Anyone work on the lending side on this forum?
Seems like all equity side/ brokerage on this forum.
Anyone work on debt and have any insight into compensation potential as an originator at a private lending company or bank that does direct lending on real estate?
Would appreciate any insight, Thanks.
Based on the most helpful WSO content, compensation in real estate finance can vary widely depending on the market, the size of the shop, and the individual's experience. While the context doesn't provide specific figures for an originator at a private lending company in the Sunbelt areas like Texas cities, it does give us some insight into compensation structures in similar roles and regions.
For instance, an Associate in the Texas market working in real estate with a few billion AUM (Assets Under Management) reported a compensation of $120,000 with a 30-40% bonus and equity participation. This suggests that for a direct lending role in a private company, especially in a growing market like Texas, the compensation could be competitive.
It's also worth noting that compensation in real estate finance roles often includes a base salary and a variable component, which can be in the form of bonuses or equity, reflecting the performance and the success of the deals originated.
To get a more accurate picture of compensation for an originator role in the Sunbelt, it would be beneficial to look at more data points from professionals in that specific niche. The WSO forums and compensation database could be a good resource for more detailed and up-to-date information. Remember, the real estate market can be quite dynamic, and compensation often reflects that volatility. Keep networking and don't be afraid to ask around in the industry for the most current figures.
Sources: What is your compensation in Real Estate Finance?, What is your compensation in Real Estate Finance?, What is your compensation in CRE Lending?, Associate ---> Director/VP/Manager
Bump
I am a bank lender. I started as a credit analyst, then was promoted to portfolio manager, now a relationship manager. My pay basically doubled with each promotion. You can make $300k+ as a good RM at a regional bank.
I don’t know much about debt funds but my sense is you can make more, but you work more too.
If you want to get rich taking no risk in lending, become a debt broker and somehow win repeat agency business from institutional borrowers. Very possible to make $1M+ in this space.
What does WLB look like in a role like this? Seems from everywhere I’ve seen that bank lending roles average at around 40-50 hours a week
Well debt broker is actually very risky lol, you're all commission and in most cases not even getting 1% of the deal.
On the Lending side for originations, the Junior level can be pretty hit or miss, but a great entry point to get to the director, aka a producer or originator, quickly. The base is pretty weak, like 100-150k, based on seniority. But they make a cut securitization, premium, origination fees, and a trail. I know plenty in poor years like last year that made 250-300k and in a good year made +$1M, but they had a killer year and a good amount of products to offer. Both in the office and MF spaces for lenders.
I forgot to mention that it varies wildly between producers. A lot of shops have 1-5 teams crushing it and then 30+ doing a deal a year or like a small 4-property 4-pack. But they all seem to have a very laid-back casual lifestyle if they know what they are doing. Others do make decent money, but they grind because they overwork it. It all depends on how well you can control your clients and balance interpersonal and outer personal skills.
Are you on the agency side? What do you think about the agency business long term term compared to balance sheet lenders- banks, life co’s, etc?
I was on the agency side. The agency side has a little less risk; therefore, the payout will not be as high. However, as others have mentioned, you have more flexibility in where you live, and you make relatively the same money on the origination side. Since one of the bonds that the Treasury likes to hold on their BS is Agency debt, I think there is less long-term risk of failure in the system. I worked at LifeCo as well, and the money was superior. I worked at a Regional bank as a lender, and the pay sucked, so it's hit or miss across the board there. Now, away from it all, I think Agency is a great middle-type career. I'm not going to make insane money, but I'm not going to make pennies either. You have a better outlook on prospects and career growth as you can hope to the Agency side and then back as consultants do in Government. WLB is better than LifeCo.
40 hours a week, max. WLB is great.
I was initially. I no longer am, but often overlooked and a great career path. If you're looking to make millions through promote, its not the path for you. If you're a family man looking to make $200K+, be able to leave the office at 5, leave on Fridays at 3, and get weekends off, then this is the place for you. WLB is fantastic.
Doesn’t meet your direct lending criteria, but I work on the debt side for a small life co. lender. WLB is probably as good as it gets, but that’s reflected in the income potential. As a producer you’re probably maxing out at $200-215k right now.
Something to add here. $200k-$250K is higher level comp but people need to keep in mind that these guys make this much in random areas around the country. They don't need to live in NYC.
I know mid level VPs in underwriting/lending at traditional banks making around $250K. One lives in Waco, TX. Another one is in St. Louis. I got a buddy who is around $250K and is in Norfolk, VA. So yes, pay is less, but you can get these jobs in some LCOL or MCOL markets. Heck $250K in Norfolk gives you a life of pretty good luxury whereas $400K in NYC (although still good money) is more difficult to manage.
You can typically hit this level with 8-12 years of experience. Most of my friends that started in lending right after college are pulling $200K+ and are in their early 30s now.
The only thing ill add is that if you are an originator/producer, you are making 30-50% of the fees you bring in and usually you’ll have some type of hurdle to hit before you see anything.
So an example would be the producer’s base salary is $200k. His and your team’s first hurdle is 2x the team’s base before you make your first bucket of 30%. So you guys would have to bring in $600k in fees (assuming your junior salary base is $100k) then every dollar you bring in after that would be split 30/70 with your firm. This could easily be done with two $30m deals where the originator charges 1.00% up front.
Lots of places have incentive hurdles after that such as after you bring in 4x your salary you start splitting fee income 50/50 or even 60/40 in rare cases.
Your junior level bonus would be paid out probably 10-15% of the after-split team total. So if you guys crushed and had $2m in fees to split, you could be walking home with 200-300k in bonus on top of your $100k base.
Apologies if that was confusing - it can be confusing in real life too
Great point^^^ this is something I forgot.
Large RE debt fund (ignore title). Originators on my team (VPs and Directors) generally pull $500k - 800k in cash with about $1mm in carry per year give or take which may or may not materialize.
That is significant all in comp, whats the AUM?
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