How to Get into Commercial Real Estate: Side Doors, Front Doors, Steppingstones, and Career Paths

While people obsess over investment banking and private equity, other sectors within finance, such as commercial real estate (CRE), often go ignored.

That’s a shame because “how to get into commercial real estate” is a much easier question than “how to get into investment banking” for many people.

There are many pathways into the industry, you don’t need an Ivy League degree or high GPA, you can move between different CRE jobs quite easily, and many roles pay quite well.

On the other hand, the industry is highly cyclical, and you could get “pigeonholed” if you stay in real estate for years but then want to move elsewhere.

But before presenting a full pro/con list, I want to start with a sector overview and the main pathways in:

How to Get into Commercial Real Estate: Which Sector Do You Target?

People often divide commercial real estate into “fee for service” and “investing” roles.

The categories look like this:

In the first category, you provide services or execute deals by connecting buyers and sellers, and you earn money based on your service or deal volume.

In the second category, you make investment decisions and profit based on your capital and deal performance.

It’s like the buy-side vs. sell-side distinction in finance, but specifically for real estate.

In general, it’s quite difficult to find investing roles directly out of university, so if you’re a student, you’re better off targeting the “fee for service” roles for initial internships and jobs.

But there are some exceptions to this rule, so the categories above may not be the best way to think about the sector.

I would suggest the following “career map” instead:

You can win the initial roles without much experience and use them to move into other areas afterward.

The intermediate roles typically require more work experience, such as a relevant full-time role or previous internships.

And the endgame roles usually require even more experience, such as several years of RE-related full-time experience.

That said, most real estate jobs are not “up or out,” so plenty of people stay in the initial or intermediate roles for a long time.

However, if you’re interested in finance careers, you will probably view these jobs as steppingstones to investing at larger firms.

How to Get into Commercial Real Estate: Initial Roles

There are a few options here, but if you’re interested in moving to bigger-and-better CRE roles, you should focus on appraisal / valuation and brokerage roles:

Leasing / Property Management

In these roles, you work at a local property management firm and deal with tenant-related issues for different property types (apartments, offices, retail, industrial, etc.).

Tasks include getting tenants to renew their leases, negotiating new terms, and handling unit repairs, maintenance, renovations, and new HVAC installations.

You put out a lot of fires, which makes the job stressful – especially if you deal with residential properties (i.e., individuals, not businesses).

The advantages are that you can win these roles with minimal experience, and you will learn a lot about leases, property budgets, and management.

The disadvantages are that it is quite difficult to move from these jobs into investment/deal-related roles, as some CRE investors “look down on” property management.

The compensation isn’t great (perhaps $50K – $100K for entry-level roles in the U.S.), but it’s fine for your first job.

If you want to go this route, find a management firm that works with commercial properties (or multifamily properties with 200+ units) owned by institutional investors.

This type of firm will give you more networking opportunities and career mobility.

Appraisal / Valuation

Real estate appraisal is the process of valuing a property, which is essential when it is being sold.

But it’s also important when a commercial real estate loan refinancing occurs, as the amount of new debt is based on the property’s value.

The biggest CRE brokerage firms, such as Jones Lang LaSalle (JLL) and CBRE, have appraisal teams, but many smaller firms and independent operators also do this.

This one is probably the best “initial job” in CRE because you can get in without great credentials, you’ll do plenty of real estate financial analysis and valuation, and you’ll meet plenty of brokers and investors.

The exit opportunities are also quite good because many appraisal professionals get into development, investment sales, lending, and even real estate private equity roles.

The starting pay is in the “not great, but fine for a first job” range ($50K – $100K), but it moves into the 6-figure range once you’ve passed the required licensing test and have more experience.

Experienced appraisers with their firms could earn $200K annually (or more) if they have many clients and bring in new ones regularly.

The main disadvantage is that the licensing time frame can be very long, depending on your state and country.

For example, Texas requires 18 months with 3,000 hours of study/training before you can take the exam, so you’ll need at least 1.5 years to gain significant experience and earn higher pay.

Brokerage

We have a detailed commercial real estate brokerage article, so you should review that for all the details.

At a high level, you connect buyers and sellers of properties and earn commissions based on a percentage fee.

The main advantages are that you can win brokerage roles without fancy degrees, Ivy League schools, or high grades – just aggressive networking – and if you get in, you will learn a lot about real estate valuation, sales, due diligence, and deal execution.

The main disadvantage is that while getting into brokerage is relatively easy, it’s difficult to succeed on the job, especially in your first 6-12 months.

At many firms, these positions are commissions only, so you earn nothing until you close a deal.

But closing a deal, even for a “small property” (worth a few million USD or less), is easier said than done and normally requires a decent network and brand.

On the other hand, brokerage could be a fantastic long-term job if you are outgoing and good at networking.

Experienced brokers can earn in the $125K – $250K range at smaller firms, and well-connected brokers can earn above $500K, or even above $1 million, if they sell high-priced properties.

But most brokers do not earn anywhere close to these high-end figures, just like most people in investment banking do not earn Managing Director pay.

If you want to enter the industry via brokerage roles, find a firm that provides formal training and jobs that are not 100% commission-based.

Architecture / Construction / Engineering

We don’t cover these roles on this site, but you could potentially use them to win real estate development roles.

The main advantages are that you can get in without much experience or a great pedigree, and you will learn quite a lot about the “physical” side of real estate.

But if you are just interested in “commercial real estate,” I wouldn’t recommend these jobs because they require significant education and some type of licensing exam, and the pay is still not great (architect salaries are also in the $50K – $100K range).

You can leverage these roles to move into real estate development later, but they’re not especially relevant for finance/investment/deal-related roles that require financial analysis.

How to Get into Commercial Real Estate: Intermediate Roles

These jobs tend to require some amount of work experience.

For example, to get into real estate private equity, you normally need previous internships in investment banking, private equity, or real estate.

However, you do not necessarily need full-time experience (i.e., you can complete internships and join directly out of undergrad).

Asset Management

“Asset management” (AM) refers to what institutional investors, such as PE and life insurance firms, do after buying new properties.

Some consider AM a back-office role, but it’s closer to PE firms’ “operations” or “value creation” teams.

It involves everything from optimizing tenants and leases to coordinating property appraisals, renovations, refinancings, and budgeting.

Managing the property effectively can be the difference between a 10% and 20% IRR.

The real downside to AM roles is that the compensation tends to be lower; expect a 10 – 20% discount to compensation in acquisition roles.

The main advantage of AM roles is that the exit opportunities are good: Some people move into acquisitions or other REPE roles, and others go into lending, debt funds, or even REIT or investment banking jobs.

If you have less work experience, you might want to target life insurance companies with RE operations, such as Prudential; they tend to be less competitive than private equity firms with separate RE asset management groups.

Real Estate Private Equity (Smaller Firms)

We have a detailed article on real estate private equity, so you should refer to that for everything.

In short, REPE is just like normal PE, but firms buy and sell properties rather than companies.

Junior-level roles consist of real estate financial modeling, reports and memos, due diligence, and meetings.

The main advantage of REPE is that you can get into the industry from a wider variety of backgrounds.

For example, in the U.S., it is very difficult to win traditional PE jobs without investment banking or other M&A experience.

But you could win an offer at a REPE firm from a real estate brokerage, real estate lending, or REIT role (in addition to the standard IB route).

However, it’s more plausible to do this at smaller REPE firms rather than the giants (e.g., Blackstone, Starwood, and Brookfield).

If you’re aiming for the private equity mega-funds that also operate in real estate, you’ll almost certainly need real estate investment banking experience at a top bank to have a good shot.

There are some recruiting tips in the REPE article, but you need to network extensively, join industry associations, and complete at least 1-2 RE-related internships to be competitive.

I list REPE in the “Intermediate” category here because if you intern or work at a small firm, you will most likely leverage it to win a different role in the future.

Real Estate Lending

Again, we have an article on commercial real estate lending, so you should refer to that for the details.

In short, CRE lenders review deals from property investors and make quick decisions on whether to fund the loans required to acquire and develop these properties.

In commercial real estate, virtually every deal involves a substantial debt (often over 50% of the property’s value), so lenders play a critical role.

As an Analyst, you’ll review property financials, build pro-forma models, do some due diligence on the property and its investors, and contribute to the funding decisions.

Since your upside as a lender is capped, you focus on the worst-case scenarios and whether your firm might lose money if rents plummet or property values decrease significantly.

The main advantages of CRE lending roles are:

1. Wide Range of Entry Paths – You’ll see everyone from recent grads to former bankers, real estate developers, and even commercial/corporate banking professionals win these roles. But you still need some finance/real estate internships in university if it’s your first job out of school.
2. Exposure to Lots of Deals – You will be exposed to far more deals than in most other CRE roles, which means you’ll learn more about different property/deal types, different sponsors, and more.
3. Exit Opportunities – You can use CRE lending to move into almost anything else in real estate, from real estate debt funds to REITs to REPE to REIB.

The pay isn’t spectacular; expect ~$100K total compensation initially, rising to the low-six-figure range when you move up to the VP level.

But given everything above, you can’t go wrong with CRE lending as your first full-time job or a steppingstone to another one.

Real Estate Investment Banking

We have a detailed real estate investment banking article, so read that if you want the long version.

The short version is that if you work in REIB at a large investment bank (Goldman Sachs, JP Morgan, Morgan Stanley, etc.), you advise entire companies in the real estate sector.

These companies might include REITs, casinos, hotel firms, homebuilders, real estate operating companies, developers, and leasing firms.

By contrast, if you’re in REIB at a big brokerage firm, you usually focus on raising debt and equity for properties rather than companies.

This distinction between properties and companies means that REIB roles are much closer to other investment banking roles and quite different from RE brokerage jobs.

This also means that you must be on top of the very early recruiting timeline, with IB internship recruiting starting in Year 2 of university in the U.S. (and early Year 3 in other regions).

Your undergrad university, GPA, previous internships, networking, and technical preparation will also be important.

In theory, you might be able to use other CRE roles, such as lending or brokerage, to break into real estate investment banking, but it’s not that common in practice.

The skill sets do not transfer well, and it’s almost always easier to go from REIB to something else than the reverse.

REIB roles are some of the most competitive in this entire sector.

So, they shouldn’t be your top choice if you’re a non-traditional candidate, but they do offer benefits such as high pay and some of the best exit opportunities.

How to Get into Commercial Real Estate: Endgame Roles

I label these roles “endgame” because many view them as permanent roles they plan to stay in for the long term.

For example, if you enter REPE at a mega-fund, there isn’t an obviously better exit opportunity.

In most cases, the main “superior exit opportunity” is going independent and becoming a real estate investor, with all the pros and cons of starting any business.

Real Estate Private Equity (Larger Firms)

See the REPE description above. The only difference here is that REPE is more likely to be an “endgame” goal if you work at a large firm with a clear hierarchy and advancement.

Think: Blackstone, Starwood, Brookfield, etc., rather than the 5-person firm in your neighborhood.

Real Estate Debt Funds

Once again, we have an article on real estate debt funds, so you can get the full story there.

The big difference vs. CRE lending is that RE debt funds tend to fund a wider variety of debt issuances, including the riskier mezzanine tranches, and they tend to be independent entities that raise capital from outside investors.

Many CRE lenders, by contrast, tend to be connected to large commercial banks, so it’s a bit like the distinction between DCM / Leveraged Finance vs. direct lending / mezzanine.

Much of the work is similar to CRE lending (more deals, downside case focus, memos, due diligence, and financial review).

However, the pay ceiling is higher, especially at the biggest debt funds (e.g., Affinius, Fortress, MSD, and Sculptor).

Also, your exit opportunities are quite good because you could easily move to REIB, REPE, or almost anything else besides a pure development role.

The main downside is that breaking into RE debt funds is quite challenging, and they typically require several years of full-time experience.

Real Estate Development

Development differs from almost everything else because it is much more of a nuts-and-bolts job.

In other words, you must deal with issues like budget overruns, angry landowners, construction crews, government approvals, zoning problems, etc.

There is still plenty of financial analysis, and many development models are more complex than acquisition and renovation models.

However, you do far more work outside of spreadsheets.

There are two main paths to breaking into development:

1. Finance / Deals – For example, you could potentially move in from something like CRE lending or REPE if you have worked on development deals in these.
2. Construction / Architecture / Engineering – See the “Initial Jobs” section at the top. These jobs all give you a good knowledge of the physical side of real estate, which is essential for development.

Getting in from brokerage or appraisals / valuation is also possible, as networking trumps almost every other skill for real estate careers.

In most cases, you will need full-time experience in another area to have a good shot at the few roles available at the larger, well-established developers.

In terms of the job itself, starting pay is around $100K – $150K at larger shops, and this increases to the mid-six-figure range as you move up.

But there is one big difference: Like private equity firms, developers receive a share of the profits in successful development deals.

The earnings ceiling is still lower than in PE, but it’s higher than in areas like CRE lending because this profit-share structure results in significant upside on successful deals.

The number of deals you get exposed to varies based on the market, geography, and firm, but you should expect to work on fewer deals than in most credit roles.

Each development deal requires more time and attention than an acquisition of a stabilized property, and some developers only do one deal every few years and still earn a good amount.

Real Estate Investment Trusts (REITs)

Real estate investment trusts (REITs) are similar to real estate private equity firms in some ways, as they both acquire, develop, and sell properties.

However, they differ because they operate as long-term holding companies and do not necessarily “have” to sell properties within a specific time frame.

They raise equity and debt constantly in the public markets, and they have shareholders but no Limited Partners – so there are no issues with fund lifecycles.

REITs are structured as special corporate entities with a corporate tax exemption (or a very low tax rate) if they distribute a high percentage of their Net Income as Dividends.

Some REITs specialize in a single property type, such as hotels or offices, while others specialize in a certain geography or are more diversified.

Many of the skills required for REITs are the same as those in brokerage, CRE lending, or REPE: You value properties, model the potential returns, and assess the downside risk.

The difference is that it’s quite difficult to break in right out of undergrad – like how it’s difficult to win corporate development jobs without full-time work experience.

Instead, REIT teams usually hire people with at least a few years of experience in fields like REIB, REPE, CRE lending, or RE debt funds.

The pay isn’t great, as it’s a discount to REPE pay in most cases (like the gap between corporate development and private equity compensation).

The big advantage is that the hours tend to be much better, with minimal weekend work, though this depends on your team and their deal flow.

Also, if you can advance to the top of the hierarchy and become a C-level executive at a solid REIT, you can get paid very well for reduced hours and stress (vs. other finance roles).

But it’s also quite a slog to get there because few people want to leave, and turnover is much lower than in traditional finance firms.

How to Get into Commercial Real Estate: Final Thoughts

As a career, commercial real estate is best if you:

1. Are Willing to Network Aggressively – You’ll need to do this to win almost any internship or job, and sometimes you’ll need to do it on the job.
2. Do Not Necessarily Have Great “On Paper” Credentials – For example, maybe you attend a non-target school, have a low GPA, or got started very late in the recruiting process.
3. Are Very Good at Execution – You can figure out tasks and get them done regardless of any obstacles, which is essential for CRE deals.

The best way to get into commercial real estate depends heavily on your current position.

If you’re a university student, focus on winning RE / finance internships in any of the “Initial Roles” above (brokerage, appraisals, leasing, etc.).

And if you’re starting very early with the potential to be competitive for IB internships at large banks, real estate investment banking is a great option.

If you’ve already graduated, you may be able to move into CRE via a real estate lending firm, brokerage firm, or asset management group.

It just depends on how close your current experience is; you could do this from commercial/corporate banking or a credit analyst role, but probably not from an IT or engineering job.

So, if you’re in something completely unrelated, you may want to consider a Master’s degree or an MBA, depending on your experience level.

Assuming you get in, your next step depends on how you value factors like work/life balance, compensation, and the daily routine.

If you want to work on many deals but have a good work/life balance, and you’re fine with lower compensation, CRE lending might be perfect.

If you want to be more entrepreneurial, work on fewer deals, and be more involved with the physical side, maybe RE development is the best fit.

The good news is that it’s such a broad field that you can find a job fitting almost any preference – if you understand how to get in.

Read More

You might be interested in this article, titled The Real Estate Pro-Forma: Full Guide, Excel Template, Explanations, and More.

Or, Commercial Real Estate Lending: The Best Backdoor into the Finance Industry?