How to source, finance and execute your own deal as a Junior?
As a junior (before associate/associate level), how do you learn how to:
- source a great deal
- find debt and equity
- negotiate
- structure an airtight deal
Obviously this will be for a small deal, because noone is going to trust you with serious ca$h since youre still young, but who are the gatekeepers for smaller deals within CRE?
At bullet point number 1 is where i percieve there to be the largest difficulty - given that everyone wants good deals.
The last 3 bullet points all seem like any kind of negotiation which you could translate from anywhere in life, but you are never going to be presented the chance to do these at work (for either an AM,PE/Capmarkets team).
Context (did 1 years internship at a top 5 AM manager worldwide, about to start at a "sell side" domestically dominant shop doing rotations across all their functions)
Thank you for taking the time to read this. Look forward to hearing what people have to share!
You learn all of the above by getting reps in with someone else's money.
Source deals for someone else in your day job, secure financing for someone else in your day job, etc. You do this enough and the individuals you interact with recognize that even though Mr. Boss runs the company, you are the person executing at every step. Plus, it gives you some time to build a net worth, which - at least for me - is the biggest impediment.
On some deals I have financed, the GP was relatively young with a big pocketed guy also on the carveouts. The guy with the B/S then charged a “Guarantor” fee at closing. That team has run this structure on a bunch of value add deals that have been successful.
That's the dream.
@Malta" - when you get good at programming, you need to make a sugar daddy app for real estate. Connect me with rich people (tech bros are fine) who want to play developer.
Not to be snarky... but you learn this by watching your 'seniors'. It takes time, like Gladwell's 10,000 hours to get good time. Don't stress it, focus at being the best analyst or whatever your role is.
With that grand statement.... sourcing deals is really a matter of relationships. Who knows you/your firm and what they do/buy/build. That is really the game, making sure your firm's name and reputation is inline to be called by the best opportunities.
But, you don't just wait for the phone to ring... You call on owners/brokers to turn up off-market deals. That can be researching property records, finding true owners, and finding a number to call the principal or their rep (believe it not, but google searches of owners' name can be a winner strategy).
here are my thoughts..
Modelling is key right now, less important in the future (still, top people build models here and there, just part of the nature, but it won't be a differentiating skill forever). Master it for sure.
You may disagree with Gladwell now (quality is a fair point), check back in a few years when you cross the 10,000 hour mark in the industry. Just wait.... quality matters, but time wasted on unproductive pursuits can be very valuable (the book Range is the best answer to Gladwell that I agree with)
Best relationships come from common cause. Clearly, those you work with, then those you do deals/business with, then those you meet or work with in organizations/industry groups (why joining leadership in groups like NAIOP/ULI can be so powerful). Mentorship/general networking can be powerful (the cause being your or boths' personal success), but is really a lot harder to make happen (but totally worth it).
The key to relationships is repetition and time, like simple seeing and/or speaking with someone time after time (at events or whatever) makes the difference. Maybe its a psychological thing, but we start out distrusting, then the more times we see/speak with each other the more trust is built.