Would you move from real estate development to asset management?

d309206's picture
Rank: Monkey | banana points 45

I have been offered a position with a prominent PE firm working on the asset management side. I would be managing / overseeing our development partners and projects where we are the LP.

This firm invests in pretty high profile projects.

I am not sure about this move (because I seem to hear mix bag on 'asset management')... my interest is in real estate and real estate development , but ultimately on making the most money (with the least amount of stress hah..).

What are your thoughts on long term prospects?

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Comments (29)

Mar 16, 2018

Personally, no, I wouldn't. Just depends on what you want. Making the most money and stress are directly related in this business, unfortunately. The reason you (can) get paid so much in development is because you are taking an enormous amount of risk and putting in an enormous amount of effort in locking up a site without (in many cases) having a guarantee of making a deal/making it work. Asset management you are managing an existing portfolio of assets. So you will make good money in AM, but probably not 'retire at 45' money. You might not achieve that in any of the other CRE paths either, but development is much more of a j curve potential track than AM or acquisitions. You could argue that brokerage is on that level, but again a risky proposition for other reasons.

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Jan 1, 2019

I'm actually also looking to crack into asset management and come from a real estate sales background. We basically sell residential properties in US and Brazil.
I'm currently also a CFA level 2 candidate.

Any advice on how should I go about it ?

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Mar 16, 2018

Entry level asset management CAN be easier to break into than acquisitions/development roles assuming that you aren't expected to hit the ground running with any type of portfolio management knowledge. That being said, you want to play up your CFA accreditation and the multi-tasking aspect of your sales gig. As long as you have decent experience to speak to and good UG credentials to match, shouldn't be that tough to get a gig. You might not get an AM gig at a megafund, but you should be able to land at a pretty good firm somewhere.

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Mar 16, 2018

Would much rather be doing AM at BX/Carlyle making dope money with less stress, than busting my balls at a small development shop to make ~50K less. As long as you've spent long enough in Acq/Dev to get a grip on underwriting and modeling, you'll still have the ability to go back into that side of the business in the future.

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Mar 16, 2018

The money at those places on the AM side is good, would argue it's not fantastic.

As far as going back into dev, the underwriting is probably the easiest part of that job IMO. But if you're out of that world for a while, your contact list can go stale pretty quickly.

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Mar 19, 2018

agreed on both counts @MonkeyWrench

if you want to chase fast money, then AM is not the place for you. it's a slow/steady career path. but it will for the most part always be there.

development underwriting is easy, b/c there are no existing financials or relationships to evaluate or forecast. it's all pro forma.

Mar 19, 2018
LReed:

s long as you've spent long enough in Acq/Dev to get a grip on underwriting and modeling, you'll still have the ability to go back into that side of the business in the future.

There's a whole lot more to development than underwriting and modeling. I'm not sure why someone who spends 3-5 years learning how to run a job would make a switch to AM, only to come back later.

Usually you slave through those ADM and DM days, usually at a huge pay discount to AM/Acq, so that you can run your own shop or at least your own division and make real money.

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Mar 19, 2018

+1, while we all know it varies a lot depending where you are, I personally spend about 5% of my time on pro forma / "underwriting" shit with acquisition guys, and 95% of the time closing on the deal, executing, helping with leasing team to lease up. I am personally trying to figure out the next level for me when I am ready. Don't want to get pigeonholed and not sure how to level up without trying to take a VP level type job/head of development somewhere unless I am promoted here, but who knows when that happens right?

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Mar 19, 2018

I think you have to define this as "by choice" or not. If the market tanks and my options are AM or unemployment, then you better believe I'll live in a cube and crank out models all day. If I have my choice though? Absolutely not - it's neither the day to day I want currently (I'm a DM) or aligned with my long-term goals (being a developer).

Mar 19, 2018
d309206:

but ultimately on making the most money (with the least amount of stress hah..).

For the first part of your quote, I'd say AM might make you more money in your first 5 years, but then a whole lot less money over the course of your life.

For the second part of your quote, re: stress, I'd recommend you go with AM over development.

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Mar 19, 2018

agreed on these two points but when you add a temporal component to the discussion, a real estate career can last an extremely long time. there is also a ton of value in experience ("grey hair") whereas other industries are kindof the opposite.

i would argue the best possible thing to prepare someone for success as their own development shop is capital. they gotta be able to weather the storm if deals dry up. almost like brokerage.

so for new people, i'd rather see them go into AM first, and build up their balance sheet, then take that experience and nest egg into development where they can absorb some risk and enjoy the returns.

nothing wrong with the opposite route if you time it right and are at a larger, legit developer. but timing the market is tough thing and in downturns there are a million brokers and developers looking for jobs and nobody wants to hire them. the AM job is a lot more stable.

but like i've said elsewhere, when you are young and have no expenses, that may be the best time to take some risk. if there is minimal downside.

it is a lot more about personality and appetite for risk IMHO.

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Best Response
Mar 21, 2018

Everyone is entitled to their own opinion, but I have to disagree with the guy saying AM is more challenging, etc. It's clear he is in AM and has probably not had any experience in acquisitions and/or development. I am responsible for all three in my current position and AM is by far, and I mean a long, long shot, the easiest portion. In terms of learning the most it goes development>acquisitions>asset management. In terms of challenging, enjoyable work it goes development>acquisitions>asset management. But I do agree, in terms of job stability, it goes in reverse - asset management>acquisitions>development.

To recommend someone starts in AM and uses their nest egg and experience to get into development is a recipe for disaster. Managing a stabilized property will not prepare you for running a development. Don't get me wrong, operating/managing the asset once it's stabilized is important, but not nearly as difficult as development or even acquisitions.

But to OP's question - leaving development to go to AM when your actual goal is development does not really make sense to me. You will learn more in development. Now if it's just a personal choice of wanting the type of work and job security, then that's a whole different discussion.

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Jan 1, 2019

I think another item worth mentioning here, is the last 5-6 years has been great to be a developer... When the cycle slows, a lot of these shops will have to become lean. There's only so much G&A that can be justified and thrown at development directors and VP's to chase deals that realistically aren't going anywhere. At least in an asset management shop you job security is much better.

Jan 1, 2019

Like RE Dev, I also cover all three and agree with most of what he says. That being said, I would say AM can be the most challenging due to the fact the acq guys hand you a bag of shit i.e., give you a deal they PF a 5cap and that's what IC is expecting when in reality, it's barely at a 4.

I've also noticed when things are hot, everyone wants to do acquisition/development. When the economy hits the shitter, the traffic is in the other direction. I'll let you judge where we are in on this cycle.

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