We respect your privacy. Please refer to our full Real Estate Private Equity (REPE): The Definitive Guide
The real estate industry varies tremendously based on the firm, location, and strategy – and the differences in compensation, hours, and work styles reflect that.
Real estate private equity offers some advantages over the traditional “high finance” paths of generalist investment banking and private equity.
But it’s not for everyone, and you must read the fine print closely before buying into this career:
What is Real Estate Private Equity?
Real Estate Private Equity Definition: Real estate private equity (REPE) firms raise capital from outside investors, called Limited Partners (LPs), and then use this capital to acquire and develop properties, operate and improve them, and then sell them to realize a return on their investment.
The outside investors or Limited Partners might include pension funds, endowments, insurance firms, family offices, funds of funds, and high-net-worth individuals.
REPE firms usually focus on commercial real estate – offices, industrial, retail, multifamily, and specialized properties like hotels – rather than residential real estate.
If they do operate in residential real estate, the strategy is usually to buy, hold, and rent out homes to individuals (see: Blackstone).
For more, see our private equity overview.
Real Estate Private Equity vs. REITs vs. Real Estate Operating Companies
Real estate investment trusts (REITs) raise debt and equity continuously in the public markets and then acquire, develop, operate, and sell properties.
REITs must comply with strict requirements about the percentage of real estate-related assets they own, the percentage of net income they distribute in the form of dividends, and the percentage of their revenue that comes from real estate sources.
In exchange for that, they receive favorable tax treatment, such as no corporate income taxes in many countries.
Real estate operating companies (REOCs) are similar, but they do not face the same restrictions and requirements and do not receive the same tax benefits.
Real estate private equity firms differ in the following ways:
- Investors – REPE investors are the Limited Partners whose capital is locked up for a long period as the firm invests. REIT and REOC investors are public shareholders and lenders, and their investments are highly liquid.
- Holding Period – REPE firms plan to acquire or develop properties, hold them for a few years, and then sell them; REITs and REOCs often hold properties indefinitely.
- Regulations – REPE firms, as private investment firms, are lightly regulated and not subject to the same requirements as REITs or even REOCs.
Real Estate Acquisitions vs. Asset Management
Within real estate private equity, there are two distinct roles: Acquisitions and Asset Management.
They’re separate teams at some firms, while others combine them.
Others separate them at some levels of the hierarchy but combine them elsewhere.
The Acquisitions team pursues and analyzes deals, negotiates them, set up the financing, and convinces the decision-makers at the firm to invest in properties.
The Asset Management team executes the business plan that is put in place once the REPE firm has acquired a property. Team members improve the property’s operations and financial performance and fix problems that come up.
The pay ceiling is higher in Acquisitions because the perception is that it’s harder to execute deals than it is to manage properties.
Asset Management is sometimes viewed as more of a “cost center” that gets blamed when deals go poorly, but which also doesn’t receive full credit when deals go well.
However, Asset Management is more stable in terms of compensation and career path because firms always need to manage their properties even if they’re not doing many deals.
Real Estate Private Equity Strategies
You can divide real estate private equity groups by strategy, sector, geography, capital structure, and deal role:
- Strategy – Does the firm acquire only stabilized, mature assets (“Core”)? Does it focus on major renovations or redevelopments (“Value-Added”)? Does it develop or redevelop properties (“Opportunistic”)? Does it buy distressed properties and attempt to turn them around?
- Sector – Multifamily? Industrial? Office? Retail? Hotels? Something else?
- Geography – Continental Europe? The U.K.? East or West Coast of the U.S.? Sunbelt? Texas?
- Capital Structure – Technically, “private equity” means “equity investments,” but some firms label themselves “real estate private equity” and still invest in senior loans, bridge loans, mezzanine, and more.
- Deal Role – Does the firm operate as a General Partner or Limited Partner in deals? In other words, does it contribute a small percentage of equity and run the deal execution and management, or does it contribute most of the equity but take a hands-off role in the deal?
The biggest REPE firms are highly diversified and pursue everything above.
Smaller REPE firms tend to focus on narrower markets in which they have some advantage, based on comparative market analysis.
For example, a boutique REPE firm might focus on value-added multifamily deals in medium-sized cities in the Midwest region of the U.S.
But at a huge firm like Blackstone, that might be a small part of one team’s mandate.
You can think of the main investing strategies, in terms of risk and potential returns, like this:
Top Real Estate Private Equity Firms
The top real estate private equity firms vary from year to year; you should look at the PERE rankings for an updated view.
However, Blackstone, Starwood, and Brookfield are almost always in the top few positions.
Blackstone and Brookfield are gigantic firms that do much more than real estate, while Starwood is the biggest dedicated real estate investment firm.
Of the generalist private equity firms, Carlyle tends to have the second-biggest presence in real estate after Blackstone.
Real Estate Private Equity Jobs: The Full Description
At the junior levels, the work in real estate private equity is similar to the work in normal private equity: deal sourcing, analyzing potential investments, building financial models, conducting due diligence, monitoring the portfolio, fundraising, and preparing investment committee memos.
But everything relates to properties rather than companies, which creates differences.
For example, in-person visits and property tours matter a lot because the numbers can only tell you so much about a building; you need to see it in real life to get the full picture.
Also, on-the-ground logistical issues such as working with construction workers and the on-site maintenance team matter more.
Some days, you’ll crunch numbers in Excel for 10 hours; other days, you might complete property tours, meet a construction crew, and set up conference calls to speak with LPs about a new fund your firm is raising.
People often claim that real estate financial modeling is “easier” than the financial modeling of normal companies in traditional private equity since properties are simpler than companies.
Also, you can automate some of the process using tools like ARGUS.
These claims are sort of true, but it’s more accurate to say that the sources of difficulty in the financial modeling process are different.
For example, in real estate, you’ll often get horribly formatted rent rolls, and you’ll have to spend a lot of time cleaning them up so you can translate the data into ARGUS and Excel.
But in traditional private equity, most companies have reasonable financial statements, so the complexity comes from how you choose to forecast future performance.
As a junior team member, you might expect to spend your time like this at the average firm:
- Property Analysis and Modeling: 33%
- Investment Committee and LP Reports and Memos: 33%
- Marketing, Due Diligence, and Other Meetings: 33%
The Real Estate Private Equity Career Path
…but there are sometimes fewer levels, which is why we didn’t list the “Senior Associate” title.
Also, there are different tracks for the Acquisitions and Asset Management side, and you get promoted up the ladder for the track you’re on.
There are fewer REPE firms than there are normal PE firms, so there are also fewer senior-level roles, and it can be even more difficult to get promoted.
Real Estate Private Equity Salary + Bonus Levels
Compensation in real estate private equity is highly variable, and it tends to be more performance-based than in traditional PE.
Rhodes Associates occasionally publishes compensation reports, and you can find reports on sites like Glassdoor.
If we extrapolate from those sources, the ranges for salaries + bonuses for Acquisition roles, excluding carry, might be:
- Analyst: $100K – $150K
- Associate: $150K – $250K
- VP: $300K – $500K
- Director or SVP: $450K – $700K
- Partner or MD: $750K – $1 million
NOTE: I’m not very confident in these numbers because data from different sources showed big discrepancies. If you have better estimates or sources, feel free to add them.
NOTE 2: Also, note that there is a huge variation in pay among different firms. These compensation numbers correspond more to the “institutionalized” firms (pay at boutique firms and family offices will be lower).
Many firms start giving you a performance-bonus or “finder’s fee” on deals you bring in at the VP level, and some will allow deal participation and carry even for Associates.
Your carry and deal participation will increase as you move up the ladder as well.
On the Asset Management side, pay tends to be lower across the board; expect a 10-20% discount at all levels.
Also, deal participation, carry, and performance-based bonuses are more limited on that side until you become a Partner.
How to Get into Real Estate Private Equity
Unlike investment banking careers or private equity careers, where there are clear steps you must follow, real estate private equity is more of a “Choose your own adventure” game.
Professionals get into the industry from:
- Straight out of undergraduate.
- Real estate investment banking groups at BBs and EBs, as well as industry-specific boutiques like Eastdil.
- Real estate brokerage firms like CBRE and JLL, usually from investment sales roles.
- Commercial real estate lending or real estate debt funds.
- Acquisitions roles at REITs or REOCs.
- Property development roles (sometimes).
- Business schools, if they had a real estate background pre-MBA… or if they do real estate investment banking and then move in from there.
Of these paths, the best ones for breaking into REPE are real estate investment banking or real estate brokerage.
Joining straight out of undergrad brings with it the normal downsides: less flexibility, less of a network, less training, etc.
And while it’s possible to break in from the other roles above, you’ll often need other jobs before you can win those roles – so they’re less direct paths.
For example, you’re probably not going to win an Acquisitions role at a REIT right out of undergrad; you’d need some other full-time experience first.
To get into the industry at any level, you should:
- Complete real estate-related internships, even if they’re not directly related to investing – industry-specific knowledge is incredibly important. You’ll learn more by managing tenants in an apartment building than you ever would in a class.
- Join industry associations like the Urban Land Institute (ULI), the Commercial Real Estate Development Association (NAIOP), International Council of Shopping Centers (ICSC), and Young Real Estate Professionals (YREP).
- Network, network, and network some more, using our informational interview tips and email templates.
- Focus on learning asset-level skills, such as how to read rent rolls, interpret the real estate pro-forma, analyze deals and market data, and make recommendations based on financial information.
Outside of the biggest firms, the recruiting process in real estate tends to be ad hoc, and firms hire “as needed.”
Therefore, you must do everything to be top of mind at firms in your area when a spot opens up.
One final note: the “top schools” in real estate are somewhat different, and you don’t necessarily need an Ivy League or Oxbridge degree to get in.
For example, in the U.S., schools like USC, UC Berkeley, and the University of Wisconsin-Madison are top choices due to their alumni networks in the industry.
Other strong choices are Northwestern, UPenn, and NYU.
These are all good schools, but they’re not the best overall universities in the country.
The Real Estate Private Equity Interview Process
They’ll ask a mix of fit, technical, and industry/market questions, and you’ll advance up to more senior team members, such as the Director of Acquisitions or Asset Management, after this first round.
Once you’ve met everyone on the team, you’ll most likely receive a case study.
It’s usually based on Excel, a written property description, and a “Should we invest?” question at the end.
However, they could also test something like ARGUS, or the case study could be more qualitative.
If it’s an Excel-based case study, the possibilities are similar to the ones in private equity interviews:
- Short/Simple On-Site Test – This might be like a 30- or 60-minute paper LBO where you have to enter the assumptions, make the calculations, and answer the questions quickly.
- 1-3-Hour On-Site Test – They might give you a more detailed prompt, a blank Excel template, and ask you to complete it and answer the questions. The model will require more detailed assumptions for individual tenants, scenarios, and possibly quarterly or monthly projections.
- Take-Home Case Study – With this one, you’ll spend a lot more time on market research so you can form an investment thesis. Your model won’t necessarily be more complicated, but you’ll need more data and outside research to back up your claims.
If you want case study practice, our Real Estate Financial Modeling course gives you examples of the tests above with the full solutions:
Real Estate Modeling
Master financial modeling for real estate development and private equity with 6 short case studies and 5 in-depth ones based on real properties from around the world.
learn moreYou could also get a sense of the models by looking at the example pro-forma on this site.
If you do well in interviews, everyone likes you, and you pass the case study with a reasonable score, you should expect a job offer soon.
In Europe and the broader EMEA region, the order is often reversed, and they might start with the case study or modeling test.
The logic is that if financial modeling skills are required for the role, there’s no point in conducting multiple interviews until you prove that you have the skills.
Real Estate Private Equity Interview Questions And Answers
Interview questions in this industry span a wide range.
On one extreme, interviewers could stick to investment banking-style questions about fit, deal/client experience, and even finance, accounting, and valuation/DCF technical questions.
On the other extreme, they could go “all in” on real estate.
The most likely scenario is a mix of both, especially if you’re joining from investment banking, traditional private equity, or something other than a pure real estate role.
For the standard behavioral and technical questions, please see our guide to investment banking interview questions and answers.
The rest of this article will focus on questions specific to real estate:
Question Category #1: High-Level Concepts in Real Estate
Why real estate? OR Why would you invest in real estate?
It’s a very tangible asset class that’s rooted in real cash flows, not pie-in-the-sky future assumptions, and it combines financial analysis with real-life, on-the-ground knowledge. It’s also one of the oldest asset classes and will likely be around in some form forever.
For investors, real estate combines elements of Equities and Fixed Income and allows for strategies that are somewhere in between them, or even above/below them in terms of risk and potential returns.
There are also many investment options, from individual properties to loans to REITs to real estate funds to crowdfunding, and they all have their benefits and drawbacks.
What are the main property types, and how do they differ from each other?
The main categories are office, industrial, retail, and multifamily properties.
Office, industrial, and retail properties have businesses as tenants and offer long-term leases of 5-10 years. The lease terms are highly variable and often include different rental rates, rental escalations, free months of rent, expense reimbursements, and tenant improvements.
Industrial properties can be built more quickly and cheaply and tend to have fewer tenants, while office and retail properties take more time and money and tend to have more tenants.
Multifamily properties have individuals as tenants and offer short-term leases (usually 1 year), with very similar terms for all tenants.
“Other” property types include hotels, storage, data centers, healthcare facilities, condominiums, and more; they also differ based on the tenants and leases or ownership.
What are the main strategies that private equity firms use to invest in real estate?
The main strategies are “Core” (buy an existing, stabilized property, change very little, and sell it again), “Core-Plus” (similar but make minor upgrades), “Value-Added” (acquire an existing property, renovate or greatly improve it, and then sell it again), and “Opportunistic” (develop or re-develop a property and then sell it).
Core real estate offers the lowest risk and potential returns, Core-Plus is slightly higher, Value-Added is higher, and Opportunistic offers the highest risk and potential returns.
What is Net Operating Income (NOI)? What about Cap Rates?
Net Operating Income, or NOI, represents the property’s cash flow from operations on a capital structure-neutral basis before most of the capital costs (disagreements over the Reserves).
NOI lets you compare and value properties and analyze acquisitions and developments; it’s similar to EBITDA for normal companies, but not the same due to the treatment of Reserves.
The Cap Rate equals the property’s stabilized forward NOI divided by its “price” (asking price or actual sale price); lower Cap Rates mean higher valuations, and higher Cap Rates mean lower valuations.
Question Category #2: Leases, the Real Estate Pro-Forma, and Projections
Walk me through a property pro-forma and explain the main line items.
See our comprehensive guide to the real estate pro-forma.
How do Triple Net (NNN), Double Net (NN), Single Net (N), and Full-Service or “Gross” Leases differ?
With NNN leases, the tenant pays Rent, plus its proportional share of Property Taxes + Insurance + Maintenance/Utilities; with NN leases, it’s just Rent + Property Taxes + Insurance, and with N leases, it’s just Rent + Property Taxes.
Full-Service Leases require Rent but no expense reimbursements. They tend to have the highest rent since the tenant does not reimburse the owner directly for the other expenses.
A tenant occupies 5,000 square feet of an office building (20% of total space) and pays rent of $50 per square foot per year, which is the same as market rates in the area.
This tenant receives 3 months of free rent upon move-in, it’s on a Triple Net Lease, and the total operating expenses and property taxes for the entire building are $500,000 per year.
Calculate the Year 1 Effective Gross Income for the tenant, assuming a January 1 move-in.
The Base Rental Income is 5,000 * $50 = $250,000. In Year 1, this tenant receives 3 months of free rent, which is 25% of the year, so the Concessions & Free Rent line is $250,000 * 25% = $62,500.
The Expense Reimbursements for this tenant are 20% * $500,000 = $100,000, so its EGI is ($250,000 – $62,500 + $100,000) = $287,500.
Question Category #3: Specific Sectors: Multifamily, Office, Retail, Industrial, and Hotel Properties
What are the main financial differences between multifamily properties and office, retail, or industrial properties?
The pro-forma numbers tend to be “lumpier” for office, retail, and industrial properties because they have fewer tenants with more customized leases, and there are often long periods of downtime in between tenants and significant concessions when new tenants move in.
Capital costs such as Leasing Commissions and Tenant Improvements are also far more significant, which reduces cash flow for these properties.
These items are much lower for multifamily properties, but unit turnover is much higher, and they may have more staffing and sales & marketing needs as a result.
Also, rent, occupancy rates, and expenses for multifamily properties tend to change much more quickly if there’s a downturn because the leases are short-term.
Walk me through a hotel pro-forma.
Revenue split into Room Revenue, Food & Beverage, and “Other,” which includes fees from Parking, Telecom Services, and Events.
Then, there are Departmental Expenses that match the revenue categories, Undistributed Expenses for items that don’t match revenue categories, such as Sales & Marketing and Repairs & Maintenance, and Fixed Expenses, such as Insurance and Property Taxes.
NOI = Revenue – Departmental Expenses – Undistributed Expenses – Fixed Expenses, and then you subtract Capital Costs to get Adjusted NOI.
Question Category #4: Development Deals
Walk me through a real estate development model.
First, you make assumptions for the land required, the construction costs, and the Debt and Equity to use. Then, you project the costs, initially draw on Equity to pay for them, switch to the Construction Loan past a certain point, and draw on the loan as needed, capitalizing the interest and loan fees.
When construction finishes, you assume a refinancing, project the lease-up period for individual tenants, and then build a Pro-Forma with debt service based on the Permanent Loan.
Then, you assume the property is sold in the future based on its NOI and a range of Cap Rates, and you calculate the IRR to Equity Investors.
Why do you assume that loan fees and interest are capitalized during the development period? Can’t you set aside a reserve for them in the beginning?
You assume they are capitalized because the property will not have cash flow to pay for them when construction is taking place.
You could pay extra for an upfront reserve, but doing so will reduce the IRR and multiple because the Equity Investors will have to contribute more in the beginning.
Why do you assume that construction loans are refinanced and replaced with permanent loans when the construction finishes?
Construction Loans are riskier and, therefore, have higher interest rates, so they attract different lenders than permanent loans for stabilized properties. And lenders want underlying assets that match their risk tolerance.
Equity Investors also like commercial real estate loan refinancings because they boost their returns if the property’s value has increased.
The property can take on additional Debt once it stabilizes, so (Total New Debt – Old Repaid Debt) gets distributed to the Equity Investors as a cash inflow.
Question Category #5: Acquisition Deals
Walk me through a property acquisition model.
You first assume a purchase price based on a Cap Rate and the property’s NOI, and you assume certain percentages of Debt and Equity to fund the deal.
You then make assumptions for the property’s revenue and expenses, sometimes projecting individual tenant leases (for office/retail/industrial properties) and sometimes using higher-level assumptions such as the average rent or ADR (multifamily and hotels).
You forecast the Pro-Forma over several years, project the Debt Service, and you assume an exit in the future based on a Cap Rate and the property’s stabilized forward NOI.
Finally, you calculate the returns based on the initial Equity contribution, the Cash Flows to Equity, and the Net Proceeds after Debt repayment upon exit.
You acquire a multifamily property for $10 million at a Going-In Cap Rate of 5%, LTV of 70%, and Debt with a 5% Interest Rate and a 3-year interest-only period followed by 2 years of 2% principal repayments.
NOI stays the same throughout the holding period, but you sell the property for a Cap Rate of 4% in Year 5. What is the approximate IRR?
The NOI each year is $10 million * 5% = $500K, and you use $7 million of Debt and $3 million of Equity.
Assuming no capital costs, Cash Flow to Equity in Years 1 to 3 = $500K – $7 million * 5% = $150K.
In Years 4 and 5, Cash Flow to Equity is approximately $150K – $7 million * 2% = $10K.
In Year 5, you sell the property for $500K / 4% = $12.5 million and must repay ~$6.7 million of remaining Debt, resulting in just under $6 million in Equity Proceeds ($5.78 million exactly).
You invested $3 million and earned back around $6.2 million if you count the Cash Flow to Equity in Years 1 – 5 and the ~$5.8 million in Equity Proceeds at the end.
This is just over a 2x multiple over 5 years, so we’d approximate the IRR as “slightly above 15%” or “between 15% and 20%.”
If you run the numbers in Excel, the exact IRR is 17%.
Question Category #6: Real Estate Valuation
How do you value a property? What are the trade-offs of these methodologies?
Cap Rates, DCF Analysis, and the Replacement Cost methodology.
Cap Rates are simple to apply, but they don’t work as well in smaller regions with more limited data; people also disagree about how to calculate NOI.
The DCF model is the most theoretically correct methodology, but it’s based on far-in-the-future assumptions and is less useful for stabilized properties that don’t change much.
Replacement Cost estimates the cost of reconstructing the entire building from scratch today and compares it to the property’s asking price.
It can be more grounded in reality than the DCF or Cap Rates, but different developers will give wildly different cost estimates, so it’s often used as more of a “sanity check.”
You are analyzing two office buildings on the same street in Chicago. The buildings have the same rentable square feet, are the same age, and are both “Class A.” Why might one building sell for a lower Cap Rate than the other?
The more valuable building, i.e., the one selling for a lower Cap Rate, might have higher-quality tenants, more favorable lease terms, a higher occupancy rate, or lower ongoing capital costs.
How do you calculate the Discount Rate in a property DCF?
The Cost of Equity is based on the equity returns the investors are targeting in this “deal class” (e.g., Core vs. Core-Plus vs. Value-Added vs. Opportunistic), and the Cost of Debt is linked to the coupon rate on Debt. Discount Rate = Cost of Equity * % Equity + Cost of Debt * % Debt… and if there’s Preferred Stock or anything else, you also factor those in.
Question Category #7: Waterfall Schedules
What is the waterfall returns schedule, and why is it widely used in real estate?
See our video tutorial on the real estate waterfall model.
The waterfall schedule allows the Equity Proceeds from a deal to be split up in a non-proportional way if the deal performs well enough.
For example, if the Developers contribute 20% of the Equity, normally they would receive 20% of the Equity Proceeds.
But a waterfall schedule lets them receive 20% up to a certain IRR and then 30% or 40% of the Equity Proceeds above that IRR if the deal performs well enough.
This structure incentivizes the Developers or Operators to perform while taking away little from the Investors or LPs.
How do Preferred and Catch-Up Returns work in waterfall models?
Preferred Returns give one group, such as the Investors or Limited Partners, 100% of the positive cash flows from the property until they reach a specific Equity IRR or Multiple, such as 10% or 1.0x.
Then, the other group(s) may receive Catch-Up Returns that “catch them up” to that same Equity IRR or Multiple, which means that the other group(s) will receive 100% of the next available positive cash flows up to that level.
Once these thresholds are reached, the Equity Proceeds will be split based on percentages.
Question Category #8: Credit Analysis
How do Senior Loans and Mezzanine differ, and why do many deals use both?
Senior Loans are secured Debt where the property acts as collateral, they tend to have the lowest interest rates (either fixed or floating), and they often have amortization periods that far exceed their maturities (e.g., 30-year amortization vs. 10-year maturity).
Senior Loans fund property acquisitions up to a certain LTV that lenders will accept, such as 60% or 70%. If the sponsor wants to go beyond that, it will have to use Mezzanine, which is unsecured Debt that is junior to Senior Loans.
Mezzanine has higher, fixed interest rates, either paid in cash or accrued to the loan principal, amortization is rare, and the maturity is almost always shorter than the maturity of Senior Loans.
How can you determine the appropriate Loan-to-Value (LTV) or Loan-to-Cost (LTC) ratio for a deal?
You look at the LTV or LTC for similar, recent deals in the market and use something in that range.
You could also size the Debt based on the credit stats the lender is seeking, such as a minimum Debt Service Coverage Ratio of 1.2x and a minimum Interest Coverage Ratio of 2.0x.
Suppose that the Debt Service Coverage Ratio (DSCR) is 1.1x, the Debt Yield is 8%, and the Going-In Cap Rate is 7%. What does this tell you about the deal?
The deal uses too much leverage because the DSCR is quite low – lenders usually want to see at least 1.2x to 1.4x so there’s enough “cushion” if something goes wrong.
Also, the Debt Yield (NOI / Initial Debt Balance) and Cap Rate (NOI / Initial Purchase Price) are very close, which means additional risk.
If the Cap Rate ever rises above the Debt Yield, you’re in trouble because then the Debt is worth more than the property itself (i.e., you’re “underwater”).
Is ARGUS a Requirement for Real Estate Interviews?
The short answer is “not necessarily, but it helps to know the basics – and it doesn’t take that much time/effort to learn.”
ARGUS is useful for creating the pro-forma for office, retail, and industrial properties that have many tenants with different lease terms; it’s much easier than using Excel.
You don’t “need it” if you make some simplifying assumptions about leases, but it can be quite important on the job if your firm focuses on office/retail/industrial properties.
ARGUS is an expensive program, so I don’t recommend purchasing it outright.
But if you can complete some training via an industry association or another group, it’s well worth it.
Real Estate Private Equity Exit Opportunities
You stay in the role for a few years, learn a lot and get paid well, but then you decide it’s not for you – even though most of your colleagues plan to stay in it and move up the ladder.
What happens next?
Those who leave the industry may start their own firms or become “real estate entrepreneurs” with their own portfolios.
It’s more feasible to start a real estate investing business than it is to start a private equity firm because less capital is required.
It’s also possible to move into a generalist private equity role, but you need to do so relatively early – i.e., after 1-2 years on the job, not 5+ years.
You could also move into other real estate opportunities, such as real estate lending, real estate investment banking, or real estate brokerage.
Finally, many tech startups are looking to change or disrupt the industry, and there’s high demand for RE professionals who are also interested in tech.
Real Estate Private Equity: Pros and Cons
We like to sum up everything at the end of our “career path” articles, so here’s the summary for real estate private equity:
Benefits / Advantages:
- High salaries and bonuses at all levels, though they are highly variable and firm-dependent as well.
- More interesting work than investment banking, brokerage, and other sell-side roles.
- Significantly better hours than investment banking and private equity (often 50-60 per week), and a more predictable schedule outside of major deals.
- It’s feasible to get in without a top-tier university or bank name on your resume; hustle outweighs pedigree. You can be a late starter, a career changer, or do something unrelated and still break in.
- The industry is unlikely to be disrupted by technology because the human element is a huge part of real estate.
Drawbacks / Disadvantages:
- It is a small industry, which means it can be tough to find openings and to advance once you’re in.
- If you stay in REPE too long, you will get pigeonholed, making it difficult to move into non-real-estate roles.
- Compensation is lower than in traditional PE and also highly variable based on your fund’s performance. Yes, the compensation ranges above seem similar at first glance, but I have little faith in those numbers, especially for senior-level professionals.
- You could end up working on a lot of logistical issues (e.g., fixing leaky roofs) rather than financial/deal analysis, depending on the firm and your role.
- You won’t gain the same network or structured training that you would at a large bank or brokerage firm.
Real estate private equity is a specialized industry, but it can be a great side door or back door into finance.
You’ll earn less than in some other front-office roles, but you’ll have a better life and plenty of exit opportunities if you want to stay in real estate.
Just make sure you read the fine print closely before buying into this career – even if you’re planning on a “quick flip.”
Want more?
If you liked this article, you might be interested in:
- Infrastructure Private Equity: The Definitive Guide
- Private Equity Salary, Bonus, and Carried Interest Levels: The Full Guide
- Value-Add Real Estate: What Makes It Different, and Why You Should Invest – Maybe.
- Private Placement Agent Jobs: Industry Overview and Recruiting
- Real Estate Financial Modeling (REFM): The Ultimate Guide, With Templates & Examples
- How to Conquer the Super-Early Investment Banking Recruiting Timeline and Win Offers – Even If You’re at a Non-Target University
- Family Office Private Equity: The Best Pathway into Finance for Non-Traditional Candidates?
- What to Expect in Real Estate Private Equity in London When You Join Right Out of Undergrad
About the Author
Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys lifting weights, running, traveling, obsessively watching TV shows, and defeating Sauron.
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Would you take MM PE (Thomas H Lee, Harvest, Leonard Green etc.) or Megafund REPE (TPG, Bain etc.)
Which has better long-term prospects (lateral opps, growth) as well as comp potential?
Depends completely on what you value more. The compensation potential is always higher at the bigger fund, but burnout, churn, and hours are also worse as well. Only a small percentage actually advance post the Associate / Senior Associate levels (don’t know the exact percentage, but lower than the % that advance beyond Associate in IB most likely).
So if you want more of a sustainable career with a higher chance of lasting / getting promoted but lower compensation, the MM PE offer is better. If you just want the best brand and highest initial compensation but murkier advancement prospects, the mega-fund is better.
Hi Brian,
This article was really interesting and informative. I have a quick question. If you wanted to move into PE from REPE, do you think Acquisition or Asset Management would be more beneficial?
Probably an Acquisitions role because executing deals has more similarities between RE and non-RE roles than managing properties or portfolio companies.
Hello Brian,
I am currently working in corporate banking but want to ultimately work in REPE. I just received an offer for an analyst position in LIHTC syndications. However, I am afraid of being pigeonholed in LIHTC. Would you suggest not taking this offer and keep applying to other roles?
Thanks!
I do not even know what “LIHTC” stands for (had to Google it), so don’t go by me, but at a quick glance, yes, it seems quite specialized and I would not recommend leaving corporate banking for that.
My question is this one: In your real estate funds structure you say something like this( example) : Total amount of the deal : 100.000 Equity: 50.000 in the following way ( LP 90% and Sponsor 10%) and Debt 50.000. My question is why don´t you prefer, as Sponsor, to assume that debt (50.000) and to increase your percentage in the fund…even higher than the LP…Thank you a lot.
Sorry, but I don’t understand your question (please clarify or give a different example). If you’re asking why the Sponsor does not invest more than 10%, they don’t have the capital to do so – their own personal funds are limited, which is the whole reason why PE funds are primarily capital raised from Limited Partners such as endowments, pensions, etc. You could theoretically have a Sponsor that invests a lot more or splits up deals differently, but it’s not the norm for most standard PE firms.
Hi,
I currently have an offer at a shop in Florida but they only invest in core multifamily apartments. I am afraid that I am joining a firm that is subsector focused and don’t know if I should target a fund that is more generalized. I would like to eventually return to the northeast but have heard it’ll be tough to come back. Do you have any advice?
It’s hard to answer this question because I don’t know your background or other available options. If you can interview around and win an offer quickly (within a few months), sure, maybe hold out for a more generalist fund.
If you don’t have anything that looks likely in the near term and you don’t have much work experience, I would recommend accepting this offer. While multifamily is technically “subsector focused,” it’s one of the largest classes within real estate and isn’t nearly as specialized as other verticals. Moving around real estate isn’t that difficult once you already have experience at one type of investment firm or strategy.
Hi Brian,
I currently work at a financing/lending role for RMBS portfolios in a big bank, and I’m looking for potential exits out of structured finance.
Is it realistic to pivot from RMBS lending to REPE, or to direct lending/private debt fund? If not, would an MBA help me with this pivot?
REPE might be possible but is a bit of a stretch because the skill sets are quite different. Direct lending / private debt is more realistic.
An MBA might be helpful, but it depends on how long you’ve been in the role. MBAs are generally more useful for people making a big career change after 3-5 years and less useful for moving into adjacent areas in finance.
Hi Brian, I have been reading many of your posts. Very informative, helpful, and well written work. I have been trying to transition into an REPE or brokerage role, specifically Asset Management. I currently work as a Sr. Analyst in FP&A in marketing & advertising (2 years), and worked 2 years in a property management company as an Account Executive (accounting/client analysis role). I am 25 & am just completed my first semester for my MBA. At this point what would be the best course of action, I haven’t had luck with analyst roles. It seems the only likely route would be to work on a Masters in Real Estate, or just completing my MBA and applying for an Associate role. Any suggestions?
Thanks!
If you already have 4 years of experience at this point, you probably want to go the MBA route and apply for Associate roles at REPE firms, RE lending firms, or RE brokerage firms.
Hi Brian,
I have been working at a boutique Real Estate Private Equity firm in Toronto, Canada for over three years and I think your analysis of what the role encompasses as well as the interview questions is quite accurate. Notwithstanding your disclaimer on the compensation referenced, I do believe that the actual salary figures may be a tad lower than quoted in your article. However, note that I am based out of Canada and I suspect that wages across the board in Canada are lower than in the US.
Thanks for the great work, Brian!
Thanks. Yes, compensation is lower in Canada across almost every job.
Hi Brian,
Thanks for a brilliant contents.
I recently start working as a assistant development manager at Westminster City Council in London right after my graduation in MSc Economics with aims of breaking into REPE after this. I already have done an internship at IB but always wanted to work in Alternative especially Real Estate. I am reaching out to people in REPE to build a good network in the industry to join after a year of being in property development alongside my studies for CFA and CAIA simultaneously. Do you think I have a good strategy ? FYI. I am 25
Thanks for your time
Yes, that sounds fine.
Hi! Love this article. I am a current undergad who was able to break into REPE for internships. I have had one internship at a tier 2/3 firm with the acquisitions team, and will be interning at a tier 1 firm this upcoming summer in AM. I come from a target school, high GPA. I am wondering if you think applying to early deferral MBA program are worth it/getting an MBA in general.
Thanks in advance!
If you have the option of working in REPE directly out of undergrad and are not interested in anything else, I don’t think an MBA is worth it. MBAs are usually only worth it for people who want to change careers or who missed the recruiting boat the first time around for roles like IB, PE, consulting, etc.
Hi Brian,
Hi Brian,
Many thanks for the great article, very helpful indeed.
I’m currently in an AM role +5 years at a brokerage (CBRE, JLL type) in the hotels team and am looking to do an Executive MBA (top tier UK/EU) and then transition into RE PE. UK and Europe are possible as I’m currently based there and speak multiple European languages. What would your advice be in terms of focus for the transition and do you believe the MBA could help straight away or further down the career path in RE PE? The career seems the perfect fit for me as I will not want to stay at a brokerage indefinitely. Many thanks in advance, Brian
I’m not really sure why you need an MBA instead of just networking to move in directly. MBAs are generally best for people making total career changes, such as engineers moving into investment banking or something similar. I wouldn’t recommend an MBA at all unless you have already been networking for REPE roles for 6+ months and haven’t gained much traction yet.
Brian – Great article.
I’ve spent 10+ years working in Property Development (Acquisition, Delivery, Disposal), and have recently taken a sabbatical to complete a Masters in RE Investment and Finance with a view to moving into PE. The points ahead helped clarify exactly where I want to go (Value-Add/Opportunistic).
However, I’m interested in why you note Property Development roles as, ‘sometimes’? Are there perceptions of this experience, or other barriers to entry I should be aware of when I start to look at roles?
The problem is that REPE firms are generally not involved with the on-the-ground work of property development. Even if they do development deals, REPE firms are generally higher level and look at them more from the financial perspective than the actual construction. So it depends a bit on what you did, specifically, but you could still get in, especially if you have another degree already.
Thank you for the awesome article.
I am now working for around 10 months in a mid-size REPE fund in Germany (AUM: c.€2.5bn). I find myself at the flexing point if I want to pivot to traditional PE given that 1-2 years in REPE is the golden time frame and I am about to enter my late 20s.
My background is relatively unusual. I worked around 2 year full-time in East Asia at a British middle market bank focusing on selling bonds to HNWIs after graduate from university, and then decided to leave my hometown for a better career prospect. I did a BB IBD summer analyst in country coverage before I started my LBS master and did another BB ECM summer analyst in London next year. I received a full-time offer for HK office (I am native in Mandarin), but I didn’t want to take the return offer concerning the political situation. I tried my luck in IBD analyst role in London until my student visa expired in Dec 2020 but cannot secure a role after getting into several final rounds. And when I was about to give up job-hunting and packed my suitcase for moving to HK, I got my current position through personal network.
What I did in my current role is also not so typical. I spent my 50% of my time on corporate development matters, which is not directly related to real estate – working with IB ECM on firm-level private placement, talking to GP stake investors, M&A of other asset managers, etc. In the first 6 months, I also spent some time on a new fund setup (building the fund model and preparing the marketing materials) and afterwards doing fundraising for all the funds in our firm, mainly focusing on Asian LPs.
I somehow find my current role interesting, but I don’t want to stay here forever. I still want to go to traditional PE as 1) I somehow missing seeing different sectors rather than just real estate, 2) my end goal is to be an investment professional in family office so a holistic experience in various asset classes I think will be a plus
For all the possible paths I could think of, I am wondering which one is the most viable or I should definitely doing something else:
1. Target middle market fund for IR/fundraising roles or even investment roles directly
2. Switch to real estate arm for mega PE and then working on internal transfer
3. Go to fund placement arm in IB (PJT Park Hills, Lazard private capital advisory…etc.) and either switch to IBD or trying to break into PE from there
4. Break into Tier 1 consulting focusing on DD and PE cases and going from there
I find the first might be the most viable one as most of head-hunters approach me for IR/fundraising roles, and after I express my preference, some of them introduce me for investment role in local PE firms. However, for local German PE firm, I cannot fully work in German now, so it is a deal-breaker. I probably need another 1-2 year to confidently work in German.
I don’t consider doing another degree as I already did master, but I am also wondering if CAIA helps.
Thank you very much for your sharing again!
If your goal is to move into traditional PE, you should focus on that. I’m not really sure how any of these options help you directly because fund placement/IR/fundraising are all quite different than traditional PE deal roles (and consulting is even more different).
I would focus on mid-size and smaller PE firms that invest in companies with some exposure to real estate, such as consumer/retail companies with large property portfolios, and pitch yourself as being useful due to your understanding of RE and how that affects their valuations.
With the German language issue, I’m not sure what you can do other than apply to roles in London or HK or somewhere else where it will not be an issue. I don’t think the CAIA or other certifications will help here.
Thank you very much for your reply. I will focus on recruiting for PE directly
I cannot decide between Real estate private equity or infrastructure private equity. Is there anything i should consider when deciding between these two assets classes? Which would you suggest i choose if i still cannot decide? Is the pay generally better or worse in either of these asset classes? (Though understand this is very much fund dependent)
If you can’t decide, pick real estate because it’s a broader industry with more adjacent roles that you can move into with enough RE experience in one specific area within it. I don’t think pay is that much different based on the compensation reports.
would you mind providing example of some of these “adjacent” examples you mention that aren’t available if you went down the infra path?
There are examples here: https://mergersandinquisitions.com/commercial-real-estate/
How should I transition out from RE PE to general PE? Currently in RE PE
The best idea would probably be to find a PE firm that works with companies in sectors that have a lot of exposure to real estate, even if they are not actually REITs, REOCs, gaming/hotel companies, etc. For example, find a PE firm that invests in consumer/retail companies and helps them optimize their value with sale-leaseback transactions or by otherwise changing around their property portfolios. And pitch yourself as an RE deal expert who could help with that part of the deal process and also expand to eventually cover everything else these non-RE companies do.
Extremely informative article! I have a question for you, I’m a somewhat recent grad who got a degree in Civil Engineering, and am working in construction at one of the top GC’s in the US. Since I started I have always thought I’d love to break into the developer side, but as my knowledge of the industry has increased I have now learned about the REPE side of things, and I will say my interest has been piqued. How feasible would it be for someone like me to break into this industry if I learned the ins and outs as best I could and did the necessary networking without going to Business school? I ideally want to avoid getting an MBA as financially it is a big hurdle, but it is something I have been kicking around in my head honestly ever since around my junior year of college. Anyways let me know what you think of my possibilities of breaking into REPE from Construction Management.
I think it would be difficult to move directly from construction into REPE. You would probably need something more relevant in between first, such as a lending role, a brokerage or operations role, or something else like that.
Great article and insight! Would it be easier to transition into REPE from a Lending Role -underwriting analyst (W&D, Berkadia) or a valuation and advisory role (CBRE, JLL)?
Thanks. Probably about the same.
Thanks for the great article!
Do you think there will be more corporate-level (entity-level, platform) deals at big REPE? Such as privatization of REITs, acquisition of real estate companies.
As an IBD associate in my mid-30s, I love real estate and it seems that REPE is a practical option now compared with corporate PE. Will my age be a huge obstacle if I try to switch from REPE to corporate PE in 2 years? What can I do to increase the possibilities? Network and more corporate-level deals?
Thank you in advance!
It’s possible, but I don’t think any REPE firms have completed buyouts of REITs, as REIT LBOs are very rare anyway. Gaming/lodging buyouts are usually done by more general groups as well. Age matters less than # of years of previous work experience. All you can really do is network more and work on non-RE deals as well.
Thank you for the reply!
Agree that there are not so many LBO of REITs. I think Blackstone is quite active in this area (the acquisition of Equity Office Properties in 2007?).
Besides, a recent case is that Starwood Capital launched an unsolicited tender offer on a J-REIT (http://www.invesco-reit.co.jp/file/en-news-50106a4c6742e83a9d09be8b36a7ed1d3e29f2eb.pdf)
Great article and write-up Brian.
I worked at a REPE as an investments analyst for two years until COVID-19 caused severe distress to our portfolio since many units are in the class-C space (nearly LIHTC, but unfortunately not subsidized) and we could not evict tenants. – We’re talking 95% physical occupancy here and now under 75% economic occupancy. Therefore, we put all acquisitions on hold for six months, delayed distributions to our investors, and our $1B target for equity fundraising turned into a $100MM target instead.
Now I’ve found myself unemployed along with my boss, the former VP of acquisitons. There were two VPs at our fund, an associate, and myself. (Not enough deal flow to support a team of 4). I would caution anyone going into an acquisitions role in real estate to make sure he/she knows what they’re getting into. Every firm is different, and some can go under when times get tough.
On the other hand, I am thinking about lateraling into a senior analyst role at a brokerage given I have significant experience underwriting deals, creating pitchbooks, looking at properties, etc.
My question would be does this make sense from a career standpoint? Or would I be better off getting back into acquisitions or going into IB where a lot of my friends and sister work?
I feel like my personality would fit brokerage, given I’m very extroverted and a good closer, but obviously I’ll be taking some sort of a haircut in terms of comp in exchange for upside a few years down the road. Would graduate school make any sense?
To be honest my overall goal is starting a hedgefund with real estate investments as a major component and I’ve spent even more time trading futures and selling options than I ever have spent modeling deals.
Thanks for the help!
Sorry to hear that. Going from REPE to a brokerage firm doesn’t make sense in terms of pay/prestige/exit opportunities, but it may make sense if you want somewhat better work/life balance and or a different type of work (more sales and less analysis/deals). IB or acquisitions would make more sense if you want to continue with your old role, at the expense of a much worse lifestyle (at least on the IB side).
If you want to start your own hedge fund that focuses on real estate, why not just go to a RE-focused HF directly, or work in real estate IB and use that experience to get in? You’re going to need HF experience if you want to start your own anyway (personal accounts don’t really count).
Hi Brian,
Thanks for the amazing article – think I must have read this thrice: the first time being when I was binging everything on this site before I recruited for a summer internship, the second when I got my return offer from this BB IBD internship and thought: hmm, I’m into fancy buildings so why not look into RE finance jobs, and the third being now, when I am 4 months into my full time career at the FSG of this BB bank, loathing a huge chunk of the day-to-day as emails and messages permeate every breathing hour. I took time to reflect what I’m passionate about and after many YouTube videos in RE investing (not Tai Lopez), talks with my mentor with RE businesses across a few countries, and reading up great articles like this one, I decided that I want to give this pivoting into RE thing a shot.
As I’m pretty new to the bank, I’ve not executed any RE deals (there are deals for businesses in adjacent sub-sectors). Just curious as to whether you’d think it’s feasible to break into REPE coming from a FSG rather than RE background in investment banking, considering that RE deal experiences may be rare going forward. Do you think experience in dealing with PEs in a BB bank and some good interview prep will cut it?
Potentially, yes, but if you want to do that, you’re going to need to learn a lot of the lingo and analysis and industry trends and so on independently, and spin your deals into sounding RE-related even when they’re not. It’s not the worst background for RE jobs, but is less ideal than more closely related groups like consumer/retail.
Hi Brian,
I am at a crossroad. I am in a deal position at a boutique fund with currently 0 dry powder. I have been offered a role at a much larger fund, with institutional backing, but in a portfolio analyst role.
I am concerned that by becoming a portfolio analyst I am giving up a deal position, but by staying, I am concerned that no deals will be done. I am two years into my career.
I guess the general question is, is the step from Portfolio Analyst to acquisition analyst likely (or possible) to happen once I cross over?
Do you have any tips?
Thanks
I think you can do it since you’ve already had this deal position at the boutique fund. Just say that you switched to gain better experience since your fund wasn’t doing any deals and seemed to have little on the horizon, but ultimately you want to work on deals rather than analyze existing assets. It shouldn’t be that difficult to move around internally.
Hey Brian, I found a study on PERE compensation from 2016 that should offer some more concrete numbers. Your estimates weren’t too far off. Great article by the way! It’s a review of all the things I did during my internship at an RE investment firm, and a great refresher for future interviews.
Link to the study: http://www.rhodesassociates.com/wp-content/uploads/2016/12/Compensation_Study_2016_Rhodes_Associates-NYPEN.pdf
Thanks for sharing that
Dear Brian,
I was laid off from my Analyst-I role at a Tech-focused boutique where I had been working for about 10 months. Dealflow had dried up and the pandemic gave them a reason to lay off about 20% of their workforce.
After multiple interviews and hiring freezes in the last five months, I have now joined the valuation team of a Proptech startup. The role involves valuing different types of real estate (mostly residential) using different methodologies including cash-flow based modelling and ad-hoc market research.
Is it realistic to work here for a year, build up better sector knowledge/network and then try for an Acquisitions role at a REPE? Or are there other roles in CRE that would be better suited for me?
I am not completely ruling out the possibility of trying for M&A again in the future but being in my late 20’s I am not sure if re-doing an A-1 stint again is the best choice.
Also wanted to add a huge thank you – the Investment Banking Interview Guide and Fundamentals courses had been incredibly helpful and helped me to break into the industry!
(Responded to your message on BIWS, so please refer to that.)
Hi Brian, awesome article. I am currently on a top tenant rep team at one of the top 3 brokerages in California. I am in my early 20’s and a little over a year out of school. I graduated with a liberal arts degree.
Some of the tenant rep brokers are making 7 figure salaries every year and I see that it is a great way to make a lot of money. What I don’t like is that it is a career that often will get you pigeon holed to a certain market and not learning a lot about investing in and managing assets.
I have been in the role for a little over a year and have been trying my best to learn modeling and analyzing commercial deals at night. I would love to one day be an owner or partner at a REPE firm.
A few questions:
1. What are your thoughts on tenant rep?
2. What could be the best way to get over to the principle side preferably acquisitions coming from a tenant rep leasing role?
3. With COVID are firms even hiring acquisition analysts?
4. Would working in leasing at a big REIT be a decent path?
5. Would the skills I develop in this type of career allow me to switch to different markets or is it like tenant rep where I would need to commit to one market?
Thank you!
I don’t know enough about tenant rep to give you detailed feedback here, but if your goal is REPE, then you should do anything you can to move away from property management and into the buying and selling of properties. So, even something like a brokerage role would be better. Leasing at a big REIT might be marginally better if you can eventually move to the acquisitions team there. Hiring was frozen for a while, but eventually firms will have to hire people again, so there should be some pickup by next year.
Hi Brian,
I have an issue and was wondering what your advice would be.
I am currently working at a boutiqe REPE fund within a very specific niche (read: everyone in the niche knows each other). I am pretty early in my career (1 to 3 years), and am looking to transition into a more general REPE role at a larger fund. The angle I have thought to take on this is reach out to people at larger funds that also operate in this niche, on the basis that I can bring my experience within this niche asset class, but have a good story on why I am looking to leave (i.e. wanting more broad real estate exposure). My issue is I fear my boss finding out I am reaching out to other firms through industry chinese whispers. Is there a simple way of dealing with this?
Thanks,
Not really, no. Any time you network, there’s a chance that someone at your current firm will find out. All you can do is keep your emails vague and not directly ask about a job in the subject or body so that you have plausible deniability. Just position it as you wanting to find out more about what they do, and leave the actual requests for phone calls.
Hello Brian, Thank you for providing this invaluable guide. Given you’ve had great success, I’d like to pick your brain. To start off, I am interested in REPE, development, and deals. I thought that traditional AM was the end-all-be-all as I am currently in a non-investment BO role with a Bond AM (2 years in this role) but have really turned my head unto real estate: the power of leverage, cash-flow, value-add, cap rates etc. With that said, I am a CFA lvl 2 candidate trying to produce shine on my resume because that is all that I have to show coming from a small liberal arts school. Do you think this is an absolute waste of time to continue going forward with this? Secondly, what is the best way to slowly make that transition to those aforementioned career desires? I Thought about buying the BIWS Real Estate and REIT Modeling Course and the Excel & Fundamentals Course but I am not sure that will add any credibility either with zero experience. I would really like to finish the CFA before attempting this jump and the prospects of moving into a portfolio management role at the firm I work for may help bolster my resume further. I know this was just a dump of information, but any advice at all would be the greatest gift. Thanks and have an awesome week.
The CFA will not be that helpful for real estate because RE is completely different and far more specialized. If you already have Level 1, completing Level 2 won’t add much. I would focus on getting work experience ASAP – start by networking with local RE professionals, try to set up something on the side, try to move into an AM role that has something to do with RE, etc. It might almost be easier to quit and take a hands-on RE role in something like brokerage or development rather than attempting to move into an investing role in AM.
Any specific roles you would recommend? For entry level positions? For instance, I saw a role with CBRE, Capital Markets Operations Analyst. Could that help be a pathway?
Yes, that role could help. Real estate is much more unstructured than fields like investment banking, so almost any RE-related role could eventually lead you into REPE. Brokerage, lending, development, property operations, etc. could all work.
Thanks for posting such a helpful article! I’m currently at a non-target and fine arts major. I decided that I wanted to get into finance a little late, but am currently minoring in business administration, so I’m getting plenty of economics, finance, and accounting foundation courses. I’m interested in breaking into REPE by possibly networking with industry professionals and close contacts and a top brokerage firm and possibly getting a MSF. Would getting a MSF at a top graduate business school help set me up for success to secure internships in CRE and eventually transition into a REPE role? I currently have no relevant internship experience, but have a 3.99 GPA and have taken the GMAT and scored a 720.
Yes, it would help.
Great article Brian. Very useful. Can you please opine on how easy is it to transition from a BB RE group at the VP/D level to a REPE in the US? What level can one expect if making such a move?
It will be quite difficult because it’s always difficult to move from IB to PE at the mid-levels. They want you to transfer when you’re younger or when you’re at the top of the ladder already.
However, real estate is quite specialized, so that may give you an advantage here. I’d say it’s possible if you’re willing to move to a smaller firm and possibly move in at a lower level (such as Associate rather than VP). They normally won’t bring on bankers at exactly the same level because the job is still different and there’s a learning curve.
Great article Brian
Thanks for reading!
Hi Brain, many thanks for your article.
I am considering moving from a coverage role at European large IB for an analyst role at a mid-size REPE (got an offer) even though my LT goal would be working in classic PE with companies rather than properties. Do you suggest my move would be meaningful to get closer to my goal or better stay where I am and target a role in M&A/corporate finance?
I think those options are about the same – M&A / corporate finance is a better path into traditional PE, but you have to factor in the time and effort required to switch into one of those groups vs. the fact that you already have the REPE offer. You can switch from REPE to normal PE if you do so early enough (e.g., after 1-2 years rather than waiting 4-5 years) – a good example is this story:
https://mergersandinquisitions.com/real-estate-private-equity-london/
SUPER helpful. Favorite article I’ve read on this site (and I’ve been reading it for years!).
I’m a mid-20s associate at a large AM firm in California (one that’s listed on the PERE top 50), but I’m on the public markets side (multi-asset strategy). I’m from no money, a non-target school and hate all the prestige B.S. much of “high finance” carries with it, so am drawn to the RE business, but this article is a comprehensive guide to a more lucrative area of the RE world that I didn’t know much about!
Time to network, grind, and make this shit happen!
Thanks for the direction and motivation!
Thanks for reading! Yes, real estate is good if you like to get things done without dealing with annoying people completely obsessed with prestige.
Hello Brian,
I am a class 12 student in India.I have been reading all your articles and post since 2 years and have gained a considerable knowledge in the industry; they are great.
I really need your help and guidance as you are an expert in this industry.
I love real estate, buildings ,properties, construction and my goal is to end up at a large REPE firm(Blackstone ;I know everyone want to get in BX but I’m 17 and I would leave no stone unturned In getting a foot into BX RE ;You already said “Don’t overestimate the competition”) and do a side business in real estate.
My Target Route:-
2 years at top REIB group(Jp morgan,GS,MS,BoA)/Investment sales at top Brokerage/Work at Brookfield or a Top real estate company etc.
Then a transition to BX RE
With my profile, I could get into LSE,Warwick,NUS type of schools but not into Wharton ,Oxbridge etc. As, Budget is my big issue, I am planning to attend HKU (Probably full scholarship) as I have no other option(US/UK).
Q1)Should I go to HKU(good ranked university and prestigious in Asia) because I have heard Internationals have a hard time recruiting there and will the top US banks (GS,JPM,MS,CITI etc in REIB )accept me in a NYC position if I am an International or they just accept on basis of credentials and how good you are and not discriminatory on basis of nationality?
Q2)Should I study Economics and finance(Most wall street) or a different program Ba&sc in Artificial Intelligence in Finance?Do banks care? I have heard banks are hiring more tech people and will I be at a disadvantage of studying just Finance?
Q3)I have abundant time before college and I want to use it effectively(learning finance ,financial modelling real estate etc).Please tell me which Mergers and inquisition course should I join .
Q4)We have 2nd year spring weeks and 3rd year summer analyt but how should I gain experience during 1st year.
Q5)IB ,PEis tough.What about REIB and REPE .Are they easier or equally hard?
Q6)After reading STARR vs TWAT article , I understood Communication skills, relationship management are critical besides technical knowledge .How should I improve my communication skills.
Q7)What makes one really stand out .You probably say “Student quality has dropped”
Are these certifications helpful-
Certification in real estate management by REMI ,Certification in business communication skills by Britsh council, Certified Negotiation expert(Real estate), Ecornell or other universities Certification
Please help me Brian as this will affect my whole career .
Thank you Brian.
1) I would not recommend HKU if your goal is to work in the US or UK because it will be more difficult to recruit as an international student there. To have a good shot at winning a role in the US, you need to attend a university and major in something that allows for F-1 OPT (https://studyinthestates.dhs.gov/sevis-help-hub/student-records/fm-student-employment/f-1-stem-optional-practical-training-opt-extension) so you can work there after graduation.
If budget is your major concern, skip the US and look at cheaper but still good options in the UK or possibly other European countries.
2) See above – depends on where you plan to study. I think you should gain at least some technical knowledge with a minor in a subject like CS, math, etc., but you don’t need to be an expert. The most important skills to learn in undergrad are accounting, writing/communications, and some technical background in the subjects I just mentioned.
If you want to go to the US, it’s more important to pick something that qualifies for the F-1 OPT program.
3) It depends on your existing knowledge level, but if you’re just starting out, probably the Excel & Fundamentals course. Or the Real Estate one if you already know that material.
4) Please see: https://mergersandinquisitions.com/investment-banking-recruiting-timeline/
5) I don’t know what you mean by “tough” – if you mean ease or difficulty of getting into those fields, yes, they are still difficult to get into but probably a bit easier than normal IB/PE because they are more specialized.
6) Practice writing and speaking as much as possible. Get feedback and improve.
7) Certifications are not really useful for anything in real estate. They want to see practical experience in the form of internships and other work experience and the ability to complete case studies and make investment recommendations.
Thanks for the great article! I will join a BB bank in Asia as a IBD summer analyst in their real estate team, so it will be great to learn more about REPE.
In terms of REPE within a mega PE fund (e.g. BX, KKR), how’s the compensation look like? 10-15% discount comparing to their traditional PE? Will it be at least in line with BB IBD salary?
Thanks!
Thanks. I don’t think you would see much of a compensation discount in REPE at a PE mega-fund. Maybe a slight discount over normal PE pay (5-10%?), but not the difference you see at actual small/mid-sized funds.