Why do you enjoy working in real estate private equity?

Hey guys,

Why do you enjoy working in real estate private equity and why did you choose this career? Do you also think that real estate debt is interesting, if yes or no why?

Looking forward to your comments

42 Comments
 
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I appreciate investing in real estate because the fundamental value and cash flows of the assets your acquiring are more realistically ascertainable and rooted in tangible value - as compared with trying to estimate the future cash flows or a terminal growth rate of an early-stage tech company or something. You can really put a fundamental value range to a real estate property with a straight face, whereas price targets for biotech companies or tech stocks are yielded from wildly unpredictable variables.

I also enjoy the bricks and mortar aspect, it's dope going to do property tours and seeing the shiny finished product after a re-development project. It never gets old driving down K Street and pointing out buildings our company owns to friends and family too.

Aside from that, great work-life balance, great potential to go out on your own and start your own investment series, and the culture is way less stiff than IB or Corp PE.

 

There is nothing more demoralizing than sourcing a deal that actually makes economical sense, negotiating the terms of the purchase, working with lawyers, architects, politicians etc. while bringing the project through the entire permitting process, negotiating a construction contract, managing the construction process, getting it finally built and leased all over a 2 or 3 year period with countless hours of work, not to mention stress and risk - and then having a broker come in and sell or refinance the building and on the settlement statement his fee is a multiple of your salary. For 2 months' work at best. Untouchable business model. End rant.

 

I have almost exclusively worked on the REPE-side of the business. Here's what I like about it:

  1. You learn a lot about structure, risk, and financial engineering

  2. The compensation vs personal risk standpoint is as good as it gets in this industry.

  3. If you are successful over a long period of time, you have the network, skillset, and credibility to start your own firm

  4. Because you're "the money" in any deal, you have a lot of control and leverage with the various JV partners.

Where it lacks

  1. At the end of the day, it is the General Partner / Operator who is sourcing the deal, creating the value, and executing the business plan. In this industry, I would rather be where the value is created than being the one providing capital to that person.

Interested to hear other's viewpoints.

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