectly. I should have been more clear--perception of real estate risk for the majority may be having multiple houses foreclosed on during the GFC, while not considering what leverage even means or how to be sensible about capitalizing deals. The most extreme scenario related to RE that could have played out did, and so that's the image engrained in a lot of folks minds. On a risk adjusted basis though, I would absolutely put money into value add and multifamily development deals vs. the stock market right now, which to me brings a ton of volatility in the near term.

Oct 15, 2018
cpgame:

Buy side gigs will always encounter more risk than sell side in my opinion

Yep.

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Oct 9, 2018

I think the lack of structured recruiting plays a huge role. I love RE, but it's not practical to wait around for something to possibly open up at a development or REPE shop when I know that IBs are hiring - it's a huge risk to pass on those opportunities. There's a definite value in the surety of the IB process that RE just doesn't have. IMO, the second big factor is the optionality that comes with IB. For kids who aren't sure they want to be in RE (of which there are a lot because few schools have RE programs at the UG level), they know they can lateral to just about anything in finance if they're top bucket performers at a reputable IB - the same can't be said about RE.

I think the comp difference is overblown. The guys I know who got REPE or development jobs out of UG were making $75-$85k/yr, which is certainly better than making $120-$140k/yr working 90 hours/wk in IB. Personally, I love RE but wasn't in a position to pass on a good IB offer in the hopes that something would open up at a REPE or development shop that I had a foot in the door at. I know of some REPEs that are planning to move their timelines up to mirror IB recruiting so that they can compete for the same kids, and I hope that more firms start doing the same.

I come from down in the Valley, where Mr. when you're young, they bring you up to do like your daddy done.

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Oct 11, 2018

Most probably look to IB, consulting, AM or corporate roles because those roles are more widespread and can cover different assets and there are more exit opps while they figure out what they want to do long-term. Many hop out to something with a better work-life balance because of how much time is spent just working. Real Estate is one asset and is a small world. Most firms only have one office. There generally aren't multiple offices with the exception of select brokerage shops and large megafunds. And because most are small many don't have any need for traditional recruiting methods at the junior level, if they even like to add junior people. Deals may appear small, but splits can be great since shops are quite lean.

Another thing to point out is most don't know about these jobs in finance or how to explain what an IB, PE or AM firm does. And getting into RE is already very specific. Have you tried explaining to friends and family outside the industry what you do? I have. Most think I just work in a cube all day doing accounting or paper work. When I correct them or explain it, it's only a confusing look to explain why my company might work with a Life-Co to originate a commercial property loan.

So don't worry about it being "unpopular" you know more about the end result than others do.

Oct 12, 2018

RE firms can be small. It doesn't take a ton of people to manage a large amount of assets, where as a bank might have several different divisions ie brokerage and wealth advisory, lending, etc.

Even the large companies are unknown to a large portion of the population. Think of CBRE, Cushman, Crowe vs. Bank of America, Wells Fargo, etc.

Oct 12, 2018

Mostly because it pays less than true private equity, it's more simple, less challenging. So it makes sense if you think about it

Edit: someone just went through this thread and monkey shat every single one of my comments here. What a waste of silver bananas lol

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Oct 12, 2018
EliteStudent11:

Mostly because it pays less than true private equity, it's more simple, less challenging. So it makes sense if you think about it

There is no question that real estate development (perhaps not private equity, I have no experience there) is far more challenging than "true" private equity.

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Oct 12, 2018

This is you:

"I won't comment on REPE because I have no experience there. But I can say with 100% certainty RE development is more challenging than corporate private equity... although I have no experience in corporate private equity"

Hmmm

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Oct 12, 2018
EliteStudent11:

This is you:

"I won't comment on REPE because I have no experience there. But I can say with 100% certainty RE development is more challenging than corporate private equity... although I have no experience in corporate private equity"

Hmmm

I mean, it doesn't take a genius to realize that (and I know plenty of folks who work in PE).

You have to have a working knowledge of every part of the development process, which means knowing the local politics, knowing how to get through an entitlement process, understanding the market you're building in, and literally knowing the basics of how to build a building. Maybe this is a reflection of the PE guys I know, but when they buy a company that makes widgets, they don't learn how to make that widget. They learn how the business operates, obviously, but at the end of the day its still the widget company making the product.

By contrast, if I don't have some idea of what I'm looking at on a blueprint, I have no way of auditing the assumptions my engineers and architects are making. If I don't know what the trades cost, I can't possibly bargain down my GC. By it's very nature being a real estate developer means being a jack of all trades, or else you're fucked. I have good buddies at Blackstone and have been there for years, and I know from talking to them that their level of understanding on an individual deal basis isn't as comprehensive as mine is on a property I'm building. Maybe they're anomalies, but I suspect they're not.

None of which is to say PE guys are idiots, don't understand what they're doing, or don't do their homework. Obviously that isn't the case. But I've seen (well, heard) what PE folks focus on when they do their diligence, and while they get down in the weeds like the rest of us, there is a level of granularity in development (not to mention risk) that I have not noticed in PE.

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Oct 12, 2018

I wonder if a PE guy has ever written out a long post about how his job is more complex than a real estate developers

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Oct 15, 2018
EliteStudent11:

I wonder if a PE guy has ever written out a long post about how his job is more complex than a real estate developers

If you think 5 minutes of typing is a "long post" then you are essentially illiterate. As I said, real estate developers need a wide array of skills, one of which is literacy beyond the financial. Apparently a skill M&A analysts aren't required to possess.

Oct 15, 2018

A glimpse into Ozymandia's cubicle

https://youtu.be/3KquFZYi6L0

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Oct 15, 2018
EliteStudent11:

A glimpse into Ozymandia's cubicle

https://youtu.be/3KquFZYi6L0

Lol. Some of us graduate beyond cubicles, my friend. You know, the whole "literate" thing.

Oct 15, 2018

Somewhere in the US... A mid-level real estate developer sits in his office typing several responses to a 20 year old student on an online finance forum. The 28 year old developer feels a burning desire to demonstrate (to this 20 year old and other forum readers like him) that his job is prestigious, complex, and challenging.

When he fails to gain the support of the forum through the garnering or silver bananas, he brings it home with an absolute power move: calling the 20 year old HYP student "illiterate" and touting his office as his ultimate symbol of success, manhood, and power.

Defeated, the Ivy League student returns to his schoolwork. He must study hard if he ever hopes to brag to 19 year olds about his illustrious profession of building 20-unit apartments

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Oct 15, 2018
EliteStudent11:

Somewhere in the US... A mid-level real estate developer sits in his office typing several responses to a 20 year old student on an online finance forum. The 28 year old developer feels a burning desire to demonstrate (to this 20 year old and other forum readers like him) that his job is prestigious, complex, and challenging.

When he fails to gain the support of the forum through the garnering or silver bananas, he brings it home with an absolute power move: calling the 20 year old HYP student "illiterate" and touting his office as his ultimate symbol of success, manhood, and power.

Defeated, the Ivy League student returns to his schoolwork. He must study hard if he ever hopes to brag to 19 year olds about his illustrious profession of building 20-unit apartments

Little do you know that I only signed up for this forum in order to brag to 20 year old students!

Though seriously, if you don't have any actual experience, what are you doing commentating? I have 10 free minutes in a day to spare, and for what it's worth, I called you illiterate well before I had the opportunity to posture for meaningless third party recognition in an anonymous online forum. I don't need to prove myself to you, but I would prefer that even anonymous debating partners be intelligent, preferably well read, and certainly who know what they're talking about.

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Oct 15, 2018

I've looked through your post history. You are involved in more childish arguments than any other person on the real estate forum (which usually remains pretty mature and civil compared to the IB forum). If you're so experienced, stick to providing helpful content to young readers and lay off the pettiness

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Oct 15, 2018
EliteStudent11:

I've looked through your post history. You are involved in more childish arguments than any other person on the real estate forum (which usually remains pretty mature and civil compared to the IB forum). If you're so experienced, stick to providing helpful content to young readers and lay off the pettiness

Ah well now I am well and truly enjoying myself. Glad to know my opinions are childish! It's so hard to get honest and accurate feedback online. Except, this is more than the Twitter-approved character count; could it be that maybe spending more than 12 seconds on a post isn't such a crime against efficiency after all?

If you want to benefit from the knowledge of people who know more than you about a particular field, cut down on the snark when someone posts something more than the bare minimum. I worked in IB for a few years, and as I said, I know more than a handful of guys doing damn well in private equity; I may not be an expert, but it's enormously likely I have relatively more knowledge of PE than a PE guy has of my industry. Which is no reflection of my ability to do their job, but that Private Equity firms and Hedge Funds get a lot of press and there is a wider general awareness of what they do as opposed to the real estate industry.

Oct 15, 2018

You're reaching pretty far back into the conversation with your response. You also seem a little mad ;)

All I said was you have a tendency to get into petty fights (and run them into the ground until the other person gives up). You're proving that point response after response

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Oct 15, 2018

I'm impressed - you really know how to rustle people's jimmies, lol

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Oct 15, 2018

Thanks rustling jimmies is one of my favorite hobbies. Check out reddit.com/r/kenm for one of the most infamous online jimmy rustlers there is

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Oct 17, 2018
EliteStudent11:

You're reaching pretty far back into the conversation with your response. You also seem a little mad ;)

All I said was you have a tendency to get into petty fights (and run them into the ground until the other person gives up). You're proving that point response after response

Is this an insult? Or meant to be taken as a negative quality? Every internet fight is a petty fight, almost by their very nature. And coming from someone clearly interested in engaging in a petty fight and running it into the ground until I give up, I'll take it as a compliment from one professional petty-fighter to another that you seem to think I have a talent for it.

And I'm not mad. I'm amused. I wouldn't be engaging you in this manner if I weren't getting some positive personal reaction out of it, naturally. I find it even more amusing that a self-professed student with admittedly no experience in what he/she is talking about thinks they're going to rile me up or convince anyone of your point of view.

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Oct 17, 2018

Just say u mad breh haha lol

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Nov 6, 2018

Have to read this in a british accent with wildlife sounds in the background and imagining a shaky handheld cam

Oct 19, 2018

This fucking killed me

Oct 13, 2018

I'm not sure why people compare effectively being a serial entrepreneur (development) to managing assets (REPE).. totally different types of careers.

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Oct 22, 2018

LOL serial entrepreneur. Before this thread, I actually thought RE was as good as any other career. But seeing how much the RE defenders overplay the profession really has me scratching my head.

RE development sounds about as challenging/exciting/lucrative as banking, PE or most other fields. But serial entrepreneur? The lady doth protest too much. I won't be confusing any RE developers with Thomas Edison or Steve Jobs.

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Oct 22, 2018

What's funny?

As a developer you quite literally make something that wasn't there before.. You have to do this at scale and multiple times throughout a business cycle.

I'm not talking about the grunts working for a developer as an FYI.

Oct 24, 2018

Jesus I was enjoying this thread until you and elitestudent took a Chipotle dump all over it.

I don't agree with Ozymandia on politics, but thought he had pretty reasonable input on this thread, taken from an outsider's perspective. He left room for people to agree or disagree and maybe have a constructive discussion. Of course, like any discussion of professions, it had to be a dork measuring contest. Then you walked back your comment and "elite" started playing games. Look, when I'm a douche you get mad! hahaha 11!!1!

Of course I can't trust any of you kids, you wear black socks to the gym, and think that's the cool thing. You all look like retirees in Boca with that shit. Obviously I can't trust you on anything else.

Oct 14, 2018

This is very incorrect. Depends on fund size and strategy.

A PE shop focused on turnarounds // distressed is incredibly complex and ops heavy.

Also fyi, indicative of your ignorance, companies do more than just manufacture things lol. You have to market, run cs, analytics, etc... It's a lot more complex than real estate and compensation is a pretty good indicator of that.

Oct 15, 2018
m_1:

Also fyi, indicative of your ignorance, companies do more than just manufacture things lol. You have to market, run cs, analytics, etc... It's a lot more complex than real estate and compensation is a pretty good indicator of that.

I'm aware. My point was that that's the one function that isn't somewhat comparable. Developers market their buildings, operate them, etc. They don't manufacture a product; rather, they build a building. And I wouldn't be so sure PE folks get paid more than developers. Plenty of ultra high net worth developers as well as PE guys. And while I have zero evidence to back this up, my guess is you'll find lots of very wealthy developers all over the country. It's easy to sit in NYC or SF and say that PE or hedge funds or venture capital pays better, because those positions, especially the high paying ones, are overwhelmingly concentrated there. Go to any reasonably sized city in the country and you'll find real estate folks worth 8 figures.

Oct 18, 2018

Eh, having done all three. The RE Dev side is fundamentally more complex. Running a business you have professionals who are experts in their task to do the operations, you need to know enough to ensure that they are doing it correctly but you do not need to know how to do every job. In PE you need to know enough about what a compnay does to be able to value it and its market. But the skills that go into that are easily transferable from one company or industry to the next with a brief amout of time to learn the jargon. RE Dev is very different, the political intracacies alone are incredibly complex and varied from city to city let alone state to state and country to country. Hell in NYC the political forces vary from area to area in Manhattan not just in borugh to borugh. No one is saying PE is easy, but it pales in comparison to the complexity of real estate development.

Operations focus for PE is even in turnarounds limited. You need to know enough to know what needs to change and that is a skill in of itself. Then you bring in talent that you know to execute on this strategy.

Both are challenging but one has a scope that dwarfs the other.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

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Oct 22, 2018

Isn't this whole "which one is harder" a little bit like comparing the difficulty of two sports? My friends on the baseball team would always say "there's nothing harder than hitting a baseball" but that's why someone who bats .300 is a star player. Hitting a jump shot is easier than hitting a baseball which is why you need to make a much higher % of them. Catching a football is easy which is why you better catch it 90% of the time and have get beat up right after catching it.

Bottom line, anything that's easy just has to be done that much better. Anything that's hard probably has more room for error or less competition. Six of one, half a dozen of the other.

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Oct 23, 2018
PteroGonzalez:

Isn't this whole "which one is harder" a little bit like comparing the difficulty of two sports? My friends on the baseball team would always say "there's nothing harder than hitting a baseball" but that's why someone who bats .300 is a star player. Hitting a jump shot is easier than hitting a baseball which is why you need to make a much higher % of them. Catching a football is easy which is why you better catch it 90% of the time and have get beat up right after catching it.

Bottom line, anything that's easy just has to be done that much better. Anything that's hard probably has more room for error or less competition. Six of one, half a dozen of the other.

This is a terrible analogy. Moreover, the defining difference, to my mind, is that real estate has risk. Banking doesn't. You are providing a service, and whether you do it well or poorly may impact your ability to attract business in the future, but has no immediate financial impact. Real estate requires capital to be deployed and often involves guarantees; that in and of itself makes real estate as an industry more stressful, though perhaps not "harder".

What makes it harder is the vastly larger number of skills and areas of expertise one must become conversant in in order to execute on a real estate deal.

Oct 23, 2018

I think everyone here already knows that investing capital, where you can hit or miss, has more risk than providing a service where you're getting paid either way. That has nothing to do with what industry you're in.

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Oct 23, 2018
PteroGonzalez:

I think everyone here already knows that investing capital, where you can hit or miss, has more risk than providing a service where you're getting paid either way. That has nothing to do with what industry you're in.

Haha, I think you'd be surprised. There are a lot of kids on this site.

That being said, the larger point, that real estate covers a number of fields that require an intense amount of technical knowledge, is what differentiates it in "difficulty" from other industries. You simply cannot be a successful developer and not have a basic understanding of effectively all of them, either. Not that people are necessarily out to screw you, but if you have no way of spot checking, at least at a high level, the work that your subs and consultants are doing, you're going to get f**ked. I may not be able to put together MEP drawings, but I need to know enough about how the systems work so that when my engineer tells me that I'm losing 6" of ceiling height to some unexpected ductwork, I can at least read the drawings and see whether or not that's the only option, or merely the easiest one for him.

Oct 15, 2018

Here's you: 'I haven't done either of these things yet I'm speculating based on random posts by people on the internet.'

I'll bite. I've done both REPE and been the LP in several development deals, and have been intimately involved in the day to day of the GP/developer in the development deals for tracking purposes. I also have several friends that are placed at top level 'true PE' shops, and can say with absolute certainty that REPE and 'true' PE are about the exact same level of difficulty. You still have to capital raise, you still have to pitch to committee, you still have to underwrite well, you still have to manage your investments well after acquiring them, and you still have to plan/strategize for an effective exit. So all of the fund-level stuff is pretty much the same. The compensation is less standardized because the majority of true PE firms are in NYC, while REPE firms are smattered across the country/have offices in a less centralized fashion due to the nature of the industry. COL adjusted though, my friends in PE make about the same $ as REPE when looking at it across an entire career.

But development is 100% more 'difficult' than either of the PE routes due to the stress factor. There are a shitload of things that can go sideways in a development deal, whereas the risks are mitigated much more effectively up-front in a PE deal (whether RE or corporate). Comp is drastically more volatile as a result.

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Oct 15, 2018
MonkeyWrench:

But development is 100% more 'difficult' than either of the PE routes due to the stress factor. There are a shitload of things that can go sideways in a development deal, whereas the risks are mitigated much more effectively up-front in a PE deal (whether RE or corporate). Comp is drastically more volatile as a result.

Well said. Some of the PE folks posting here, and I'd imagine even some of the REPE folks, don't understand the complexity involved in actually constructing a code-compliant building. Developers are still doing their due diligence in terms of defending underwriting assumptions, making sure the project has a universe of end-buyers, controlling expenses and figuring out how to maximize revenue, entitling land, etc. It's just that there is an entire other facet of the business which carries its own enormous risks, not to mention expertise, in the form of construction.

Oct 17, 2018

Yes, exactly. There's a reason why very, very smart PE guys are willing to give up such high promote figures that heavily favor the GP - because it's a head trauma that capital markets/guys that deal in the broader capital raising spectrum don't want to deal with. In fact, I really appreciate it when I'm reading a JV/partnership agreement and the developer tries to slip in some nuanced language that tips the scales even more favorably for them. Some people get mad about that, but like I tell my boss 'that's the guys I want to partner with because I know they know WTF they are doing'.

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Oct 17, 2018

I can be inexperienced and still correct. Using someone's experience level as an argument for why they are wrong is a logical fallacy

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Oct 18, 2018

True, however using somones stupidity to point out their stupidity is completely valid.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

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Oct 24, 2018

I've found my new tagline

Oct 18, 2018
EliteStudent11:

I can be inexperienced and still correct. Using someone's experience level as an argument for why they are wrong is a logical fallacy

I fundamentally disagree. A five year old child can also be "correct" and inexperienced, but if they're correct because they're making a random guess, then it's a worthless accomplishment. If in 2008, a monkey threw it's own shit at an Amazon logo when asked to pick a stock, are you going to make that monkey your financial adviser today?

Likewise, if you have no experience, then whether you're right or wrong, you're merely fabricating reasons for your argument without fundamentally understanding the issues. Being correct in the sense that anyone on this forum cares about means being able to justify and support a position, not throw a dart while blindfolded. You're doing the latter.

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Oct 18, 2018

I could explain further but I'm way off my account's mandate. And also way out of character.

I'll leave you with this. If you're comfortable and happy with your job, you probably don't feel the need to aggressively defend it on a finance forum. Take a look at CREs comment - there's a guy that's happy.

End thread

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Oct 18, 2018

And the ignominious retreat, completely coincidentally timed to when any and all goodwill from an puerile quip has evaporated as the community realizes you have no idea what you're talking about but are still trying to defend a stupid position.

I love me some petty internet fights!

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Oct 18, 2018

Ur crazy. Chill out.

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Oct 24, 2018

I'll leave you with this. Don't go patting people on the head condescendingly after you've sneered at their careers and not expect to get your punk card pulled.

Oct 25, 2018

I guess I am a "dumb pussy" that made over 40 million essentially doing nothing over the past 7 years after I purchased a real estate portfolio. Okay, that is a slight lie, I work about 3 days a year on that segment of my portfolio. But please do tell me about how dumb real estate people are.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

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Oct 25, 2018

I think this calls for an AMA...

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Oct 25, 2018

Well I bought a portfolio that made me $41 mil and I only had to work on it 2 days out of the year

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Oct 25, 2018

Don't bother. Trolls gonna troll.

Fact is, real estate folks have a much better idea of what finance jobs entail than the other way around.

That being said... that's very impressive. Any insight in that? Realized gain or just appreciation? Very curious!!

Oct 26, 2018

That is purely appreciation, I am far to lazy to take the operational generation into account. For that would require I call my accountant, and I am just not in the mood to hear that pencil necks shit today.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Oct 25, 2018

Definitely want the AMA on this!

Looks like mods removed elitestudent's "dumb pussy" comment.

“Doesn't really mean shit plebby boi. LMK when you're pulling thiccboi cheques.“ — @m_1
Oct 26, 2018

I did one years ago on this, its titled something like Alterative asset investing or something similar.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Oct 26, 2018

I'll look it up, thanks!

“Doesn't really mean shit plebby boi. LMK when you're pulling thiccboi cheques.“ — @m_1
Oct 26, 2018

Link if you find @Edifice

Oct 26, 2018
“Doesn't really mean shit plebby boi. LMK when you're pulling thiccboi cheques.“ — @m_1
Oct 26, 2018

You da man

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Oct 18, 2018

In this case, you're inexperienced and incorrect. If you are incorrect but have a logical reason or experiential knowledge to support your view, then that's one thing - but you don't have that. For some reason the younger folks on this forum think using the phrase 'logical fallacy' makes you look intelligent. To quote Princess Bride: "You keep using that word.... I don't think it means what you think it means"

Oct 22, 2018

But . . but . . but . . REAL ESTATE IS HARD!!! There's all these structuring complexities and so much can go sideways and the political strategy and blah blah blah blah. You just don't understand man, you havent been there. SO MANY INTRICACIES!!! Until you've actually been in the TRENCHES, like all the RE guys on this forum (who I'm sure worked at KKR before choosing RE development) you have no basis for opinion!

Good news for anyone who's regretting that decision to not go for the Navy SEALs . . you can still be a real estate developer! Makes warfare look like a day at the circus.

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Oct 23, 2018
PteroGonzalez:

But . . but . . but . . REAL ESTATE IS HARD!!! There's all these structuring complexities and so much can go sideways and the political strategy and blah blah blah blah. You just don't understand man, you havent been there. SO MANY INTRICACIES!!! Until you've actually been in the TRENCHES, like all the RE guys on this forum (who I'm sure worked at KKR before choosing RE development) you have no basis for opinion!

Good news for anyone who's regretting that decision to not go for the Navy SEALs . . you can still be a real estate developer! Makes warfare look like a day at the circus.

Says the guy who understands so much about real estate that after naming the easiest part of the business (structuring the financing) exhausted his vast store of knowledge and had to end with a "blah blah blah".

RE just covers a wider area of specialized knowledge than corporate PE. One doesn't need to spend two decades at KKR to understand that. As others have pointed out, there are entire career paths that exist solely for the purpose of constructing buildings; architects, structural engineers, MEP engineers, expediters, to name just a few. Each of those requires a specialized education and years to master, and each is only a tiny piece of how you get a building up. If you're in RE, you need to have a working knowledge of a lot, if not all, of those fields.

Oct 23, 2018

I never called it easy. Just saying it's not as hard as some of your more insecure/defensive RE colleagues on this thread are claiming it to be.

Oct 23, 2018
PteroGonzalez:

I never called it easy. Just saying it's not as hard as some of your more insecure/defensive RE colleagues on this thread are claiming it to be.

To be fair to them, I'm not sure you have any idea what you're talking about. Have you ever constructed a building, from acquisition/entitlement to lease up (or sell out)? A lot of folks in real estate on this forum have experience in various parts of finance, some of them in PE I'm sure. They seem to have a little more experience in the other direction than you do, so while I'm obviously biased and will tend to agree with them, it also seems that they have a bit more of a leg to stand on.

And for what it's worth, I'm in development, not REPE, so I don't have a great case to be making here for anything other than development.

Oct 24, 2018

I'm so happy and secure with my career that I'm going to write out several 500 word responses until you agree that my job is the best!!!1

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Oct 14, 2018

Bull Shit -
Take the most well known PE shop: Blackstone.
You think the RE guys are pulling in less than the corp guys?
Go back to school

You get paid in a PE shop due to the size of your fund, not the industry. If your fund is 5bn and you take in 2% management and carry it will all depend on performance of the fund, not the sector.

Less REPE jobs out there because it's more niche. You won't convert easily into a regular PE job because your skills are not as comparable and not as technical. Those are valid negative on REPE, but if you know that's what you want to do you don't really care whether a regular PE shop will take you.

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Oct 14, 2018

Lmao this is beyond idiotic. Obviously if you take the best player in the REPE space, yes, they will get paid just as much as the best players for the corporate PE space.

However, if you go anywhere beyond the top 25 REPE shops, it's almost guaranteed that the corp PE guys are pulling more at the same level. The vast majority will work in the MM, where the corp PE guy will destroy the REPE guy in comp. So yes, corp PE is far, far superior from a comp perspective

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Oct 14, 2018

Do you even think before you write?
It's pretty straight forward:
$100mln AUM at 2% mgmt fee + promote
$2mln to share in the company per year, doesn't fucking matter who you are. Unless you are arguing that corporate PE returns more cash than RE. Or that REPE fund owners are greedier. Both silly arguments...
I really don't understand your argument. Also in REPE size matters just like in corporate PE - you won't get paid regardless if you are not at the top, unless that $100mln fund is the founder and just you or you get mega lucky in your returns.

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Oct 14, 2018

^This. It's a function of fund size. If you go to a Corp PE firm with $2b AUM, they're not paying Analysts $100K base. My buddy's at a growth equity tech fund in NY with $2b AUM and is looking at 75K base and 20% bonus.

I think the reason people don't want to go into real estate is because it's super niche. You can start out in IB or Management Consulting and go anywhere from there if you don't like it or if you get burnt out or even laid off. Once you start in RE there's a lot less exit opportunities available.

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Oct 14, 2018

Well Blackstone pays less than axonic capital

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Oct 14, 2018

To be blunt, real estate takes a special tolerance and ability to work with idiots. I have no idea how guys in the business deal with that level of horseshit on a daily basis.

Oct 14, 2018

Real estate is highly fractured, for example an acquisitions role in a REPE shop, a REIT, a traditioanl firm, an RE asset management firm, and a dev firm might have incredibly large amounts of overlap or can be doing completely different things. You then have further bifurcation among the different types of assets. It is entirely common for someone to start in single tenant retail and never leave that asset class for the span of their entire career. People think bankers or corp lawyers have highly specialized skills but they look incredibly broad in comparison to people in RE.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Oct 15, 2018

This is an oddly aggressive thread for a simple question.

Why do so few go into real estate? Because they don't know about it and because there aren't as many jobs.

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Oct 15, 2018

Amen. These 20 year old kids will one day realize their itch for prestige and getting"complex" job is silly. We're all crunching fake shit numbers on a goddamn screen, not saving lives here. You want a complex job, go operate on dead brains or make rockets for crying out loud.

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Oct 21, 2018

deleted

Oct 15, 2018

I enjoyed reading the comments above though hah! Quite entertaining for our RE forum...

Oct 17, 2018

In case any are curious, RE is the second most popular forum on WSO (behind IB)

WSO's COO (Chief Operating Orangutan) | My Linkedin

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Oct 17, 2018

can someone from the industry insert a joke here as to why

Oct 17, 2018

Cause all the cool kids played with legos and the lames played with an abacus.

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Oct 17, 2018

I mean as to why the RE forum is so active

-waiting on OMs type stuff

Oct 18, 2018

Well yeah, this business is very feast or famine. If we have multiple live deals going on (under contract/DD period) then I'll go radio silent for days on this forum. When it's slow, it's SLOWWWWWWW.

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Oct 17, 2018

This is honestly probably one of the most up-to-date outlets for RE talk. Most other forums are about flipping houses or something.

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Oct 17, 2018

Yeah, It's heavily focused on commercial

Oct 23, 2018

Can you name some other similar forums (commercial re/re finance focused)?

When I try looking around, I usually find forums saturated with house flipping and residential heavy content--as you alluded to

Oct 23, 2018

There really aren't any other than maybe appraiser forum, and it's pretty so-so. As mediocre as this real estate forum is, I'd bet dollars to donuts that WSO real estate forum the best English-language one available (or at least the best North American one).

Oct 23, 2018

Have searched as well. WSO is as good as it gets for CRE. Bigger pockets is bigger but more about flipping houses just like HGTV with an article/ thread here or there thats actually pretty good.

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Oct 18, 2018
Ronclue:

can someone from the industry insert a joke here as to why

Look at my post count...

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Oct 18, 2018
AndyLouis:

In case any are curious, RE is the second most popular forum on WSO (behind IB)

Fuck yeah

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Oct 24, 2018

I like the RE threads the best, generally they generate the best back and forth discussion. Of course, this thread doubled as a comparing careers thread, and that's always a recipe for trouble.

Oct 17, 2018

It's been said already, but I'll aggregate:

1) There are fewer jobs that offer prestigious pay for 20-something year olds when compared to PE, IB, Consulting, Tech.

2) Exit opps are better from the aforementioned track. For example, it's way more challenging to get into H/S/W out of real estate compared to the typical track for individuals high in intellect and trait conscientiousness whose parents have been railroading them their entire lives. Another example: you're not likely to transition from RE into a cool VC role.

3) It's easier to lateral into real estate later in your career after working the typical I-banking stint. You'll see lots of these profiles in their late 20's / early 30's in NYC PERE and development after they jumped ship.

4) It's true that you have to have a high tolerance for working with idiots. It's unreal how uneducated the majority of the real estate world is. It's usually a lot more fun to work with smart and creative people versus type-A uneducated asshats.

5) There's a lot of risk and you don't get compensated well until you're at the top. Outside of a sales position, the road to a 300k per year salary is a lot more challenging in real estate than in the other fields. That's not saying it's easy in the other fields, it's just EXTREMELY rare to be paid in the 300k/yr base range in real estate. Price's law in respect to real estate compensation is undeniable.

6) Unless you work for Blackstone or a comparable firm, everyone you meet thinks you're a realtor or a home flipper. :(

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Oct 17, 2018
Non-PC Broker:

4) It's true that you have to have a high tolerance for working with idiots. It's unreal how uneducated the majority of the real estate world is. It's usually a lot more fun to work with smart and creative people versus type-A uneducated asshats.

Interesting. I've found the opposite to be the case. Yes, there are plenty of idiots in real estate, as anywhere else, but they seem to get sifted out pretty quickly, or rather, never really rise to a position of decision making responsibility. Whereas I know tons of IB folks who just keep plugging away in a mediocre fashion, and 30 years later make MD.

Non-PC Broker:

5) There's a lot of risk and you don't get compensated well until you're at the top. Outside of a sales position, the road to a 300k per year salary is a lot more challenging in real estate than in the other fields. That's not saying it's easy in the other fields, it's just EXTREMELY rare to be paid in the 300k/yr base range in real estate. Price's law in respect to real estate compensation is undeniable.

This is definitely true, and 100% why RE isn't more popular. You don't see a ton of 30 year olds making bank the way you might become a VP if you stay on that consistent track in the finance world.

That being said, once you get to the more senior levels and get even a little bit of carry, it seems to me that the balance tips the other way and you start seeing RE folks getting compensated better (with a much better lifestyle to boot) than their IB/HF/PE counterparts. Not at the principal level, but like 35-45 year old folks sourcing deals.

Oct 18, 2018

A note on the idiot thing, I think many people here are doing the same thing they say others do and are lumping in home realtors and the handyman that fixes your sink. Both are technically in the real estate industry.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Oct 18, 2018
heister:

A note on the idiot thing, I think many people here are doing the same thing they say others do and are lumping in home realtors and the handyman that fixes your sink. Both are technically in the real estate industry.

I guess. So does that mean I can include bank tellers in the finance industry, or janitors at KKR in the PE industry? At some point I think we're all intelligent enough to understand the types of positions we're talking about.

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Oct 18, 2018

You would be suprised by the reality of assuming we are all intelligent enough to understand the positions we are talking about. We had a question asked by someone who had no idea about how big the scope of industry professional is. Not to mention that we have had more than a couple people perk up who have zero experience or knowledge about any of the industries we are talking about here.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Oct 18, 2018

Fair enough.

Oct 18, 2018

Why do you depict it as so difficult to get good pay early in your career?
You can start in REIB at a BB then move to BX, CG or Starwood ...?

Array

Oct 18, 2018

Comp is fundamnetally structured different. One of the prime reasons less people go into RE is that pay is lower at the start but on an attrition adjusted basis is signficantly higher later in your career. In banking you might have an MD making 10MM a year but that MD might have risen out of 100 analysts. in RE you might have 5 partners making 4MM on a deal. Of those 5 partners they started as a group of 12 analysts.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

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Oct 18, 2018

Im in CRE.. oddly enough I've only ever been in real estate from the leasing side during college to the financing side now. I don't think anyone I graduated with ended up in RE, which is fine by me.

The work life balance is truly unbeatable. No one bothers you before 8am and if the money isn't out the door by 5:30pm, it becomes tomorrow's problem.

Though I have always thought about how firms like Bozzuto and such operate and what their culture is like. Or even an insurance company who has hands in RE as equity partners.. I wonder how fair it is there.

Oct 18, 2018

Bozzuto has a development company, GC, and property management company. I imagine each component is very different.

Oct 19, 2018

Thanks for explanation guys

Oct 20, 2018

1) Real estate is the most valuable asset class in America, by far. There are a ridiculous number of people in real estate. Way more than other financial services positions.

2) Why do people out of an MBA or undergrad business not look to real estate more? Real estate generally pays like shit. You make real money as an entrepreneur, not as an employee. IB/PE, in contrast, allows you to make a lot of money as an employee.

Oct 20, 2018

Speaking for development only here...Smaller field and base pay + bonus ceiling is lower. But doing your thing should be the goal anyways as that's where the big money is.

I guess to a certain extent, the fact that there is a pretty varied, unscripted road map to 'doing your own thing' may deter some people. You gotta find a way do find deals at a good price, raise capital, PM/ manage the projects, etc. It's not rocket science but need to be willing to suffer through a bit of brain damage and deal with high level of uncertainty.

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Oct 22, 2018

My school had a RE Major and we put on a big conference in the Mid-Atlantic once a year for RE professionals.

They never really marketed the program well. And one thing i picked up from speaking with people in the field is that it is EXTREMELY network driven. Since i didnt have the network to get in with a good company, i decided to pass on it.

Oct 23, 2018
Oct 26, 2018

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Oct 26, 2018
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