How To Think Like An Investor
I’ve Been Debating On What Would Be A Better Beginning In Real Estate Out Of Undergrad. I Have Been Interning At A Development Company On The East Coast This Summer In An Acquisitions Role But I Think Starting Out In REPE would Better Develop Your Ability To Think Like An Investor. What Are Everyone’s Thoughts?
I Am Not Sure There Are A Lot Of Good Options
As a serious answer though I think that it depends, what kind of investor do you want to be?
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I think thinking like an investor is similar to being able to look at opportunities from the prospective of different people. The buyer, seller, investors, lenders, the market, the unknowns, the regulators, and the exit buyer’s investors/lenders/etc.
To do that, you need to work for, with, against them. You need to have a good memory and recognize patterns. You need to look at the risks, not just the upside. You need to witness setbacks. You need to taste glory. You need intuition and know when to go for it all, and when to walk away.
And when there are lines on your face; vertical wrinkles on your forehead between your eyes from a decade or more of thinking, calculating and making the tough decisions, you will even look like an investor.
Pay your dues.
I think asking "How to think like an investor?" is the wrong question and is too general. I assume you're asking because your goal is eventually to start you own firm/fund or head your own division/team. There are different ways to invest and different investment strategies and at the end of the day investing just comes down to assessing risk and reward. Everyone's risk/reward appetite is different, so there is no one size fits all. You could work in the real estate division of a life insurance company or you could work at an opportunistic fund. Either way, you will learn how each company thinks about investments, but they are just two very different ways of investing because of different risk/reward appetite. I think what's more important is 1.) working in a role and firm that you are really interested in because then you will excel and learn more and 2.) If your goal is to invest on your own or start your own firm, then you need to be able to come up with or replicate an investment strategy that you can actually implement based on your resources and learn how to execute (to be honest, execution and problem solving is the real skill set. You can have a great investment idea, but it's useless if you can't execute). You could work for a MF REPE shop and learn investment concepts and how they invest, but you wouldnt be able to replicate what the MF REPE fund does because they are on a completely different level. If your goal is to eventually become a principal or partner at the firm and run a team, then follow advice #1 and work at a company/strategy that you are truly interested in so that you can excel the fastest and climb up the ladder. As you work at the firm and see more deals, you will learn how that company invests and discuss with other partners/principals about different strategies.
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