Real Estate Modeling Test
Interviewing for roles with the real estate asset management team of a large bank was told next round would be a modeling test any ideas?
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Based on the most helpful WSO content, here are some insights and tips for preparing for a real estate modeling test, particularly for a role with JPM's real estate asset management team:
Core Focus Areas:
Practice Under Pressure:
Technical Skills:
Preparation Resources:
Behavioral Component:
By focusing on these areas and leveraging the resources mentioned, you'll be better prepared to excel in the modeling test. Good luck!
Sources: Real Estate Modelling Test Practice, J.P Morgan Asset/Wealth Management Video Interview, JP Morgan Commercial Real Estate HireVue Questions
You guys on this website are seriously brain dead. You’re posting the exact firm, and the exact stage you’re in while publicly trying to gain an edge. Do you not think people at these firms are not on WSO and know exactly who you are?
Hint: they are
At JP Morgan, models must exhibit GRADE A CANNONS that your little fish head girlfriends could only dream of
Del.
These modeling tests are usually testing whether you can take a set of assumptions and build a clean, error-free cash flow under time pressure, not whether you can build a development model from memory.
Based on what I've seen on the institutional side, expect some combination of:
A few practical tips: only build monthly if the assumptions force you to, meaning something happens intra-year like a lease-up hitting stabilization in month 6 or a refi in month 15. If everything is annual, build annual and save yourself the time. Getting the right answer matters more than making it pretty. And use XNPV/XIRR with actual dates rather than NPV/IRR. Small thing, but it will be well received.
As for prep, the best thing you can do between now and the test is sit down with a blank workbook, give yourself 90 minutes, and build a full model off one of the practice case studies floating around. Do that two or three times and you'll walk in having already made the dumb mistakes (forgetting to grow expenses, hardcoding the wrong exit month, etc.) somewhere it didn't count.
As someone who is getting back into interviewing, this is a super helpful refresher. Thanks!
Any tips on development models and best practices on modeling interest reserve for carry costs and the circularity here?
Glad it helped, and good luck getting back into it.
On construction interest, a few ways to handle it:
• Iterative calc (turn it on in Excel options) • Python in Excel, overkill for a test • Build an estimated interest reserve to break the loop, also overkill for a test
For a timed test, iterative calc is your friend.
For the dev model itself:
Timeline first. Land closing, pre-development, construction, lease-up, stabilization, exit. Everything keys off these dates, so lay them out before building anything.
Development budget by line item. Likely a development fee in there too, and they might hand you FF&E, legal, taxes and insurance separately, but for a test those usually just get lumped into soft costs.
• Land closing, single line item in the first month • Soft costs, from land closing through end of construction (sometimes into lease-up, depending on the timeline they give) • Hard costs, over the construction period
Spreading the hard costs:
• Straight-line over the period, fine and faster under a time crunch • Percent inputs to drive an S-curve, not wrong, just not dynamic • Beta distribution for the S-curve, what I use. Not overkill, but don’t reach for it on a test unless you’ve practiced it and feel confident. Straight-lining is the safer play.
The mistake that costs you points: make sure your monthly cash flows sum exactly to each development budget line item, and watch your date logic. A = where it should be adds an extra month of expense and quietly throws everything off. Easy miss, easy for a grader to catch.
Property cash flows. They’ll probably give you easier assumptions here. The one piece that materially differs from a regular operating model is the lease-up: model the percent leased ramping during lease-up, then drop to a market vacancy once it stabilizes. Model the sale at exit like you normally would.
Building the draws:
• Size equity and debt off the given LTC in your sources and uses • Leave a line item in the uses for the interest reserve • Draw equity first, then debt, calculating interest monthly on the loan balance • Sum that interest and reference it back into the reserve line you left
That last step is what creates the circularity.
Happy to go deeper on the beta distribution for the S-curve if useful.
Have a few examples, feel free to pm
Appreciate any cases too :)
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