Good Responses to Common Interview Question: "Why Real Estate?"

Same thing happened to me recently (and I have another one for Development Analyst coming up - oops!)

what do you like in real estate

DBI3171:

This should be the easiest question you get during an interview. If you don't know the answer, you probably should interview for something else.

DBI3171:

This should be the easiest question you get during an interview. If you don't know the answer, you probably should interview for something else.

This. You shouldn't be interviewing for jobs your not passionate about.. http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action.html

"Donald Trump seems pretty cool lol"

I always win in monopoly

Go onto the firm's website to see what kind of transactions they've done in the past, their investment strategy, if they publish research - read where they think the market is going, their sector focus (e.g. retail, office, residential, warehouse, etc) and so on. Then figure out what you like about it - this isn't a question others on WSO should answer for you (like so many people not having an answer for 'why banking'). If you do a bit of the research I suggested above, you'll likely get a better sense as to what you would (or think you would) like about RE.

They'll know you don't have prior experience from your resume, which they reviewed before your interview. This is a chance for you to say 'I've done some homework on your firm, what you've done in X, Y, Z... and I thought it was interesting because... '. Part of the question is to see if you've done some of the homework, and if you did, that shows interest beyond a canned answer.

I just interviewed and got the internship at a startup REPE shop today. Although I had previous real estate experience (with a brokerage), my answer was that I was an architecture major my first year in uni and switched to econ when I realized architecture wasn't for me, and real estate seemed to be a reasonable combination of the two. If you don't have anything that concrete, you could try saying you're interested because you see opportunity in the industry after the recession, etc. Good luck!

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:) Thanks!

"I enjoy the idea of mediocre pay and working under someone who, while also making mediocre pay, works for either a giant, bureacratic financial institution or for someone who inherited a bunch of property"

Just joking of course, I love real estate. And there is a lot more to it than just local families and big life companies.

I spent last summer buying re collateralized debt in fdic auctions and loved it. Any ideas on where to look in NYC or ATL to do something similar?

RE is tangible RE affects your life every day - you live in a house/apartment, you work in an office, you shop in retail stores etc. RE is one of the oldest asset classes and is not going anywhere There are many ways to invest in RE Lots of leverage can be used

I have a great answer for this question, and I feel a lot has to do with where you live and where you were brought up. Real Estate as an asset class functions differently then traditional equity or senior fixed income investments.

Most of the time equity and fixed income is made up of a product(s) which operate on a international scale. However, real estate, is the 1 asset which is 99% comprised of the local market. So when it it boils down to it, real estate is an asset made up of people.

Growing up in New York, the first thing you always asked a stranger at a party was, "which neighborhood do you live in, and how much is your rent." With such history, ability, and style of living people are always drawn to live in New York. And nothing quantitatively shows this more, then the real estate market.

I have a great answer for this question, and I feel a lot has to do with where you live and where you were brought up. Real Estate as an asset class functions differently then traditional equity or senior fixed income investments..

Most of the time equity and fixed income is made up of a product(s) which operate on a international scale. However, real estate, is the 1 asset which is 99% comprised of the local market. So when it it boils down to it, real estate is an asset made up of people.

Growing up in New York, the first thing you always asked a stranger at a party was, "which neighborhood do you live in, and how much is your rent." With such history, ability, and style of living people are always drawn to live in New York. And nothing quantitatively shows this more, then the real estate market.

I'll prefer to invest in real estate sector because in stock market the ratio or profit and loss is equal but in real estate business you'll always get a profitable return on your investment.

johnathon:

I'll prefer to invest in real estate sector because in stock market the ratio or profit and loss is equal but in real estate business you'll always get a profitable return on your investment.

My answer:

"Because I can see it"

because it's not so much the market deciding the price, it's really up to the capacity of the deal maker

Family ties (uncle is a broker)/ growing up stories work pretty well for me. I was always straight and told them I had no clue what I really like in real estate and just want to learn as much as I can and pick something once I have a better understanding (if pressed then I would just say XYZ because I think it is a very exciting time in XYZ right now given example 1, example 2 from recent news)

It can be a less efficient market because 1) Information is asymmetrical 2) The market forces affecting a given property or region are geographically independent 3) Illiquidity and stale prices lead to a greater dependence on experience and judgment

That is also the answer everyone else uses when interviewing for RE jobs....

It is a safe answer, but you won't stand out.

I'll second that your response is the boilerplate answer to the "Why Real Estate" question. And as RE_Banker points out, while safe, it's generally not going to impress seasoned interviewers.

When I ask this question to potential hires, I'm looking for the back-story, the event or course of events in your life that made you choose real estate. Everyone knows that RE guys get pigeonholed, so I want to know what drove you to make the decision to dedicate yourself to real estate. For me, and the majority of people I work with, real estate was a part of our lives from an early age - meaning our parents/family/friends were developers, investors, brokers, etc. and our desire to work in real estate grew from working or spending time with those individuals.

For me, the best response to this question, is the one that directly connects you to the industry (from past experience), not basic observations like "people need a place to work/shop" or "I think architecture is cool".

NPV Positive, what kind of personality traits and life experiences are valuable or can lead one to real estate?

I'm asking this for those of us not benefiting from nepotism--born into families with RE developers/investors.

I won't go into why I'm interested in RE, but there's a little bit of "looking over the horizon" thing going on here for me -- not knowing with complete certainty what lies ahead.

You kind of have to dig down and answer this question for yourself. You can spin life experiences a lot of ways to give a credible answer to this question. I interviewed someone once who grew up in a poor(ish) area and said he fell in love with real estate when he saw investors come in and rehab struggling strip centers in his neighborhood (obviously went into more detail but this was the general idea).

You can say "what kind of personality traits and life experiences are valuable or can lead one to real estate for those of us not benefiting from a poor background" to counter this just like you did with your nepotism argument. Point is, you actually have to have a reason to like real estate to answer this question well. There isn't a boiler plate answer that someone can tell you that will standout in an interview.

Thanks reLA. I'm actually interested in what kind of personalities thrive and love RE, not what the best answer to an interview question is.

Reason being is I'm coming up to a crossroads in my life: pursue economics grad degree or focus on RE finance

Thinking about the answer to that interview question may help you think about committing to RE Finance.

Every type of personality is in RE just like every other high paying (relative to the average american job) industry. You should choose to do it if you have a genuine interest in it not if you think your personality fits a (if there is one) mold. Just my opinion.

Hello, The single most important thing in real estate is marketing, which is the way one can find sellers and buyers and without it one have no hope of success in the real estate industry.

Thanks

OB23:

My approach to the question usually touches on the tangibility of the asset class, my interest in architecture, and how real estate is used by everyone on a daily basis whether it involves where the live(residential), where they shop (retail), or where they work (office).

Interested in hearing some other perspectives...

I've heard candidates say exactly that in interviews...many times. It never gives the impression of "passion".

I get this bad feeling you are fishing for an answer that you can use in interviews. Honestly, if you can't figure out why you are passionate about the business, why bother working in the business?

Why Real Estate?

You have a longer term value creation perspective and you fcking hate to pay taxes

Alt-HOI:

y

'Cause, bro. 'Cause

My answer for my current position was because our assets are tangible and affects people's lives every day. It's a pretty cool feeling going to a development site and seeing people living in and enjoying something your firm built and manages.

I like the fact that RE is essentially a hybrid asset class with both an equity investment/capital gain component as well as a fixed income/coupon portion in the form of rents.

I've had most people say it is because it is tangible and easier to understand then stocks.

One girl said she started to become interested in real estate because she was currently looking to buy a house with her boyfriend.

During my interview I said that I have worked during the past summers with my dad who is an independent contractor and the idea of real estate as an investment possibility has always been intriguing to me.

Real answer: real estate is the easiest topic in finance to grasp because it's tangible. Most people who work in real estate--commercial, residential, office, retail, private equity, IBD, commercial banking, development, etc.--are complete dumbasses (and I don't necessarily exclude myself).

Let's be honest with ourselves--the least talented among us go into real estate because the major non-real estate players in high finance probably didn't even give us an interview when we were 22 and this was the only thing we could apply for where they'd give us an interview and perhaps a $35,000/year job. Most of us will end up in dead end jobs but the few lucky/talented/risk takers among us will end up making 7 figures in an entrepreneurial role with skill sets we learned doing the grunt work.

Suppose one were to be interviewed for Real Estate. Would an answer along the lines of "I've had exposure to this from a young age due to family affairs" be a good / appropriate response?

The plusses I have seen are the growth and return through rental income with the biggest negative being that RE is illiquid. You can easily get 3-4% price appreciation and the same or greater rental income on top of that depending on the market.

http://www.ranieripartners.com/ranieri-real-estate-partners

State schools FTW!

lol so much anger directed at DCDepository. I think what he meant is that people circlejerk to the idea of M&A or TMT a lot more than 'mmm yeah baby i want to go into RE' from the getgo

Hilarious how people are actually personally offended by what everyone in this business already knows. It would be cognitive dissonance for me or anyone of the rest of you to believe otherwise. That doesn't mean we can't have nice careers, but I'm just pointing out the obvious. Why real estate? For most people it's because that's who called them back on their resume submission when they were 21/22 when no one else would because our university, grades, internships, etc. were not competitive for the elite jobs.

I am in energy--not real estate--and I like it for a lot of the same reasons; it's tangible, it pays income, and risk takers are heavily rewarded [or, conversely, demolished].

I believe I understand exactly what DBC is saying. A lot of the wealthiest people in my city are in real estate or energy, and an overwhelming number of them aren't from what you'd call "target schools." Please, before you link me to a public energy firm whose CEO and chairman went to HBS, realize that a lot of the serious money in energy lies in the private/independent sector, just as in real estate, tenant rep brokers can regularly pull in seven figures having graduated in the meaty part of the bell curve from a no-name school. The fact is, in real estate and energy, if you're decently smart, good with people, and have balls, your background is largely irrelevant; in high finance, you'll likely never even scratch the surface of the industry without some sort of pedigree. I think what DBC means to say is that there are fewer gatekeepers (excluding REPE and REIB in this generalization) to the industry, thus making it more accessible to your average state school grad who doesn't have brains in his teeth.

Sorry if I'm misinterpreting you DBC, just my $0.02.

Why limit yourself to seven figures? If you are participating in the upsides in an entrepreneur role the sky is the limit.

DCD, you come off as if your grasp of RE careers is limited to single family real estate agents. I know you know this isn't the case. Believe it or not, not everyone in RE is there because they got a 1.2 GPA in a ceramics degree. Some genuinely want to be. First off, this is finance- you're going to be hard pressed to find a job you like if any sort of "societal value add" is high on your priority list. RE is the closest you'll get IMO. You're owning the very places where people live/ work/ travel/ shop/ and entertain themselves. It's not that difficult to actually get a feeling that you're doing something. If you instead want to make a living shifting money from your left hand to your right hand, that's fine too. It's just not for everyone. Lastly, owning property is about 1,500x more plausible of a career "end game" than making partner or MD in PE or IB. I know people in RE who are making more than those positions and they didn't have to walk around with knee pads on for 10 years to get there (or start their career with 100+ hr work weeks).

Most of the people I know are in real estate for family reasons. TBH, it's not a place where an average joe can make decent money.

This is one of those "arguing on the internet" type discussions. I've raised money for real estate funds, and yes, the managers always seem less qualified than the guys doing tech, energy, whatever. The average IQ in real estate might be less - there's a reason even retail investors thought for a long time that real estate was the perfect investment (and still do in Canada). RE is easy to understand. But I've worked with some self-made guys who were basically former gang bangers, bar managers, who pulled their act together, found a good project, raised the money, and did well. They have their "fuck you" money. I don't. So who really cares at the end of the day. "Yes, we might be dumber than you, and we may not all be HBS/Oxbridge, but we are richer than you, and happier."

This devolved quickly. I'll try to get back on track.

I like real estate because of the interplay in actual markets (regions, metropolitan cities, mid-markets) is interesting to me. You think this zip code will improve? Why? Oh, room for biomedical engineering growth? Do we get better returns from renovating office/R&D building or building a new one? Expensive cars at the shitty apartment you drove by? Put in new flooring/appliances and jack up rents. I think that sounds like fun. Other bullets, which I think are mentioned above:

-self-capitalizing (buy some homes on the side while rents > mortgage) -capital gains tax -significantly safer investment -warm, fuzzy feeling knowing someone is destroying your plumbing

+1

I have an interview tomorrow and this is my general answer for the question....My dad is in construction and does a lot of site work for development projects around (major city). My Grandfather was an agent for the (suburban) area. I've always thought they were interesting careers, but I new I wanted to be apart of something bigger and better. The idea of buying/owning/selling a building as a tangible investment opportunity always intrigued me. When I'm in a city its interesting to think of who the tenants are, what they're paying for rent, who owns the property and how they affect the value. Real estate also seems like an entrepreneurial industry, especially as you gain experience and have strong network of professionals.

I ask myself this question everyday. Honesty, I think RE quite boring so looking to change

On a recent interview, i said

"real estate takes a bit of gumption and self confidence, b/c you're basically predicting where people will spend their money, lay their heads, and live their lives. i feel like you cant be in the business without it"

He seemed to like that response, b/c it complimented him, and lent some sexiness to his job.

LOL, reading this old thread I can't believe how offended people were at the obvious--that those of us in real estate are generally less pedigreed and that most of us chose real estate because we couldn't get interviews or job offers in PE, IBD, etc. Seems like extremely common knowledge.

Look around you. Do you see all those buildings where people live, work, and play and that finite ground you are walking on? Real estate is a huge and unique asset class.

The entire market cap of the U.S. stock market is in the neighborhood of $24 trillion. The total value of all U.S. homes--just homes--is about $26 trillion. The U.S. has A LOT of real estate assets.

The history of real-estate is the history of power. Also, real estate transactions have a long and storied history which predates all this new fangled going concern crap.

Like anything that produces cash-flow, Real Estate does and many financial instruments are derivable from cash-flows it produces offering investors a very attractive yield and overall IRR (this excluding all the things a banker can do with the debt). Real Estate is one of the few asset classes that you can feel, smell, touch, and live....and this also plays a psychological role in everyone's mind- its not like it will evaporate if some asset manager makes one mistake or a wrong pick one day.

Great points by everyone.

Additionally, taxation is very low. All my clients exchange out of each deal deferring gains. Generally speaking their depreciation deduction offsets and annual income generated from their income producing real estate. They pay virtually zero tax at ever level.

I would just add that its highly relationship and reputation driven so that's why almost everyone in the industry is only working on real estate (as opposed to focusing on multiple industries), hence its specialized nature and media coverage.