Challenges of Transitioning from a Real Estate Operator to an Allocator

Joe Stampone Start a Career 8 Comments

I always tell people that there is no linear career path in real estate. While this is undoubtedly true, there’s an art to transitioning from one sector to another sector of the real estate business. I had a call a few months back with a young real estate professional who was looking to move from an owner/operator in a secondary city to a big PE fund in a primary market. This is a difficult move, and I was impressed with his approach. When he emailed me a few weeks back saying he had successfully landed a new job with a blue chip PE fund, I wasn’t surprised.

I asked him to share his insights and the challenges he faced transitioning from a real estate operator to an allocator.

Here’s what he had to say:

About one year into my stint as an acquisitions analyst coming out of undergrad with a local owner-operator, I had a deep reflection into whether I could see myself with the firm long-term. While I was getting great hands-on deal experience, I had a desire to move to a bigger city (closer to friends and family) and a real estate shop with a larger, institutional platform. Also, because my firm did not have a large pool of discretionary capital, half the time we pursued deals; I was also devoting time to sell the deal externally to potential JV partners as we like to syndicate out most of our equity. I really wanted to get more of a pure acquisitions experience and focus less time on asset management and other ancillary activities that come with working at an entrepreneurial shop.

Once identifying I was prepared to move, I worked my butt off to get closed transactions on my resume. Fortunately, I was able to work as the lead analyst on a few transactions from inception to close (side note: I would recommend if any young real estate professional starts his/her career at an operator, to try and get experience underwriting office as it is typically the most complex and Argus-intensive). After getting a couple deals on my resume that I could speak to, I began retooling my resume and even used a professional resume service as having a clean resume highlighting your deal experience is essential in the competitive job environment.

Also, I started to keep a log of all of the details of the various deals and market trends that I worked on think more like an investor and practice articulating a business-plan (there is a tendency to only focus on the positive aspects of a deal at an operator and get stuck in the weeds as an analyst). Finally, I tried to think about how changes in an underwriting affect value and the different components of the deal. I also began researching online to develop best practices to model in Argus/Excel (especially different promote structures) in anticipation of the case study/ modeling test component. I would even recommend purchasing courses if you feel it might add value as it is a critical investment in securing a new buyside job.

Initially, I felt that my deal experience would trump the lack of brand name on my resume and began shooting out resume blasts on Select Leaders and other job posting websites with minimal success. Passive online submissions get lost in the resume pile and often online postings are stale. I also tried engaging headhunters as well but had lukewarm receptions as I was not a paper rockstar and my location was a bit unorthodox (most headhunters recruit exclusively for NY/LA/SF). A few months in and I was feeling a bit disheartened by all the rejection. Taking a step back, I decided to stop beating myself up and accept rejection as a cost of doing business. Furthermore, I started leveraging my alumni network more often and began cold-emailing anyone with a potential connection. I reached out to them with the premise of informational interviews or asking for advice and avoided discussing I wanted a job from them. Also, I began attending as many real estate meet-n-greets as I could and would pay out of pocket to speculatively attend real estate conferences in cities that I had an interest in. This was helpful for me for two reasons: 1) I was able to continue to practice my elevator pitch; 2) My attendance showed that I was aggressive and serious about making a move.

By leveraging my networks and being more aggressive creating relationships, I was able to secure interviews at a much higher success rate. You never know when a connection might pan out and it’s important to develop as many long-term relationships as you can even if the benefit isn’t transparent in the near-term (I got an interview at my current firm through a referral from one of my fraternity brother’s friends). One receiving an interview, it is important to understand the natural biases firms will have against someone with experience at an operator in a tier II real estate city. I had to sell the benefits of a smaller, local operator and how I could tour the properties I underwrote as opposed to pumping out desktop underwriting. Need to sell through the lack of brand-name by pointing to your real estate-specific and asset-class specific experience. I eventually secured an offer with my current firm a year after beginning to look and two years working at an operator. In summary, the journey of moving to a bigger city and fund can be long and difficult, but it is important to stay positive, stay hungry, and continue to expand your network as you never know when an opportunity might arise.

Key Takeaways

  • Moving from an operator to an allocator is not easy
    • Especially if you are moving to a new city, you will not have as many chances to interview, so try and be selective and do as many phone interviews as possible
    • Especially if you are moving to a new city, you will not have as many chances to interview, so try and be selective and do as many phone interviews as possible
  • Stay ready
    • You never know when you will have an opportunity so it is important to know your interview preparation cold and be confident in your abilities
    • Keep grinding even if dividends do not consummate in the short-term
  • Depending on the shop, you will have exposure to many allocators
    • Important to do good work on your current assignments to make a good impression
  • Only constraint on making the move is time
    • All a function of how bad you want it and what personal sacrifices you are willing to make (e.g. giving up a bonus if timing doesn’t allow)
    • If I can move from Boca Raton to SF then anyone can do it
  • Practice selling yourself and interpersonal skills
    • Anyone can run a DCF, but few people can boil down a deal in a bite-sized summary to get approval from investment committee

If you have any specific questions about the transition, I’m happy to pass them along and get an answer for you.

  • Jessica Sala

    Great post and love that you can speak from experience!

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  • skyeearth.in

    You have given a very good knowledge. You have cleared my all the doubts! Can you tell me more about the same?

  • Thiago

    Excellent post. The folks we usually discuss Wilmette IL real estate with have been touring, so we’ve been surfing the blogs. This is easily one of the best. Thanks for sharing!

  • Jacob Verghese

    Great insights and actionable advice! Thanks for sharing…

  • Thanks Jacob, glad you enjoyed it.

  • Thanks for reading, Jessica. Let me know if there;s any other posts like this that you’re looking for.

  • Ryan Mueller

    I recently started a role at a small private real estate shop as an investment analyst. I read the article above and I’m wondering what key details will help boil a deal down into a good summary for approval from an investment committee?