Smartest People in RE?
At what types of firms, and in what roles have you seen and dealt with the smartest people in the industry?
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Depends what kind of smarts you're looking for. From a pure mental horsepower perspective, the large multinational shops have the smartest guys. Large REPE/REITs acquisitions teams have fantastic macro knowledge and really understand the broader industry and numbers/investing like nobody else. Same can be said for multinational developers in terms of navigating zoning, politics, and project management.
However, if you're looking to get entrepreneurial in real estate and stay local to your market, then smaller successful regional developers/value add guys are the way to go. They have so much asset-level, operational knowledge which combined with a level of understanding of the actual local market dynamics and politics make them far more effective in the area they play than a multinational shop. I've looked at deals with regional operators that from a high level view looked like excellent deals, but got shut down by those guys because they knew some niche market detail through the grapevine that you wouldn't be able to find out from standard research methods. These shops won't be as sophisticated but they sure as hell are effective.
Real estate "smarts" are so varied and the type of people you want to surround yourself with in this industry is going to vary depending on your ultimate goals. If I want to break out and hang my shingle in my home town then working at Blackstone is going to be useless to me because the knowledge I gain won't be applicable. This industry isn't like traditional PE where you always want to go to the biggest brand name no matter what.
IQ wise, probably the large PE funds or some of the "quant" RE funds. But like the CREnadian said, it really depends on what type of specific knowledge/expertise you value.
“Quant” RE? Explain?
https://www.twosigma.com/businesses/real-estate/
Idk anything about them as I do not work at one. But here is an example.
The idea sounds cool. At the end of the day they think they're hiring engineers to gather a bunch of data in order to pick markets, asset classes, etc. with best potential risk adjusted returns. It might work. It might not. I wouldn't call the actual real estate guys the smartest. At the end of the day they're negotiating PSAs, getting financing, etc. If anything, they're more just being told what to target then coming up with the thesis themselves
This is so vague of a question as to be almost useless. As other people have said, there will be people at "quant" funds who have a higher IQ than most in real estate. But that doesn't necessarily mean they'll be any good at getting deals done. The same as the analyst in your incoming class who can create the fastest DCF model isn't necessarily going to be the best senior banker, the best real estate guys, or the kind of "smarts" most valuable, are the ones who can build relationships and solve problems in a manner that makes everyone look good (instead of alienating others).
As CREnadian said quite well, that usually means local players who understand the ins and outs of how to manage the deal process. I always try and point out that modeling and underwriting is a tiny, relatively unimportant part of even acquisitions - it's a guide at best, the real work is done on the ground, in the building. So the person building an underwriting from scratch in 8 seconds flat with no errors isn't actually providing a lot of value. The person who knows how to navigate local politics, or who knows how to negotiate a PSA and foresee the possible problems that might arise before they even are hinted at, the person who has a great memory for retaining details about exceptions to zoning, or who can communicate with a local alderman on their level... those are the types of "smarts" that actually drive deals forward and create value, and I think on a finance oriented site like this one, that gets lost a lot.
I know some NYC developers (and also architects, in particular) who know the NYC building codes backwards and forwards and find creative ways to value engineer, or who know the affordable housing process so well that bureaucrats are asking for their advice. Those guys are the ones who will end up making the most money, which I'll take as a proxy for "smart" here, because they're the ones who have a skill that it takes a lifetime to master, and not a two week modeling bootcamp.
Preach!!! Idk why excel monkeys are idolized so heavily on this site. I guess it is a finance oriented forum….let them master excel while the ‘smart guys’ are learning the real values which you outlined above.
They are idolized because to get that first job you need strong excel skills. And than for 3-7 years all you do is excel. So people learn excel really well. And than they try to transition to VP and above and don’t understand why they aren’t good at managing a process and people and so revert to trying to be the best at excel and be a model monkey. So they add these cool bells and whistles so their model but that doesn’t get them anywhere. In the end, people need to realize excel just isn’t that important - I do all my underwriting at the start on the back of a napkin. If it doesn’t work like that - it sure as hell won’t work in excel.
Would you be willing to give some examples of the very knowledgeable affordable developers or their companies?
In NYC? There are a ton of good examples of affordable housing folks who have done an absolutely insane job and made a ton of money. BFC Partners, L+M Development Partners, Dunn Development (which I think is closing down), Monadnock, Jonathan Rose... these guys have been doing this for decades, survived multiple downturns, and know how to drive projects forward in one of the most notoriously bureaucratic, red-tape filled municipalities in the country. Maybe it isn't "IQ", but the ability to code switch and talk to lenders, tax credit investors, public officials, housing advocates, and residents on their level and make them understand what your project represents and why it should be supported is a rare skill.
You don't need a high IQ for real estate... lol. Probably a baseline of a 110 IQ.
The smartest people in this industry have the best emotional/social EQ.
I would argue that anything above 110-120 potentially hurts you in RE unless you're at BX/KKR/etc.
Can confirm. Interned at a brokerage shop this summer and freaking hated it.
Naw, unless you mean nerdy dudes who are socially awkward
I'm probably the smartest
Matthews Real Estate Investment Services hands down. Those dudes are smart
The older I've gotten the more I've realized that the majority of people in CRE are average intelligence at best and no one should be put on a pedestal, even those with 30+ more years of experience.
Pref guys I work with that have billions deployed will straight up fly 5+ people out to our properties and all they come up with is "let's try to get higher rents and push occ". Yeah no shit - glad we're billing the property 20k for y'all to come to that conclusion.
For sure. The amount of man hours that goes into business plan analysis and comp work and analyzing financial statements and breaking out R&M line items blows my mind, on top of the MD, the VP, and the analyst from New York flying out and acting like they know the first thing about driving value at a suburban work force apartment complex. I’m not saying I do but a lot of people talk to maintain their value in this industry if that makes sense.
Yep. Traditional real estate (and niche asset classes) require very little actual intelligence and analytical skills. I felt way smarter in banking and felt the folks at the top in banking were way smarter / thoughtful. Once you know how to analyze real estate (from an LP position), it becomes pretty streamlined. GPs who are actually thinking through business plans, how to reposition assets, potentially rezone, etc., I find have much more knowledge (may not be as smart though). I think Blackstone used to be "smart." Now they're just deal machines - they can pay whatever because they have multiple buckets and they get the best financing terms. Even the guys who leave there to do their own thing - generally they're just doing the same thing of buying real estate and trying to find decent prices / leveraging relationships. Smartest guys to me are the ones who think of real estate broadly (e.g. they're just investors out of a real estate PE arm but they can make anything sound real estate related) as well as those who work in distressed real estate where cap stack and situational awareness come into play
Well if you define intelligence as "the things bankers are good at" then sure, people in banking will be smarter on average. But real estate developers need to be organized, need to have vision, need to have an innate sense of what is a good risk and what is a bad risk.... all of those are areas where your average developer is going to be far more accomplished than a banker.
Understanding how a multifaceted process moves forwards, how the pieces fit together, is a skill in and of itself and that shouldn't be sold short. Bankers focus a lot of attention on minute details, to be sure, but there isn't a real big picture understanding, which is one of the reasons investment banking is inherently somewhat predatory. Doing the best job possible for clients in the long term means sacrificing future business
On a luck-adjusted basis (not counting ppl that, say, bought in manhattan way back in the day before manhattan became manhattan), top REPE guys. have interacted w acquisitions and capital markets guys at BX, and came away very impressed
Curious about your thoughts on the capital markets guys at Blackstone?
Glorified loan servicers
I’d say it’s hard to find the smartest people in real estate because there isn’t anything too technical or difficult to comprehend about this industry that would showcase ones “smarts”.
Grant Cardone
i laugh so hard internally when i mention im in development and people bring up grant fucking cardone. Sat down with a smaller team looking to co-Gp w/ us on a deal. was their first development gig and much smaller than wed normally do, we sat down as it was a friend of my principals. They mentioned grant cardone and his seminar 8 times. i could not belive it
If anyone in a JV I was looking to form mentioned Cardone as anything other than the clown he is I would immediately walk
Donald Trump Jr
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I think the trick isn't to be a genius but to not be a total moron.
Hell even total morons can get pretty far.
Can confirm, total moron, doing alright so far.
Probably the lifers at the LifeCos. Must be pretty smart to figure out early on that life isn't just about getting returns.... though I can cry about it on the commute to work in my 2019 Porsche 911, so maybe I'm smarter than them?
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