Getting "Better" at RE

I'm wondering what everyone thinks is the best way to get "better" and more knowledgeable about real estate, especially given it's not a super academic field that you can necessarily learn from a textbook. Specifically, trying to move from a lesser-known LP to a larger "MF" LP or acq role at a large developer.

I read ~an hour of RE news every day but tbh stories can get repetitive (any recs for more technical RE news / info sources is welcomed). Could just work longer hours but don't know if tweaking more models and formatting more graphs is the best marginal use of time. Curious to hear your thoughts... 

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Dec 14, 2020 - 1:19pm

Analyst 2 in RE - Comm

 it's not a super academic field that you can necessarily learn from a textbook. Specifically, trying to move from a lesser-known LP to a larger "MF" LP or acq role at a large developer.

So, while I completely agree that you cannot really learn/master real estate from a textbook alone, I would challenge the concept it is any less academic at the higher levels than any other part of high-finance/high-end industry. So, if you are looking to scale up to mega-fund type institution, be sure you have the textbook stuff down as well as anything else, it matters more the higher up you go. 

Personally, I would advise figuring out a niche/specialty that you can be best at, know the most, and basically be able to show you can provide outpaced value within this domain. Clearly, you want to pick something or set of things that your target type employers would greatly value, you can legitimately be really/good/the best at, and of course, you genuinely find interesting/enjoyable. I'm not going to pretend to know what makes sense for you, but will say the better you fit around those three attributes, the better you can perform and thus meet your goals.

Beyond being good at "real estate", if you want to ascend the way you suggest, I'd would also read to become more "worldly". From social topics, art, politics, economics, world history, etc., the more "read" you are the more you will probably fit into the places you seek. If more interested in development, be sure to add architecture, urban economics, urban planning, cities, and the like to that reading/learning list.

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Dec 14, 2020 - 4:18pm

redever

Analyst 2 in RE - Comm

 it's not a super academic field that you can necessarily learn from a textbook. Specifically, trying to move from a lesser-known LP to a larger "MF" LP or acq role at a large developer.

So, while I completely agree that you cannot really learn/master real estate from a textbook alone, I would challenge the concept it is any less academic at the higher levels than any other part of high-finance/high-end industry. 

I would argue that real estate is far more complex and academic than most finance roles.  The sheer volume of knowledge and ingenuity that goes into building something far outstrips most other fields.

If you want to learn about topics hat might prove useful, tax law and contract law are both super relevant.

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  • Analyst 2 in RE - Comm
Dec 15, 2020 - 10:42pm

Don't think it's valid to group structural engineering into "real estate" - it's handled by entirely separate professionals and most people in real estate have (and need) only a surface level understanding of it. The engineering behind 95% of buildings is also very straightforward. 

If you're actually trying to argue that straight up real estate is far more complex and academic than most finance roles, that is absolutely fucking hilarious. People are winning Nobel prizes, building models based on stochastic calculus, and implementing artificial intelligence-based quantitative strategies, and you're over here like nah Chad Chaddington IV the multifamily developer is more academic because he knows how zoning regulations and tax credits work. But I hope I am just misunderstanding. 

Dec 15, 2020 - 1:15am

I really like the advice in the last paragraph, but for a different reason than improving the soft skills/social element. I think reading broadly, and being more "worldly" as redever puts it, will flat out make you a better real estate investor. And the reason why has to do with context and with being aware of your surroundings, both literally and figuratively. Some of this applies broadly to investing ("the last liberal art") but some is specific to real estate.

From a commercial perspective, the performance of any industry will correlate to the real estate it touches. No need for examples, this is just common sense. If you're trying to make global/national/regional/whatever allocation decisions, this has to weigh into your analysis.

From a macroeconomic standpoint, as a highly levered asset class, central bank policy and interest rates play a major role in the price of real estate. Dovetailing the commercial point above, job growth, population growth, consumer balance sheets (too much student debt? You'll be renting) all drive fundamentals for real estate. Fiscal and tax policy also factor in (e.g., SALT tax deduction elimination will drive marginal demand for real estate in low tax jurisdictions.) I heard a portfolio manager on a podcast say something to the effect of: when you buy a 300-unit apartment building, you're buying exposure to  300 companies. That's an exaggeration (a lot of them might work for the same major employer in a given area) and no one thinks about it this way in practice, but I agree with the essence of the comment.

Socially, you only need to look at Covid to understand the implications that human behavior has on the value of real estate. There could, and probably will be, a series of books to describe the tectonic shifts that are occurring as a result of this pandemic. But for some examples: people moving further from cities as they become untethered from work, moving to lower-tax states, getting bigger homes with more rooms to WFH; shopping more online and less in person; consuming more media content (data centers, production studios). When will people decide it's safe to start going back to resorts for vacation? Where will they go? Will office space design and usage patterns change "permanently" as a result of the pandemic? There are a billion examples like this, but these came to mind first.

And all this comes before considering any market-level urban economic factors like why people and businesses and X want to be where they do, and local politics, and local history and culture, etc.

My point is that real estate is deeply intertwined with humanity, because humanity exists in buildings. And value is going to accrue somewhere on this 3 dimensional plane, so it helps to understand a bit about the human condition to get your bearings.

So yes read a lot and read widely. It will help you become a better observer, which might help you see around corners earlier. And it will make you a more interesting person (remember, you have to be interested to be interesting), and like everyone likes to say, real estate is a "people business"

Dec 15, 2020 - 8:11am

^this is a great comment @stache_is_king" The best real estate investors/developers can sense where market trends are going, what cities will grow and why, what prop type will be needed, what people's preferences will lead them to do what. Not a perfect science for sure, but the more you understand the world, the more likely you are to see how it integrates.  

Amazing how little "excel modeling" skills will actually matter in a successful long real estate career!!

Dec 15, 2020 - 9:15am

I actually disagree with some of the specifics this, but strongly agree with the overall point.  Being a more rounded and better educated person will make you better at any profession.  Being thoughtful, or able to analyze a given issue from several different angles, will always lead to more success than being laser focused on a single topic.  As redever says below, Excel modeling is useful for about half a decade and then becomes completely obsolete as a skill.  It's one of the reasons I love this forum - most of the people here who have experience in the industry are big proponents of the idea that modeling is not the be all and end all of skills for a junior person to learn.

Dec 15, 2020 - 7:34pm

Really good thread here on WSO https://www.wallstreetoasis.com/forums/what-are-your-favorite-non-finan…

Copy paste of my comment..

The Millionaire Mind by Thomas Stanley, this is my go-to, must read book when anyone asks for a book reco... It's about the actual paths people took to get wealthy in the US, how they found niche careers, invested, and behaved out of the "normal". Note, this book is a bit old now, but still very relevant. It is also not a personal finance or finance book (the author wrote other more famous personal fin books, like The Millionaire Next Door, good for what it is, but the Millionaire Mind is 100x better and stand alone IMHO). 

Some other non-finance (because reading a finance book seems boring AF to me) that I will throw out, but you can go to Amazon to figure out what it is about

The Incerto (all books within it) by Nassim Taleb (Antifragile is the best/most important) (sure, some are sorta finance, but not the point at all)

The Alchemist by Paulo Coelho

Hero with a Thousand Faces by Joseph Campbell

The Way, The Enemy, and The Key (three book box set) by Ryan Holiday (and any/every book by Ryan Holiday, or his mentor Robert Greene, or Tucker Max who he worked for)... This guys is amazing author and is very young and just getting going!

Think and Grow Rich by Napoleon Hill (this was basically the "original" success book, you can read it, and never read another of its genre and do just fine)

Now some really good non-fiction authors that I would buy just about any book they publish at this point (not to say all their past works are equal, they are not)..

Malcolm Gladwell

Seth Godin

Jon Acuff 

Adam Grant

Peter Diamandis (Abundance is amazing, a bit dated, but should be a must read for anyone in business/politics) 

Cal Newport

Dale Carnegie

Michael Lewis (not just his finance ones, I mean if your on WSO you read The Big Short a long time ago)

Keith Ferrazi (Never Eat Alone is best book on networking ever)

Chris Guillebeau

For fiction, I only have a few authors I like enough to recommend their whole catalogs without hesitation (and sadly both are dead)

Tom Clancy

Michael Crichton

Dec 15, 2020 - 8:45am

Join ULI or a similar industry group and learn from your peers/people you meet.

Quant (ˈkwänt) n: An expert, someone who knows more and more about less and less until they know everything about nothing.

Dec 15, 2020 - 4:50pm

100%. I will note though, OP, that not everything is free, but it's usually a nominal amount per event and an investment in your career. Your firm may be able to cover it, a couple people I know have been lucky in that regard.

Quant (ˈkwänt) n: An expert, someone who knows more and more about less and less until they know everything about nothing.

Dec 15, 2020 - 11:41pm

I personally focus on asking why. When I have downtime, I review things I've worked on and come up with a list of questions that I glossed over. Example - lawyers fighting over term sheet net worth and liquidity requirements being above market - what is market? 5-10% for lq and 50-100% for nw - why does this matter? all about limiting exposure - what is the cutoff point at which a deal won't won't work for us?...etc. 

I think the more you ask why the easier it is to see the bigger picture. Also, being curious and always asking questions is a positive trait that makes you appear proactive and thoughtful. Eventually, people will start asking for your opinion on matters you may not have a lot of experience in because you can ask the right questions. Will start to snowball into more learning. 

Dec 16, 2020 - 10:06am

stay thirsty my friends

 Example - lawyers fighting over term sheet net worth and liquidity requirements being above market - what is market? 5-10% for lq and 50-100% for nw - why does this matter? all about limiting exposure - what is the cutoff point at which a deal won't won't work for us?...etc. 

This one is easy.  More billable hours.

Jan 13, 2021 - 10:47am

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