Is ARGUS for idiots?
Hey Monkeys,
As my name suggest, I work for a REPE firm on the acquisitions side. I'm looking to make a lateral move at the moment, but when I speak to potential employers they always ask about my familiarity with ARGUS. I don't have any, and this seems to immediately turn them off. I can confidently model any asset class from scratch in excel (and tell them this) but I have never even seen an ARGUS model before.
My current boss always tells me that ARGUS is for idiots who don't understand basic finance or how to use excel and need to simplify things. How true is this?
My thoughts are I should probably just take an online class so I can check it off. Just curious as to everyone's thoughts. Is ARGUS really even needed? Why is it so popular?
yea dead easy. i went ahead and did the 2 day course a while back just to have the cert, though my shop doesn't use it, some firms use it a lot - esp for AM. Just pay the $ and get the cert if it's creating that much of block in ur process. if you can model at all, then you can do argus backwards with eyes closed ...and if the place you land in does use it, your familiarity/ learning curve will be swift -
which course and how expensive?
would it be silly to get certified before even getting into the industry? my thoughts are it's just another beneficial line item to add to the resume to help me break in.
Thanks. I think I'll go ahead and do that just so I can put the cert on my resume and avoid all future questions about it. Like you said, it will be easy, so why not just knock it out.
Argus is vital for office/retail deals with a lot of leases. If your looking at a 100 tenant office building would you model all of these leases in excel? I wouldn't.
Its also helpful with portfolio acquisitions and makes rolling up all of the individual income streams less painful.
Thanks for the info. Makes a lot of sense. Argus would be vital in those situations. We always do one-offs so I never had to model a portfolio or a property with over 20 tenants.
I've always held a similar opinion. It's not hard to modify an Excel model to accommodate whatever reimbursement, step-up, or absorption structure that the leases include. Half of the Argus DCF screens are basically a spreadsheet anyway. Excel isn't hard; people should be expected to be competent at it.
I've underwritten, in Excel...some of the largest mixed-use buildings in NYC (CMBS loans), with every kind of lease imaginable. Granted, this was from a debt perspective, which is simpler.
That said, I can understand the desire for standardization and consistency, which becomes more important as your RE shop and deal team gets bigger. It becomes more difficult to rely on your analysts for good model design and error-avoidance.
I have two words to describe Argus: false precision.
Bingo.
But to respond to OP: I would just say that you're familiar with it. Not one to suggest lying in a job interview, but if you have experience modeling, and an understanding of what's going on, argus is very easy. Classes can help illuminate some of the nuances of some of the calculations which are occurring behind the scenes, but if you are familiar with analyzing cash flows already, it should be very easy to understand what's going on behind the scenes.
Precise commission checks go hand in hand with falsely elevated cash flows..
I'm taking the certification test today (how romantic) so, as an idiot, I'll let you know how it goes.
Honestly though, the course was a joke and I don't see it being too hard. If it's preventing you from getting jobs, why not learn it? No use putting your foot down and taking a stand over something so pointless.
As others have said, if you understand basic modeling, then ARGUS isn't difficult to learn. If you specialize in single tenant or smaller properties, then you might not find it any different than using Excel.
I see the most difference when working on larger deals with multiple/complicated expense reimbursement methods (like regional malls or office towers) or are working on redevelopment projects.
Also, as @sigan7" noted, the error-checking and industry standardization is important because if I got an Excel model from a broker, I would feel compelled to check every single formula in the workbook, where as in ARGUS I just need to check the assumptions and I know how the program will process the calculations.
What is the best/cheapest path for getting certified?
The 2-day course is fairly expensive (>$1000) so I'd only take it as a last resort. Also, most firms currently use DCF '15; however, it will be largely phased out and replaced by Enterprise in 2016.
Honestly, you could probably familiarize yourself with the platform in a day so if you have any friends in the industry that may be an option.
Side note- has anyone gone from strictly Argus modeling to Excel? I'm strong in excel but nervous my use of Argus will inhibit growth or opportunities in the future.
When I'm underwriting a 5-10 building portfolio with 100+ leases there would be no way I would go home to sleep at night without Argus.
In the office/industrial/retail side Argus is my best friend.
I find Argus extremely useful in my day to day. It eliminates the calculation errors or formula problems that can be easy with Excel. That being said, garbage in garbage out. In order to use it effectively you need to really understand how your assumptions affect cash flows.
For flexibility, we model the property in Argus but then dump everything into Excel for further manipulation. Accurately modeling debt in Argus is a pain. I'm pretty certain this is standard right?
Yes, at least from my experience. Argus for property-level cash flow > dump the output into excel to manipulate otherwise.
Great feedback. Thanks, everyone.
We've developed a platform to streamline the DCF process - built it out on a $6bn portfolio, and now looking to roll it out more broadly. I'd be interested in getting feedback. LeaseLinks
Well, first of all, I wouldn't call anyone who can't model complex lease structures in Excel an "idiot".
Secondly, even if you can model all investment strategies confidently in Excel, who's to say that someone else will accept that format? A complicated excel sheet that has formulas depending on formulas that depend on other formulas is hard to audit. Argus, as "blackboxy" as it may be, is at least a standardization of "blackboxiness", if that makes sense.
Somehow, Argus is the market standard... but hopefully not for too much longer. Check out Assess+RE, which is a new Argus-like underwriting platform. Currently free to use in open beta, and does virtually everything that Argus does. (Full disclosure: I'm helping to develop the software with a few other former Argus experts.) No downloads or installation; it runs out of Google Chrome.
Pretty cool. I'll check it out.
Adding in multifamily functionality would definitely be a way to differentiate yourselves from Argus though. I never put my certification to use.
Fair point, and we will definitely be adding functionality for that sometime in the future. As I mentioned in another post, though, multifamily lends itself to being underwritten in Excel way more so than does any type of commercial real estate for a variety of reasons. For example, 1) almost 100% of multifamily leases are "gross" in nature, which is obviously less complicated than either NNN, NN, modified gross, etc. leases that are more common with commercial real estate, 2) uniform, single-year leases with no options, and 3) limited different space types (as in, even a very big multifamily property still probably won't have more than 5-6 different unit types).
But again - we will be adding that functionality in the near future.
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