Real Estate Investing Companies
I know this question isn't really fitting in the I-banking forum, but I was wondering how one would break into the real estate investing field (i.e. firms that buy big real estate properties like office buildings etc.).
One would break into that industry by starting out in CMBS Banking at an Investment Bank, most of which are now defunct.
Boy, NYC is long Real Estate Investment firms, or at least they were: Forest City Ratner, Cohen & Steers, Greystone etc.
I love how everyone thinks IB is the only entry point to all other industries...obviously you could do RE IB but you could also join a REIT , a real estate development company, a real estate private equity shop, etc.
If you're coming from undergrad, start out in a big Commercial Real Estate Services firm like CB Richard Ellis, or UGL Equis. They do corp. fin. advisory, capital markets, consulting, etc.
If you're good at that, move on to a fund. Some sort of grad. real estate/mba-finance would help.
Thanks. I was just curious because I hardly ever hear about big real estate investing firms... I'll look those up.
Hey. Thought I'd chime in here since I work in real estate finance/development. I don't know how it happened, but my life--and friendships--is dominated by real estate--commerical finance, single family finance, commercial development, single family development, boutique investors, brokerage, etc. But I digress.
There are SOOOO many entry points into generic real estate "investing", and there are even more avenues where people end up within the general "investing" field.
Avenues of "investing":
1) REITs - these will mostly be your big money investors in office space, etc. 2) GSEs (Fannie/Freddie) 3) Banks 4) Federal government 5) Municipalities and state governments 6) General real estate corporations (CBRE, Jones Lang Lasalle) 7) "Small" real estate shops (most money to be made is here--HUGE money) 8) Developers (NRV Homes, Toll Brothers, William C. Smith) 9) Managers (Kettler, AIMCO), many of which are also REITs (AIMCO) and developers (Kettler) 10) BB, MM, and boutique investment banks 11) Private equity firms 12) Appraisal
From here, your specializations:
1) Commercial a. Multifamily i. Luxury ii. General market rate iii. Affordable (and many other subgroups of these groups)
b. Office space i. Class A ii. Class B iii. Class C
c. Industrial (tons of subgroups)
d. Retail (tons of subgroups)
And I'm sure there are more.
Single Family 1) Single family houses 2) Condos 3) Co-operatives a. Luxury b. "Ethnic" c. General d. Green
From here, you get into your geographic specializations. West coast affordable multifamily is very different from southeast retail. Different language, different culture, different comp.
Then you break down your groups--institutional sales, underwriting, lease negotiations, sales, etc.
Now, the question becomes, how does one generally break into these areas?
1) REITs - great grades from target schools 2) GSEs - great grades, relevant major, relevant work experience (investment banking, appraisal, NGOs, etc.) 3) Banks - great grades in college, analyst program; or relevant work experience
4) Federal government - college degree, patience 5) Municipalities and state governments - college degree, patience 6) General real estate corporations - good grades in college, luck 7) "Small" real estate shops - you've got to know the right people, luck 8) Developers - usually an MBA and relevant work experience 9) Managers - analyst programs, MBA 10) BB, MM, and boutique investment banks - great grades from target schools 11) Private equity firms - great grades from target schools 12) Appraisal - good grades, and it would help to know some people (very VERY difficult to get into commercial appraisal), LUCK
From these positions, you develop transferrable, marketable skills, network, and develop a pretty resume. Once you've done that, transferring inside the industry is doable. Most any of these paths will work early in your career. But don't stay too long--after 5 years or so, you'll be pigeonholed probably.
^^is a very comprehensive list, although if you really wanted to break in I would only work on getting into a subset of that list.
I would say IB, REPE, REOCs or REITs. I think gaining the underlying financial skills and understanding occupier fundamentals and economics of real estate are the most important and those 4 avenues woud probably give you that foundation. As well, a lot of entry points are not really entry points because they require some work experience.
What's an REPE and REOC?
And what incomes can I expect from this line of work? (first year, and subsequent years)... I assume nothing comparable to IB... and is the culture a lot like IB in terms of work hours, pressure etc.
repe is real estate private equity reoc is real estate operating co. kinda like a reit without taking advantage of tax benefits, but not having to pay out 90% of earnings as dividends.
Thanks RE Banker, and Virginia Tech, but do any of you guys know what salaries/comp are like at these firms? REPE/REIT/REOC?
Comp in real estate is usually lower than in, say, investment banking (unless, of course, you're doing RE IB). But a first year analyst in a top 100 market at a large firm could probably expect 50-70k comp, all-in with hours in the 40-60 hour range. I'm a second year and I'm doing roughly 80k and 40-45 hours, but that's a fairly large boost from year one, which was around 50k and about 50-70 hours (and my comp and hours are on the very generous/blessed side).
If I had to guess, REPE would be closer to IBD comp and hours. REITs? Geesh, it really depends on what capacity you work in. REITs run the gamut from development to management to sales to money management. I know banks pay about 45-55k for their first year analysts. Commercial appraisal comp is a joke for first years (think 40k or less), but you learn more than in any other capacity IMHO. Actually, the federal government/NGOs and the GSEs are fairly generous with their younger talent, paying in the higher range of the scale but pay garbage to their middle managers.
I hope that gives you some insight? Frankly, pay in real estate is generally much more "normal", but if you play your cards right, you can develop those skills that will allow you to make 7 figures in your 30s.
what type of re work are those figures for?
virgina-tech pretty much nailed it on the head.
i would add that the only side of the business right now that is hiring and will be hiring into the future is property/asset management. i would also avoid re ib, anything related to cmbs, as this side of the business has been hit hardest.
At top (blackstone, etc) and good MM RE-PE funds the compensation is approaching that for I-banking. The hours are way easier though. The one problem is that there are very few target schools that these firms hire analysts from. They like people from Cornell School of Hotel Management that have the Real Estate, Finance concentration (especially firms like Starwood that have a solid weight in hotels). They also like people from Wharton with concentration in RE... they like very little else. Generally speaking - they hire MBAs.
I'm currently pursuing my MBA at a top 20 school, and I'm hoping to land a summer internship with a repe or reit in Boston. I was a commercial broker in Boston for 4 years before going for my MBA. Although I was a broker, I do not have many contacts in the investment side of the industry, but I'm hoping some of my contacts will have contacts.
Right now I'm lacking in the modeling and valuation skills, but I plan on developing them while at school. Does anyone have any advice on how to best develop modeling skills while not actually on the job, and also any advice on how to pursue an internship and ultimately a job with a repe or reit?
Thanks.
banoli, in all honesty, I would look to Freddie Mac/Fannie Mae to re-start your real estate career. As a former Freddie Mac Multifamily employee, I can tell you that you fit the profile well. You can probably move up fairly quickly and learn those skills--it'll give you nice exit options in the industry.
i always assumed that taking a job at fannie/freddie would 'pigeon-hole' you into the residential side of the real estate business. is that not the case?
Well, yeah, if you do single-family, which, in fairness, is 95% of the company. But working in multifamily takes as much knowledge of commercial real estate (economics, markets, financing, CMBS, investors, appraisers, etc.) as any other type of CRE business. Working in office real estate might pigeon hole you there, too. But I hear what you're saying. It was my suggestion becauase I personally knew people there who had the same background as the questioner. In fact, he did better than me there.
Virgina Tech 4ever, Silver Bannana awarded! Nice
these posts are ridiculous
Thanks Virginia Tech. I appreciate the advice.
Just posted this in another thread, but the Capital IQ runs are really helpful. Maybe someone could run one for you:
Example: Screening Criteria 1 Geographic Locations: San Francisco Area (Primary) 2 Industry Classifications: Investment Banking and Brokerage (Primary) 3 Business Description: Keyword: investment bank
Ackrell Capital, LLC
Alderwood Capital LLC
Aquilo Partners, L.P.
Architect Partners
Arena Group, LLC
Atlas Capital IB LLC
Babcock & Brown LP
Baker Pacific, Inc.
Banc of America Securities LLC
Barnard/Montague Capital Advisors
Bay Capital Partners, LLC
Berman Capital, LLC
Bowman/Hanson
Capital Agnostic Partners
Capital Bay Securities
Catapult Advisors LLC
Charles Schwab & Co. Inc.
Concordia Capital Technology Group, Inc.
D'accord Incorporated
Demeter Financial Group, LLC
E*Offering
Eagle Partners, LLC
ES-OP LLC
Financial Technology Partners LLC
First Principles Group
Fortrend International LLC
Fulcrum Securities, LLC
Garage Technology Ventures, Prior to Change in Line of Business
GCA Savvian Advisors, LLC
Gladius Capital Group, LLC
Glass, Lewis & Co., LLC
Gramercy Venture Advisors
Grove Capital Partners, LLC
GrowthPoint Technology Partners, LLC
GTK Partners
Hoefer & Arnett, Inc.
Howell Capital
IDI Associates
Instream Partners LLC
Intelligent Capital, Inc.
Jane Capital Partners LLC
JMP Securities LLC
Linden Advisors
cut off here, you get the point!
If one were to get an analyst job at general real estate corporate, how long and how could they break into RE IB or PE?
Hey,
I just graduated from a top-20 university and am hoping to work at a strong REIT firm in a big Southeastern city this summer, at least as an intern and then segue into a bigger role with time. I am from the area and want to get my feet wet here, but is it easy to pivot to an area like NYC?
Knowledge of one market will not help me much in an entirely different city, so is moving like starting over? How difficult is it to switch markets early on, and is it a wise move? I do plan on earning an MBA with time, so it would it be better to wait until then, go to school in NE, and THEN begin the hunt?
Thanks!
Real Estate Investing Careers (Originally Posted: 05/18/2011)
Aside from being an aspiring monkey, I have a strong interest in real estate development/ investing. Can anyone comment on comp,lifestyle, career progression working at a good RE investing firm?
interested as well, especially development
interested as well what are good development/investing firms?
Bump
.
Comp at development firms suck, but the lifestyle is good. Of course, there isn't much development going on these days. The business is very much boom/bust.
Comp at more core investment vehicles (REITs, institutional REPE shops) is better, but still not great. Don't expect big bonuses, but again the lifestyle isn't bad.
Comp at the more opportunistic REPE shops (BX and the like) is better because the business is more like traditional PE (i.e., the returns and performance hurdles are higher). The lifestyle is obviously more intense. I distinctly remember hearing about Jon Gray skipping his birthday and celebrating it in his office when BX was buying EOP.
Stay tuned, though, as I'm actually working on another guest post for M&I that covers the real estate side of the business.
thanks for the insight, cant wait to read the guest post!
how does comp in corp pe vs. repe compare?
Please check older threads. There are giant developers who hire undergrads at target schools at the analyst level. There are small development/investment GP outfits that hire at the analyst level as well. There are large publicly traded as well as non-traded REITs who hire at the analyst level. There are big funds and small funds that hire at the analyst level. There are lots of ways to break into the 'principal' side of real estate.
At most of the above your comp will be in the 40k to 70k range coming out of college. Lifestyle is good, you will never be working IB hours unless you're at an absolute top-tier fund. Career progression is what you'd expect; you're probably not going to be at the 'MD' level at age 29, and plenty of people go back for their MBA. Comp can be great at the partner level but it's kind of all over the place.
Do you know why they go back for their MBA if they are already at the "MD" level?
How is the pay and promotion progression in the above jobs at the bigger firms?
Depends what you mean by "the bigger firms," because that could mean so many things. At a reputable opp fund, for example, I'd expect pay/progression to be pretty close to that of a similarly sized LBO fund.
By Bigger firm I mean like JLL/Brookfield/Trammel Crowe
And what would the pay/progression be like at a LBO fund/?
I wouldn't expect the entry-level pay to be very impressive at any of those firms, although Brookfield might pay pretty well because they are a large, prestigious, well-capitalized investor based in NYC. NYC being a key factor there.
Check older threads for pay/progression at an LBO/PE fund. All I was trying to say is that an opportunistic real estate fund could potentially pay extremely well. Another way you could probably make great money, if the market comes back to life, is CMBS.
To the other poster, the REOCs wouldn't pay much better either. Just because it's structured that way doesn't mean it's not just another real estate company.
bump
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what about REOCs (or real estate investment and operating companies) jqbuyside?
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