Breaking into Acquisitions

Looking for advice on where I should focus my energy in order to break into real estate acquisitions. 
 

I am currently three years out of a non target university with a B.S. in Finance. GPA is 3.33. After graduation, I had a tough time breaking into acquisitions and had to accept a job on the construction side of a REIT


Since then I have applied to a lot of analyst jobs and haven’t had any luck. Looking for any advice anyone might have to help me become a stronger candidate for analyst positions. Or should I spend more time trying to break into Asset Management

 

I have had opportunities to get into brokerage. I live in a expensive area so I can’t afford to work for commission. I know it can be lucrative but I couldn’t float myself early on in the career. 

 

This is the best way. You'll be far more marketable going this path. Many brokerage shops have analyst positions that are salaried. In those roles you'll see tons of deals. For many of those roles, you transition to a salary+commission brokerage position -- then you'll be able to add context to the transactions you saw the previous year and learn the transaction side of the business. By the end of the second year, you join an acquisition team. You'll have a good base of underwriting skills, be able to confidently/eloquently discuss deals, understand the deal process, and have a Rolodex of contacts to source deals from. 

 

I do project management for them. Deal mostly with tenant improvement and vacant space prep projects. I did construction labor jobs while in school to help put me through college. Because of this I was able to get in the door with the intention to move into the acquisitions side. I have considered going the development route since I could leverage my background in construction easier. 

 
Most Helpful

If you want to be in acquisitions, you must first recognize that it is probably one of, if not the most, coveted roles in a CRE firm. Good teams are generally lean and people stay put for a while unless they're at a shop that has a 2-year program and they're gone.

With that perspective in mind, you must do the following:

  • Know your underwriting metrics cold
    • Explain and know how to calculate Cash-on-Cash, Equity Multiple, Cap Rates, IRR, Debt Yield, Debt Service, etc. 
    • Explain and know how to run through a proforma from Gross Potential Rent down to Net Cash Flow (Levered and Unlevered)
    • If you don't know the above, you will be kicked out of a process immediately (generally speaking)
  • Have an opinion
    • The core of acquisitions is deliberating investment opportunities once you've sourced and underwritten them. Have a general thesis - I like X product type in Y location because the risks are A, B, C but that is outweighed by the upside which might be ___________. Have a general strategy in mind and make sure you're interviewing with groups aligned with that strategy. They want to see your thinking behind why you would make an investment and how you weight different factors in decision making.
  • Know the market
    • As for markets, do your research by reading market reports, broker reports, and speaking with your peers to know trends (cap rates, interest rates, rent growth, hot markets, etc.)
    • Focus on knowing how your product type generally compares to other product types
  • Demonstrate interest and passion
    • Real estate folks work for money but they also work because they like the art of the deal and the hunt on the acquisitions side. You must communicate your interest and passion and avoid the "It's tangible" line that is so cliché and makes people's eyes roll. Why do you really want to be on the acquisitions team of a company? What do you hope to learn? Do? What's your growth path? Why acquisitions over anything else? Show your hunger and intellect here.
  • Network like a mad man
    • With LinkedIN and tons of ways to find contact information, there is no excuse not to network. You should DM/e-mail/call owners, brokers, and lenders in the space that you wish to operate in. By connecting with people, they get a feel for your personality and may be able to recommend you to a group they know might be hiring, etc. Be honest, let them know you're looking to change careers and would appreciate any guidance they're willing to provide for 15 mins over a call or brief coffee chat. If they cant, ask them who else they know that might be interested.
    • Go back to your university and familiarize yourself with the resources at the real estate association.

Hope this helps. Why should you listen to me? I broke into Acquisitions and worked my way up. I've also hired about 10 people for an acquisitions role over the last few years.

 

Thanks for the in depth response! I do need to brush up on my real estate finance. My university didn’t specialize in real estate so my studies were more basic finance. 
 

I have looked into getting a real estate modeling certificate. Do you think this would be beneficial or should I focus on a different type of certificate? 
 

I need to network a lot more than I do. My company does a lot of events with real estate associations. I will have to use this to my advantage and get on it. 
 

 

in response to the “why acquisitions question” my answer would be because I want to do my personal investments but I’m not sure if that’s a good response to that question, maybe even be a turn off for some firms because it comes off as I don’t want to work at an institution in the long term. Would love your thoughts on this…

 

A construction background is definitely an easier sell for AM roles. Would not hurt trying to get an AM spot, seeing if you like it, then trying to switch as it would be much easier to go from AM -> acquisitions than construction -> acquisitions. 

 

I would say it's a combination of deal volume + underwriting skills that you get in a brokerage role that will transfer over to an acquisitions role. You won't really get exposure to that on the AM side. Saying that, I don't know if there's a preferable route. There are other skills you develop working in AM that you won't get in a brokerage role that would transfer over to an acquisitions role as well.

 

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