Let's Talk About the Pros and Cons of our Gigs in RE Finance

Current Role: Fund Manager of a rolling value-add fund series.

The Good: After spending enough years deep in the weeds of building out excel models and laboring away on IC decks it's nice to have an analyst team to cover that while I focus on the high level. Feels great to present at our quarterly meeting when our fund beats expectations. Also enjoy business development initiatives of going out to dinner with different brokerage teams. Get a lot of good whiskey sent to me after deal closings too, which is always nice.

The Bad: Overseeing administrative work for the fund can be a hassle. I spend a lot of time meeting with our accountants and dealing with tax matters.

The Ugly: Investors. Road show after road show, red eye after red eye to try and bag new investors and expand the size of the next fund gets brutal.

Looks like the thread title changed as I was typing my submission. Not sure if it's relevant, but this is a cool idea @LReed", hope it takes off.

Role: NYC broker (6 years, IS + some recent tenant rep office assignments)

PROS:

• staying in touch with people (something I genuinely enjoy) isn’t goofing off, it’s important
• not tied down to a desk (if you’re in the office too much you’re probably not doing your job)
• constantly learning. I’m curious by nature and love to see how things work and how pulling different levers will affect things
• naturally a deal hunter, so it behooves me to be myself
• while I can’t control the outcome of each deal, I can control my attitude and the number of people I talk to. Knowing I did all I can do keeps me level-headed in an otherwise weird industry

CONS:

• not all brokers hold themselves to high standards, and that can be a bummer both in the moment and how it reflects on the rest of us. also brokers taking your materials, putting their name on things, shopping it as their own, and then demanding access (mostly just small- to mid-sized IS deals)
• you’re the bearer of (bad) news. sometimes people still want to kill the bearer of bad news
• sometimes kept in the dark about details that it harder to get a deal to the finish line / inadvertently limiting my leverage with the other side

I’m sure I’ll think of more over the weekend.

I think this is a pretty good thread idea

Real Estate Investment Banking Analyst (the type that does equity offerings / M&A)

PROS:

• Wide variety of transaction type (private entity level capital raises, portfolio asset sales, JV Equity Raises, Initial Public offerings, private debt financings, sale lease-backs) across almost every property type. This is the biggest pro for me especially considering you can work on both asset level and entity level deals

• Few straightforward deals. Most deals are major strategic moves for the company

• Higher pay than almost every entry level real estate role

• At most investment banks, real estate is one of the more laid back coverage groups. You'll work less hours than the traditional groups for the same pay

• You don't have to explain to people that you work in real estate. Just say you're an investment banker

• REPE Recruiters will take you more seriously solely because of your job title

Cons:

• Idea / relationship books. Basically you put together a presentation outlining a deal a company could do or you give them a market update book on the property type they cover. Mainly for relationship building. Hopefully this company will let you sell 10% of the shares on their next follow-on offering

• Work on fewer deals than your typical real estate analyst. I think this is a fair trade-off given the complexity of the deals

• Typical banking cons

• Will never work on Argus which is a deal breaker for some buy-side firms

Pro:

1) Steady paycheck that pays the bills handsomely.

2) 100 years ago I'd be shoveling hay in the hot sun.

Con:

1) Self-imposed prison. Slave to the job. Slave to the bills. Wonder if I will look back on my deathbed at the decades of cubicle drudgery wondering if I could have done more with my life.

Role: Associate at fund sponsor/manager of discretionary LP equity fund (5 year career experience)

Pros: Small team with flat hierarchy, no supervision by useless adviser, awesome work/life balance at ~40 hours per week (unless traveling), full discretion over investment selection, ability to invest nationally, and participation in full deal life-cycle (underwriting, contracts, development monitoring, and asset management).

Cons: Only employee under 50, limited current allocation parameters (80% student housing and senior living), looming retirement of managing partner, no carry (currently), and limited upside due to capital constraints

Role: Debt & Structured Finance (hybrid VP/Analyst) for primarily MF/mixed-use. I work with the MB's to close their deals.

Pros: - Deal Flow is tremendous. In 2018 alone, I reviewed 270+deals and almost 60 of them ended up closing. Total volume was over $1B - Viewing deals all over the US from BFE to Seattle/San Fran - Get to see the good operators and bad operators. Lots of value add players. Good deals and bad deals - Get exposed to all kinds of scenarios...TIFs, Tax abatements, Ground leases, Flood Zones, High crime, etc. It's awesome to be exposed to how lenders view the above and how to structure around them - Growing ability to multi-task a million different things all the time.

Cons: - Some of the idiots involved in Mortgage Banking just baffle me. Also majority throw temper tantrums when the deal implodes cause they failed to adequately source potential issues. They will push you and bullshit there way to get you to think their deal is not shitty. - Explaining to both how a 4.25% cap rate on a 1960s vintage value-add deal in a so-so midwest small market is unrealistic. - Dealing with angry LifeStyle Clients who don't know shit and still think they should get 80% LTV + build up for a deal in a high crime area where they are budgeting R&M at unrealistically low numbers gets old. - I am the analyst and manager, so I am fielding the phone calls, selling to loan committees, working the powers to get the deal done...while also building the models, running the basics and doing the analyst job.

Not a lot of representation from the direct lending side so far, so I will chime in.

Role- Associate at a mid size bank that has a national & an international presence. I focus on originations, work on all product types nationwide. I have one year of RE finance experience, a MSRE, and graduated from college four years ago.

Pros

Pay- I have absolutely zero complaints. I am paid very well and in fact I think I am paid about $15-20K above market. In my view, with the debt side (particularly mid size and large banks) more so than the development or REPE side, you will see some slips through the cracks where you will have some people making above market pay. The banks are either willing to pay more to retain talent (lots of 20+year veterans at many banks), dont care that they are paying more than they should or dont know what's market pay. The development or REPE side of the business often have very lean groups and due to the nature of their business model, there can be absolutely no room for people making above market pay.

Quality of Life- When I was a intern and an analyst, I worked my butt off, worked 80-100 hour weeks, stayed past midnight and worked on the weekends frequently. Now, as an associate, I already see the light at the end of the tunnel. I now work 50-55 hour weeks and the days where I can work 40 hours are not that far away. So, from a quality of life and pay from a $/hr perspective, the higher up you are in the debt side, this is a great gig.

Deal Flow- The amount of deal flow you are exposed to on the debt side especially at mid size and large banks is crazy. I take a look at one or two new deals every day. This deal flow helps me build experiences, stories and relationships. I often write down interesting things I learnt on every deal in my evernote folder. This gives me talking points if I were to ever interview at some other place. The deal flow I am exposed to across product types and geographies means I can interview for a corporate real estate position, a data center REIT (I have financed 4 data centers in the last six months), or a hospitality shop (which is a third of my business).

Cons

The cons are tied to the pros.

**Pay ** While I love my pay, have a way higher base than my peers, I also recognize that my upside is limited. Development and REPE offers better upside. If that matters to you, you should work in development or REPE. For the lifestyle I want to live and my goals the debt side is a perfect fit and if I play my cards right, I am looking at making a $200K base very soon and the pay can only go up from there but this is way more than I need for my lifestyle.

**Monotony ** Some parts of the debt side especially underwriting and asset management can bore you death after a while especially if have your systems down to make you more efficient. Its just rinse and repeat deal after deal, day in and day out for years. Originations offers you a little more variety. I am a deal junkie, I enjoy working on new deals every day and moving onto the next on, so originations is a better fit for me.

Role - Analyst, Valuations and Advisory (Arm of Brokerage Firm)

Pros: * Exposure to a wide variety of asset classes. Ability to work on the underwriting of everything from multi-family to hotels. * Primarily cover investment grade assets so there is an ability to create relationships with a variety of institutional clients. * Able to travel and work outside of the office. Schedule is fairly flexible and property inspections regularly take me out of the office. * Work with Argus on a daily basis. * Hours are generally 40-50 hours a week with the latter being more common.

Cons: * One step removed from the actual deal. Generally seen as a role where you are not thinking like an investor and miss out on the typical due diligence that would be required with typical acquisition work. * Low pay compared to other entry level roles. * Institutional work is generally reoccurring so a majority of the work is updating prior valuations. This can be very monotonous and mind-numbing over time.