Is it possible to break into real estate IB/PE from real estate brokerage
How would an interviewer at GS, Blackstone, etc. rate on a scale of 1 to 10 if they saw that Joe Six-Pack did real estate at Coldwell Banker or Cushman & Wakefield?
1, unless from eastdil
1...maybe even zero. The two careers (IB vs. Brokerage) could not be more different in terms of culture.
A more feasible career track would be:
Investment Sales (not leasing) Brokerage (Eastdil/CBRE/JLL/HFF/C&W) ---> Bottom to Middle Tier REPE
^^Still not likely, but I have seen it happen a number of times.
I have seen several people do investment sales --> REIB (sales, though). I've also seen office leasing --> IB (brookfield financial) --> mba --> buyside RE (institutional). In the Canadian market it isn't too uncommon. Sales is a good way to get introduced to parts of the business: begin to understand the product better, lingo, pitching, etc.
I should say, however, that the biggest thing PE looks for is modelling skills, which you will not learn to a sufficient degree in brokerage. you would have to go outside of your development at work in order to build those skills.
I should also add that the value investment sales brokers bring to the table has more to do with their connections to RE buyers/sellers and market knowledge.
My group hires mostly from these three pools:
Young analysts (with 6 months to 1.5 yrs of exp) from similar RE investment groups. We find these guys through recruiters and professional networking, and they are usually difficult to poach.
Ex-REIB analysts/associates. They make up the largest portion of employees here, but not by a siginificant margin. These guys get finance, but typicaly lack real estate knowledge.
Ex-Investment Sales brokers that work in the instiutional (typically +$20 M deals) space. These guys get real estate, but they typically lack finance knowledge. These guys make up the smallest portion of our acquisitions team.
How well would someone place from an analyst position with a developer (top 3 market)?
what kind of developer? i'm curious about this. I would put equal value on brokerage and dev IMO. Both of those get to know the sticks and bricks and market knowledge aspects of RE very well. That is where they would beat out an IB analyst. I am, however, biased. I have applied to Columbia's msred 2013-2014 program, and my ideal exit would be large RE fund/development company such as Tishman Speyer, Blackstone, Carlyle, Vornado, etc. I have some strong existing relationships and am going to network my ass off, as well as work my ass off to finish top 10% of the class or better. Still need to determine whether to try to go for an internship during studies or spend more time in classes.
What kind of modeling skills are you referring to exactly?
I have never worked in PE, but I was basing it off of conversations with analyst & associate friends.
"Think of property modeling as “startup meets leveraged buyout”: You’re starting with literally nothing, assuming that you’re modeling a new property development. Over time, you will incur more expenses as you develop the property and eventually you’ll turn a profit as soon as tenants move in and you start charging them rent. But just like in a leveraged buyout, you use a combination of equity (cash) and debt from investors to fund the development. …And also like in an LBO model, you always need to sell the property in the future to realize a good return on your investment. Compared to normal financial modeling, here are the key differences: Property modeling is much more granular – you’ll be thinking about individual parking spaces, rooms, square feet or square meters, and so on. If you’re artistic, you might even get to draw a few pictures and diagrams along the way. Timing is far more important. You can’t just assume slightly different numbers each year – you go down to individual months and make wildly different assumptions in different phases of the project. Financing is… different. You use different types of debt and equity, and the total funding required is often a far higher number than you expect because interest is capitalized while the property is under construction."
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