Q&A - IB Analyst > Development Analyst > REPE Associate / VP
As this forum has been very helpful over my career, I thought it might be helpful to give back and do a Q&A on questions where I can offer a reasonably informed opinion. Questions come up here a lot on where to start / where to go etc between IB / development / REPE, ease of transitioning between them, differences between them etc. I've worked in all 3, so happy to answer questions on each.
Will answer questions as long as it doesn't give away too much which could identify me (you'd be surprised how crazy small RE can be... I've worked with 2 people on the RE forum, put that together from their posts), where it does I will state this and provide hopefully sufficient info which may be helpful to answer the question. For background, I started in IB, moved to development in a top developer / owner-operator, then moved to a European RE focused team in the special sits arm of a UMM / MF.
Drop was c. 20-30%, but hours went from 60-70 a week (increasing to 80+ when busy) to 50 with low weekend work. Hours beyond 50 were down to me working harder than I needed to rather than deadlines. Development hours are typically pretty chilled, consistently 40-50 rather than peak to troughs of IB / PE given they're deal focused. I'm not majorly focused on comp. I earn enough to live a comfortable lifestyle and most of my friends aren't in finance, so there's no expensive "keeping up with the jones" type finance purchases.
No, growth profile in income was pretty low. Base growth was lower than IB, and bonuses were a lot lower (20-30% vs. IB which is what 50%+ as a junior up to 100-200% as you get more senior?). Development is a long term game, and you make real money through promote. I've seen several 7 figure promote payments split between 3-4 guys in development shops who went out on their own. Promote is also available in the top firms obviously, but you wont have as a big a cut as there's more mouths to feed. Risk-adjusted, you have much lower chance of going bust in a top firm vs. going out on your own so the economics are fair taking this into account. Only way I can see someone being fired from a top firm is if they materially fuck up a project whether that's on the way in (missed something in DD) or during execution (fundamental mistake).
I did 2 years in development and started to get bored. Learning curve is long but slow, projects can be 5+ years from acquisition to sale. I saw a limited range of deals (1 asset class in 1 city). I wanted a broader scope (capital structure, asset class, market etc) and more deal experience. In the 3 years I've been in REPE, I've done 10+ deals. In the 2 years I was in development I did 2, and you could easily do 0 in that timeframe.
There aren’t that many edges or levers in REPE. The best way to generate outsized returns is to buy cheap, the best way to be able to do this is have an on the ground presence in some shape or form in many markets and having the ability the more quickly when an opportunity comes up I.e. an IC process that isn’t overly bureaucratic and drawn out. Anyone can throw some “creative thinking” into a model so this doesn’t add an edge.
There’s no set day to day as it really depends where you are in project life cycle and if you’re role is cradle to grave or focused on a specific stage (acquisition, entitlement, construction etc). You probably spend close to half your day in meetings / site walks etc, and the rest making sure the team (professional team, contractor, property manager etc) is on top of what they’re supposed to be doing and dealing with any issues / fire drills which are coming up. There’s always problems to be solved. Development is far more mentally stimulating. REPE becomes pretty cookie cutter after a while, although the occasional deal does come up which does require creative thinking.
IB and REPE are similar in that they suit transaction people. Main difference is risk aversion, in IB you don’t have skin in the game so it can be less stressful. If you don’t like the idea of having your name against underperforming investments which need to be fixed, stick to IB. The worse IB aspect is you have clients and they can be demanding so you have less control over your schedule. Development suits people who are more entrepreneurial, like problem solving, and are long term focused. Development projects are a marathon rather than deal sprint, you need to be able to stick with it for several years and focus on proactively identifying issues and addressing them before they become problems.