Memoirs Of Chasidic Master’s Liberated Scion

 

 

By Michael Berenbaum

 

Follow JewishJournal.com on

 

3

 

A decade ago, distinguished Orthodox filmmaker Menachem Daum produced and directed the documentary “A Life Apart: Hasidism in America,” a restrained and loving effort to introduce the seemingly strange and alien world of Chasidism to outsiders. Several years later, he produced another film, “Hiding and Seeking,” about the non-Jewish Polish family who saved his wife’s family during the Holocaust. His task then was to introduce his own family to the deeply forbidden and contaminating non-Jewish world, which seemed so strange and alien to them, and yet which included these rescuers, who were responsible for the very existence of his own wife, children and grandchildren.

 

As English has become the native language of all but the most devout, access to this world is now far more open and available. ArtScroll, the most ambitious and effective of the Charedi publishing efforts in the United States, is the product of Charedim acculturation to the United States as well as an inadvertent spur to that very acculturation. The proud partnership of contemporary graphics with traditional texts translated into English recognizes that even American Charedi Jews are more fluent in English than in the sacred tongues of our people and can only really open the great texts of Judaism with the assistance of English translation and commentary.

 

So it is no wonder that the writings of current and former Charedi Jews, who describe the inner world of their community in anguish, in anger and even in joy, have made their way into the English language. 

 

Among the more interesting works is Judith Brown’s “Hush” (Walker Childrens, 2012) which explores sexual abuse and coming of age among Chasidic girls, and Hella Winston’s “The Unchosen: The Hidden Life of Hasidic Rebels” (Beacon Press, 2006), which chronicles the strange and painful journeys of those who have broken with their devoutly Orthodox past to venture forth into a world for which they are unprepared.

 

In this genre of work is Izzy Eichenstein’s  “The Rebel and the Rabbi’s Son: Finding My Soul Beyond the Tribe” (Oakstone Company Publishing, $18), the autobiography of a local real estate developer born into one of the most prominent of all Chasidic families — the paternal Zhidachov and the maternal Novominsk dynasties — who chose to leave the Chasidic world. (A note to my readers: I met Eichenstein more than a dozen years ago, when we shared an office suite and would bump into each other in the hall or on the track in La Cienega Park. I knew he had Jewish interests, but I did not know him. A couple of months ago, we met in a parking garage adjacent to Los Angeles International Airport, and he said he had a present for me, a book he had written. I accepted it as a courtesy and opened it with considerable skepticism and then read it with growing enthusiasm.)

 

Although Eichenstein is a rebel who clearly left the fold of his ancestors, the book is written without bitterness and with the most restrained of anger. His father, Rabbi Moses Eichenstein, began the journey, albeit unknowingly, when Chicago neighborhoods started changing in the late 1950s and early 1960s. Rabbi Eichenstein left his elderly and impoverished fervently Orthodox congregation, which had been weakened as more affluent and younger Jews moved away in droves to safer and more tony neighborhoods, and as the young abandoned Orthodoxy. He took a position as the rabbi of a traditional congregation in Chicago. Unlike Conservative Judaism, where rabbis were expected to accommodate and adjust to their congregation, in traditional Orthodox Midwestern congregations there was a deliberate disconnect between the rabbi and the congregants, one that was not to be bridged. Rabbi Eichenstein remained Orthodox, set apart from his congregants, and he expected his children to follow his lead and not to integrate into their environment. But Izzy could not accept the confines of the truncated world that was his inheritance. He could not adjust to yeshiva study, all-male environments long on textual knowledge with most minimal exposure to secular studies and summer camps where study rather than play was the norm and gender separation absolute. The more he rebelled, the more his father and his family disciplined him on a straight-and-narrow course.

 

Like many “troubled” young men, Izzy was sent to Israel to “yeshiva boot camp,” where, removed from the world he knew, living in a more remote place, he could be shaped into the Jew his family wanted him to become. But such an environment did not work. Izzy was labeled “an evil influence.” He explored different worlds. He worked as a manager for Rabbi Shlomo Carlebach, who is now posthumously revered, but was then also regarded as a rebel. He got to meet Bob Dylan and other musical giants. 

 

His parents did not relent. Both of their own accord and in response to the pressure of an extended, highly observant family who looked down on Izzy’s rabbi father for his compromises, they doubled down and tried to force Izzy into a world increasingly removed from his interests. Izzy’s journey took an unusual turn when he met a woman, Rita, then a freshman at Northwestern University, who was the child of Orthodox Holocaust survivors and who also was slowly leaving the world of her parents, but while still loving and being loved by her parents. Izzy and Rita understood one another. Their families rejoiced in the yichus that each would bring to the marriage, and they rejoiced in each other: A rebellious journey is less isolating if pursued with another.

 

Izzy came out to Los Angeles to be a promoter and discovered the world of Hollywood, including its empty promises and charlatan promoters. He was taken, yet he remained and established another type of career for himself.

 

Local readers will appreciate the depiction of Los Angeles’ Jewish life in the last decades of the 20th century, when Izzy and Rita valiantly tried to meet the demands of their respective parents and fit into the world of Modern Orthodoxy but were unable to accept its premises and its restrictions. One day Izzy said to his wife, “You know the difference between us and them: They want to be here.” Implicit in that statement was that Izzy and Rita did not. Their religious practice was vicarious; they were doing it for parents, out of guilt and obligation. And Angelenos will understand how the Eichensteins could not fit in with Hillel and its Orthodox norms. The reader follows their journey to Temple Emmanuel of Beverly Hills, with its dynamic leader, Rabbi Laura Geller, an odd place for the scion of Chasidic masters to find his spiritual home, but a place where he was free to accept himself and be accepted for himself.

 

The epilogue of his book is the marriage of his son to a Roman Catholic woman just down the road from the great yeshivas of Lakewood, where Izzy’s cousins and nephews find their home. Izzy accepts the journey with equanimity. One imagines his relatives as saying, “See, I told you so. Once you leave the path, it is inevitable.”

 

We live in the first generation since the Enlightenment, where Orthodox Judaism — even the most fervent Orthodox Judaism — is not declining, but growing. But there is a hidden story, seldom spoken of and seldom told, of those who cannot follow that path.

 

Izzy has given an honorable and graceful description of the path he has followed. It will be an invitation for some to begin their own journey and a warning for others who are afraid of where that journey might lead.

 

But one wonders what might have happened if the choice placed before him was not either/or — if his parents could have accepted the fact that there was more than one way, at least for some children who cannot conform.

 

---

 

Michael Berenbaum is professor of Jewish studies and director of the Sigi Ziering Center for the Study of the Holocaust and Ethics at American Jewish University. Find his A Jew blog at jewishjournal.com.

A version of this article appeared in print.

New Book Review: “The Rebel And The Rabbi’s Son”

Thanks to all of you the book is quite popular….I appreciate all the support and feedback.

Book Review: “The Rebel And The Rabbi’s Son”  by Izzy Eichenstein

The Rebel and the Rabbi’s Son is a fascinating look into a world–both physical and psychological–many people, including many Jews, are unaware. It was so refreshing to read such a personal, open and honest account of growing up in the orthodox community yet pulled by the wider world or a sense simultaneous detachment from and love for one’s origins. Indeed this has a been a major theme in Jewish-related literature, but I have not read an account so personal, almost therapeutic. Izzy’s struggles are ongoing–yet that in no way diminishes the insight he sheds on them. Additionally, the book is peppered with terrific anecdotes about Bob Dylan, Los Angeles in the 1970s and 80s, and hippiedom in Israel. This was a meaningful read, which, at the very least, offers a small but poignant bit of insight into what it means to be Jewish–a question Jews have been grappling with for millennia, and the asking of which, perhaps, therein lies the answer. 

http://rabbisson.com

Understanding Customers Is Everyone’s Job

 

•        

Going to market effectively these days, no matter what business you’re in, means relating to customers as individuals — even if there are millions of them. In a previous post, I described how U.K. retailer Tesco built detailed profiles of customers and then used these insights and a flexible supply chain to customize their products and offers.

How, precisely, did they do this? Creating products and services for market segments of one (“mass customization“) isn’t easy. The only way it can happen: marketing, IT, operations, and human resources functions must collaborate in unprecedented ways. As John Kennedy, vice president of corporate marketing at IBM, told me, success requires that companies execute the marketing basics they’ve always done — getting to know customers better; helping them in the buying process and tailoring offerings; and developing their trust — but, crucially, updating and amplifying them in light of new technologies. The biggest changes, not surprisingly, are in the marketing function, itself — the source of these new, more detailed customer insights. But the insights won’t be useful unless companies change core business processes and employee behavior. Here are some illustrative ideas in each of the three areas:

Getting to know customers better depends on getting them to share more information, as Tesco did with its Clubcard. It means building a profile of each customer, based on transaction and social media data (e.g., their comments on Facebook and LinkedIn). IBM has built a customer database called Blue Insight, an analytics cloud computer system that unifies hundreds of software applications for more than 200,000 IBM consulting, sales, technical and marketing people. Blue Insight integrates marketing campaigns (and the customer inquiries they spawn) across digital, social, mobile and traditional marketing channels. It provides sales and marketing professionals with insights on customers, which in turn helps IBM tailor communications based on this deep customer knowledge.

Helping customers includes offering information to make their buying process easier, as, for instance, Netflix and Amazon do with their product recommendations. They’re using tailored suggestions to drive customer loyalty. When done well, it feels like a service. For example, Marcus Sheridan, an owner of River Pools and Spas, a 20-employee installer of in-ground fiberglass pools in Virginia and Maryland, overhauled his company’s marketing by shifting almost exclusively to using educational blog posts and videos. In a recent article, Sheridan described how he answered customers’ most common questions about fiberglass pools regarding prices, problems, and competitors. Now when you enter these questions in a search engine, River Pools web pages appear prominently. Clicking on these pages shows a company that is educating customers, not hawking products. By addressing common (and often difficult) questions in such an up-front way, the impression customers get, said Sheridan, is “Oh my gosh, these guys are so honest.”

Developing customer trust requires managing interactions sensitively in an environment of increased transparency. This transparency works both ways. Companies know far more about their customers by analyzing all the data they collect on them. In turn, customers know far more about the companies they buy from through social media — their family, friends and work colleagues talk about companies and their products every day, often not in flattering ways. How a company behaves, and how it responds to this new customer knowledge, have now become moments of truth, as well as the coin of the realm in customer interactions — adding to or subtracting from brand equity. Disgruntled customers can make a video on YouTube to broadcast their tale of mistreatment, as Jarrett Seltzer did when Verizon billed him $2,345 for its equipment when his home burned down. The video went viral, and caused Verizon to change its policies.

But enhanced marketing capability, by itself, is not sufficient for gaining maximum customer intimacy. All the company functions must collaborate towards this goal. Leading marketers are looking to influence all their customer interactions by working closely with operations and their chief human resource officers on the company culture. IBM is analyzing its brand using a “Corporate Reputation and Brand Analysis” system, and it has launched an initiative to address the full range of interactions with customers.

The IT organization is also crucial in becoming intimate with customers. Besides helping analyze customer data, IT can also increase the number and value of online customer interactions. Consider the Cleveland Clinic, the multispecialty academic medical center rated one of the top hospitals in the United States. In a recent HBR video, Paul Matsen, chief marketing and communications officer, and CIO Dr. Martin Harris described how the marketing team works with IT to deepen online relationships with patients by using the web more effectively. For example, marketing wanted to attract patients who need very specialized medical procedures. So it worked with IT to place online ads when people use key words in online searches. The ads steer patients to information relevant to specific medical needs and provide the ability to schedule a consultation from the Cleveland Clinic’s specialists. While this may be seen as a pretty basic story of paid advertising, it also highlights the necessity of collaboration across functions in order to achieve close knowledge of, and high value for, the customer.

As I’ve said previously, translating customer data into insights is hard. But turning these insights into new customer experiences and revenue is even harder. An even bigger challenge is getting all the functions of the organization to work together to create the most value from detailed customer insights. (credit to Brad Power-HBR Blog)

The Happiest People Pursue The Most Difficult Problems

       

Lurking behind the question of jobs — whether there are enough of them, how hard we should work at them, and what kind the future will bring — is a major problem of job engagement. Too many people are tuned out, turned off, or ready to leave. But there’s one striking exception.

The happiest people I know are dedicated to dealing with the most difficult problems. Turning around inner city schools. Finding solutions to homelessness or unsafe drinking water. Supporting children with terminal illnesses. They face the seemingly worst of the world with a conviction that they can do something about it and serve others.

Ellen Goodman, a Pulitzer Prize-winning journalist (and long-time friend), has turned grief to social purpose. She was distraught over the treatment of her dying mother. After leaving her job as a syndicated columnist, she founded The Conversation Project, a campaign to get every family to face the difficult task of talking about death and end-of-life care.

Gilberto Dimenstein, another writer-turned-activist in Brazil, spreads happiness through social entrepreneurship. When famous Brazilian pianist Joao Carlos Martins lost the use of most of his fingers and almost gave into deepest despair, Dimenstein urged him to teach music to disadvantaged young people. A few years later, Martins, now a conductor, exudes happiness. He has nurtured musical talent throughout Brazil, brought his youth orchestras to play at Carnegie Hall and Lincoln Center in New York, and has even regained some use of his fingers.

For many social entrepreneurs, happiness comes from the feeling they are making a difference.

I see that same spirit in business teams creating new initiatives that they believe in. Gillette’s Himalayan project team took on the challenge of changing the way men shave in India, where the common practice of barbers using rusty blades broken in two caused bloody infections. A team member who initially didn’t want to leave Boston for India found it his most inspiring assignment. Similarly, Procter & Gamble’s Pampers team in Nigeria find happiness facing the problem of infant mortality and devising solutions, such as mobile clinics that sent a physician and two nurses to areas lacking access to health care.

In research for my book Evolve!, I identified three primary sources of motivation in high-innovation companies: mastery, membership, and meaning. Another M, money, turned out to be a distant fourth. Money acted as a scorecard, but it did not get people up-and-at ‘em for the daily work, nor did it help people go home every day with a feeling of fulfillment.

People can be inspired to meet stretch goals and tackle impossible challenges if they care about the outcome. I’ll never forget the story of how a new general manager of the Daimler Benz operations in South Africa raised productivity and quality at the end of the apartheid era by giving the workers something to do that they valued: make a car for Nelson Mandela, just released from prison. A plant plagued by lost days, sluggish workers, and high rates of defects produced the car in record time with close to zero defects. The pride in giving Mandela the Mercedes, plus the feeling of achievement, helped the workers maintain a new level of performance. People stuck in boring, rote jobs will spring into action for causes they care about.

Heart-wrenching emotion also helps cultivate a human connection. It is hard to feel alone, or to whine about small things, when faced with really big matters of deprivation, poverty, and life or death. Social bonds and a feeling of membership augment the meaning that comes from values-based work.

Of course, daunting challenges can be demoralizing at times. City Year corps members working with at-risk middle school students with failing grades from dysfunctional homes see improvement one day, only to have new problems arise the next. Progress isn’t linear; it might not be apparent until after many long days of hard work have accumulated. It may show up in small victories, like a D student suddenly raising his hand in class because he understands the math principle. (I see this from service on the City Year board. You can find dozens of these stories on Twitter under#makebetterhappen.)

It’s now common to say that purpose is at the heart of leadership, and people should find their purpose and passion. I’d like to go a step further and urge that everyone regardless of their work situation, have a sense of responsibility for at least one aspect of changing the world. It’s as though we all have two jobs: our immediate tasks and the chance to make a difference.

Leaders everywhere should remember the M’s of motivation: mastery, membership, and meaning. Tapping these non-monetary rewards (while paying fairly) are central to engagement and happiness. And they are also likely to produce innovative solutions to difficult problems. ( credit to Rosabeth Moss Kanter )  HBR

American Entrepreneurship At Risk?

Small-business owners‘ confidence fell in March — halting a three-month winning streak, as entrepreneurs still aren’t feeling optimistic about business or making substantial hiring plans.

That’s the finding of a monthly survey by the National Federation of Independent Business. The group said Tuesday that its small-business optimism index edged down 1.3 points to 89.5 from 90.8 points in February.

“Virtually no owners think the current period is a good time to expand,” said NFIB chief economist Bill Dunkelberg in a prepared statement. Plus, “over 75 percent think that business conditions in 6 months will be no better or worse than they currently are,” he said.

Although housing and the energy sectors are forecast to add jobs, Main Street collectively has no plans to create new employment in the coming months, according to the monthly sentiment report.

End of 3-Month Run

The sentiment reading had ticked higher in December, January and February. But to describe that as a ” ‘run’ is an exaggeration,” Dunkelberg said.

Bottom line: As the recovery tries to gain traction, there may be only modest support from new Main Street jobs—a traditional driver of past recoveries.

 

ADP: Private Sector Employment Up 158,000 in March

Mark Zandi, Moody’s Analytics chief economist, breaks down the weaker-than-expected numbers on jobs, and discusses what it indicates about hiring practices in the private sector.

Job Creation Tumbles

Plans to create small-business jobs tumbled in March, falling 4 points to a net zero percent of small employers, who plan to increase total employment, according to NFIB data.

Turns out what’s happening in the broader U.S. economy—an anemic employment picture—is playing out among mom and pops. Private sector job creation was considerably less than forecast for March. That report was released jointly by ADP and Moody’s Analytics last Wednesday.

The report was a preview to Friday’s nonfarm payrolls report, also weak. Job creation slowed to a crawl during March, with the U.S. economy adding just 88,000 positions though the unemployment rate fell to 7.6 percent. The number was a sharp decline from February’s upwardly revised 268,000.

(Read more: US Job Creation Plunges, but Rate Drops to 7.6%)

“Overall, it appears that there will be little growth coming from the small business half of the economy and as the world economy slows, maybe even less from big business,” Dunkelberg said.

American Entrepreneurship at Risk?

A factor in the jobs drag is mandatory federal spending cuts. “One reason is the sequester. I think that will start to kick in,” Moody’s economist Mark Zandi said last week on CNBC. “I think that will start to show up in jobs in the next few months. The other thing is health care.”

For employers, there has been a heavy cloud of uncertainty about anticipated spending cuts and costs associated with Obamacare that go into effect in 2014.

But unlike larger private sector businesses, smaller employers usually don’t have buffers such as large cash reserves to ride out federal budget cuts. Most smaller firms also can’t quickly pivot business strategies to ride out a rough patch. So their strategy has largely been staying in a holding pattern—including hiring decisions.

Fred Deluca, the founder of privately held Subway Restaurants, said the government is simply out of touch with small-business owners. Policies including Obamacare discourage entrepreneurship and the American dream of owning your own business, Deluca told CNBC’s “Squawk on the Street” in February.

Added NFIB’s Dunkelberg, “For the sector that produces half the private GDP and employs half the private sector workforce—the fact that they are not growing, not hiring, not borrowing and not expanding like they should be, is evidence enough that uncertainty is slowing the economy.” (credit to CNBC)By: Heesun Wee

Editor, CNBC.com

Kicking The Bricks For Your Career-An Overview

 

in Career Paths

If you’re new here, you may want to subscribe to get free updates & weekly tips. Thanks for visiting!

Real estate investing boils down to just three things: location, location, location.

Unfortunately, landing a career in commercial real estate is not as easy or simple. From core funds to development, from REITs to PE shops, from breaking in to exit opportunities – this article attempts to run the entire gamut of commercial real estate in less than 2,000 words.

Let’s dive right in …

 

Risk & Reward

With commercial real estate, it’s easiest to think of investment opportunities from least risky to most risky and then analyze the players in each category.

• Least Risky: Core Investing
• More Risky: Value-Add and Opportunistic Strategies
• Most Risky: Real Estate Development

Core Investing is all about stability and getting high single-digit returns by operating existing assets. There’s less risk when a building is already operational and generating rental income backed by long-term leases from the tenants – think of the GM Building in New York or a class-A regional mall as example core investments.

Since these are stable assets that provide a steady income stream to the owners, pension funds are the main investors in core funds.

You also see Real Estate Investment Trusts (REITs) – both publicly traded REITs and private REITs – in this space, as well as core real estate funds run by real estate investment managers such as AEW and RREEF. The big, diversified financial companies like J.P. Morgan and Morgan Stanley also have real estate arms that invest in property directly.

A Little More Risk, A Little More Reward …

After you leave this Core Investing space, you get into Value-Add and Opportunistic Strategies – the line between these two types of strategies can be blurred, but Opportunistic funds usually seek higher returns than Value-Add strategies.

Value-Add strategies will often invest in Core-like assets that have some sort of upside through re-development or lease-up of vacant space. Opportunistic strategies can do the same, but they can sometimes add more leverage to juice returns. Like I said, the line between the two can be blurry.

Returns are typically in the 15 – 20% range, but may go higher depending on how risky the strategy is. Some REITs and core funds managers dabble in this space (more toward Value-Add), but this is where PE shops enter the picture since returns are more attractive.

At the riskiest end of the spectrum is real estate development – and the players there are all over the map.

Some REITs actually have large development pipelines and land banks and invest significant resources into constructing new properties – examples include AvalonBay [AVB] (apartments) and ProLogis [PLD] (industrial), which had a $4B global development pipeline at the market peak back in the boom times of 2007.

Private equity can sometimes be active in development, but usually only as the capital partner to developers. This is where the PE shop will fund a local developer that has the development expertise but needs funding.

Then you also have large private companies like Opus that focus on real estate development.

Risk = Reward?

Based on the descriptions above, you might think that real estate development offers the highest potential returns and the highest pay since it’s also the riskiest.

But you’d be wrong since it’s a boom-and-bust business.

While PLD had a $4B development pipeline at the market peak, it dwindled down to less than $500MM after the market collapsed; three of Opus’ five major subsidiaries filed for bankruptcy in the past downturn. Sure, they made money when the market was good, but they lost their shirts when the market turned bad.

This is not to say that real estate development is “bad” – just don’t jump into it expecting to make bank right away. It’s great if you’re into the brick-and-mortars side of real estate, but otherwise think about the other options above.

You’ve also got asset management firms and hedge funds that specialize in real estate securities (REITs) across the globe. If you want to blend real estate and the public markets, these can be good options.

How to Break Into Commercial Real Estate

As with everything else in finance, at the entry-level you’re just a high-paid spreadsheet monkey.

A typical “path” for breaking in is to go to a target school and then get into real estate investment banking – that’s what many of the top people at the biggest real estate firms and REITs have done.

Mike Fascitelli, CEO of Vornado [VNO], is an example of a real estate big shot that followed this path. He went to Harvard for his MBA, started at McKinsey, and then went to Goldman as a real estate investment banker. After several years at Goldman, Steve Roth lured Fascitelli away from banking to work at VNO.

But you don’t have to follow that path to break in – and an MBA isn’t even a prerequisite.

The best example is Jonathan Gray, the co-head of Blackstone’s real estate group – Gray started at Blackstone with just an undergraduate degree from Wharton and worked his way up to become co-head of the entire real estate group by age 35. At age 37, he was busy pulling off the EOP acquisition, the biggest private equity buyout ever!

Yes, Wharton is a target school and it also happens to be one of the top undergraduate schools for real estate – but more importantly, it has a great real estate alumni network.

Just like everything else in finance, leveraging your alumni network is essential to breaking in.

Other top undergraduate schools for real estate in the US include UC Berkeley, USC, and Wisconsin – these are well-known institutions, but they’re not the Ivy League and they’re not the ones that immediately come to mind when you think of a “target.”

Real estate is very much a “who you know” business and having a well-connected alumni base is critical – if you’re at a school without much of a presence in real estate, your next best option is to get an MBA at a school with a strong real estate program.

If you’re already out of school and working, you could get involved in trade groups like ICSC, ULI, or YREP if there’s one in your area.

Whatever you decide to do, networking is even more important in real estate than in other industries so start pounding the pavement as soon as possible.

But I Want to Build Buildings!

While many top real estate jobs required work experience and/or more than an undergraduate degree, development is one area where undergrads from all different backgrounds can get in right out of school.

So if you’re in this boat and you’re interested in real estate, you’re better off using your career center and alumni network to get in and focusing on development rather than PE, REITs, or anything else that might prefer experience and/or advanced degrees.

One thing to help you out: Pick a major that lends itself to real estate development. Example majors: real estate, civil engineering, architecture, or construction management.

Since development is much more bricks-and-mortar than other RE-associated industries, knowing these subjects is valuable for breaking in – and you’ll get the alumni network to help you land a development job.

If you don’t know what major and/or school is good for getting into RE development, just ask around and see what types of jobs most graduates get – if “real estate” is a common answer, you’ve found a good match.

Breaking Into REITs

Real Estate Investment Trusts (REITs) are investment vehicles that are exempt from corporate income taxes as long as certain criteria are met; the main one is that REITs must pay out 90% of their taxable income as dividends, which means that they have little cash on hand and are constantly issuing debt and equity to fund their operations.

Historically REITs were more passive vehicles that focused on owning properties and escalating rents over time, but today they’re more dynamic and many REITs buy, sell, develop, and manage properties and 3^rd party joint ventures all the time.

A few of the larger REITs in different segments include the Simon Property Group [SPG] (shopping malls), Boston Properties [BXP] (offices), AvalonBay [AVB] (apartments), and Prologis [PLD] (industrial).

Since REITs are completely vertically integrated, you see all sorts of different job opportunities there; on the operations side you’ll find developers, property managers, and acquisition people who deal directly with properties.

On the capital markets side you’ll find finance people who work on equity and debt deals to fund the REIT’s operations.

If you want to get into the operations side of a REIT, it’s similar to what you need to break into RE development: get a real estate-related undergraduate degree and network with alumni.

But if you’re interested in capital markets, you need real estate investment banking experience or an MBA – REITs are one of the main exit opportunities for RE bankers since you advise REITs all the time as a banker.

Bottom-line: if you’re more interested in finance, go the banking route and look for REIT exit opportunities; if you’re more interested in the bricks-and-sticks part of real estate, skip banking and go straight into development or acquisitions.

Compensation: Boardwalk or Baltic Ave?

Unfortunately, there are few good data sources on real estate compensation – but in general, pay is commensurate with risk and expected returns, at least on the buy-side.

The main exception is development – it’s the riskiest investment class and yet the pay is also the worst.

You might think of Donald Trump and say, “Aha! Real estate development is where the money’s at!” but don’t be fooled by the celebrities: there is big money to be made in development, but not in the way you might expect.

The real money in development accrues to those that put their money at risk in the developments.

To complete construction of a new property, the developer itself only puts down a very small portion of the total equity – maybe 5% or less. Many times you will find that the developer simply contributes their land basis as the only equity in the project. The developer will then use debt and mezzanine financing to fund the entire construction cost.

So, start with very little money in the project and then add the fact that there’s no cash flow from properties that are under development until tenants move in and rental income starts flowing.

Even the fees the developers charge are not great compared to the overhead, so there isn’t much money left to pay salaries to employees.

Developers don’t make money until the project is built, fully-leased, and then either sold or refinanced as an operating building. Until that happens, expect to be eating ramen noodles.

So do not get into development if money is your main goal – only do it if you’re interested in building and construction side of real estate. You will not make it big until you have enough money to invest in development projects yourself.

For core funds and REITs, pay is consistent with base salaries for recent graduates elsewhere in finance – the main difference is that you won’t receive Wall Street-like bonuses in these jobs because the fees and returns are lower than in PE, for example.

On the private equity, hedge fund, and asset management side, compensation is similar to what you would earn at non-real estate funds. So real estate PE is similar to normal PE, real estate HFs are similar to normal HFs, and REIT-focused asset management is similar to normal asset management.

And on the investment banking side, you don’t see much of a difference at the junior levels between real estate banking and other groups.

Exit Opportunities

As with other buy-side jobs, the buy side itself is the end-game. Once you get there, it’s just a matter of working your way up until you become the next Jonathan Gray.

Be careful of getting pigeonholed: just as actors get typecast over time, you will also get typecast the longer you stay with the same job. So if you get into real estate and don’t like it, move on as quickly as possible or it will become more and more difficult to find a non-real estate job.

In addition to moving up the ladder, investing in real estate yourself is another possibility: a number of friends have amassed nice little portfolios of multi-family assets. It’s not uncommon to get a few friends or relatives together to purchase small rental properties.

Raising a small fund of your own is also possible, but just as with starting a hedge fund you need to raise some seed money to get started – you would go to friends and family first, show solid performance, and then approach a broader set of investors once you can point to results.

Do You Have an Edifice Complex?

It’s a great field to get into, but don’t expect to become Donald Trump right away.

Until you have enough cash to fund massive real estate developments by yourself, you won’t see your name on any buildings.

The long-term prospects for real estate are always positive. After all, the world isn’t making any more land anytime soon.

Even More on Real Estate

If you want to learn more about the modeling and valuation side of real estate, check out the new Breaking Into Wall Street Real Estate & REIT Modeling course, which covers both individual properties and REITs via case studies of an apartment complex, an office development and sale, a hotel acquisition and renovation, and Avalon Bay, a leading apartment REIT. (Credit To Career Paths)

 

Going Rogue

This is a repeat of post that I was asked about  many times, so here it is:

 

Going Rogue: The Bad

Let’s break it down in plain English. If you really want to know when it’s okay for a commercial realtor to go rogue, the answer to that question is: never. The reasons why are simplistic and straightforward if you take a moment to about it. In the commission of the everyday duties of the commercial real estate broker, there simply isn’t any room for lone wolf tactics. Most of the time as a broker, you’ll be reliant on fostering working relationships between parties to advance your aims and speed real estate deals along to their rapid conclusion. If you want a perfect example of why rogue behavior doesn’t work in these cases, think about property owners interested in leveraging commercial assets by leasing a building, or lessees who want to take advantage of extra space by bringing in subtenants. If a realtor doesn’t adopt a “team player” approach when trying to work out one of these deals, nothing will ever get accomplished.

Going Rogue: The Good

On the other hand, there are some instances when roguish or “lone ranger” approaches to conducting business are perfectly acceptable, even welcomed like a breath of fresh air—but there’s a catch. It’s only okay when it’s a concerted effort made by an entire brokerage firm, acting in unison to break new ground. Most of the time you’ll hear people slap labels like “forward thinking” or “innovative” on these types of firms. But regardless of what you label them, there’s little doubt that a commercial real estate brokerage taking bold steps at improving the performance of its agents by offering only performance-based commissions, and redefining the relationships between realtors and clients, is a good thing.

Rogue vs. Non-Rogue

If you’re confused, you shouldn’t be. Simply put, a rogue mentality works only on an conceptual level. When dealing with individuals in the real world, though—just as you would when serving a client leveraging commercial assets—the only acceptable action is to throw a lasso around the shoulders of that inner cowboy and hogtie him to the ground. If you don’t have a lasso and you’ve got lousy aim, try these more mundane approaches.

• Focus on teamwork. If that requires you to work with another broker outside of your geographical area, so be it. However, do not forget that civil engineering firms, law firms and market research firms can often help. We have used civil engineering firms in other markets to help identify active developers and uncover due diligence. Also, we have paid brokers in other markets for market data on an hourly basis instead of bringing them in as a part of the team. They like it because they get paid no matter what the outcome of the deal.
• Focus on the long term goal of the client and what it’ll take to make them happy. If the broker is compensated on client satisfaction, instead of “just getting the deal done, this is not a problem”.
• Forget your own best interests. Or better yet, make sure that your best interests ARE the client’s best interests by establishing Key Performance Indicators that are measured by the team at the end of the deal. Now the broker and the client knows up front what is “success” and how it will be measured.
• Strive for a multi-sided win-win situation. The days of smash-mouth broker negotiations are a thing of the past – the community of brokers look for great people to work with.
• Point your thoughts and concerns away from your commission and realize that long term satisfaction  in this business means knowing what part of the deal you strive to be an expert in, then get a great team around you.
• Put your verbal communication skills to work by engaging all parties in a personable manner. Pause before making that call and prepare for the conversation you are about to have. How do you view it going? What obstacle has to be overcome? How can that obstacle present a solution? Now – what is the simple message that you need to get across? Do you have any concrete or credible third parties that will support your proposal?
• Don’t resist pursuing certain options because they promise to be time consuming Develop a disciplined manner of working that emphasizes patience and diligence.  (credit to Cardinal Real Estate Partners)