Multi-Family Acquisitions Excel Test
Does anyone have an example of what an excel test for a multi-family investment shop (ex. Equity, GID, Avalon) would be like? Or an example would be helpful
May 15, 2019May 15, 2019
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Comments (15)
At what level are you doing it for (Senior/Junior analyst etc.)?
An analyst role, not senior or junior....About 1-2 years of experience
know your way around a rent roll, for starters. i don't have it but i took a MF Excel test and they gave me: Rent Roll, Debt assumptions, a bunch of supporting documents to round out the OpEx portion of the model.
Remember not to overthink it during the test. If you've done some MF modeling, in my experience, these tests are always easier than you think they would be. Follow the directions and don't go overboard.
Commercial Real Estate Developer
I guess a better question is what excel funtions should I prepare myself for. Obviously any model I have been working out of already has these equations in so theyre automatically calculated (ex. cap rate sensitivity table analysis, PMT). Things that actually take some financial knowledge, not like a vlookup where it doesnt involve anthing financial if that makes sense.
So essentially what functions do you think i should be prepared for in terms of the excel test?
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Learn moreMost MF models do not require a ton of financial excel functions. A lot of the work is making sure cells tie correctly and all of your formulas are correct. Entails a lot of general functions of excel (i.e. vlookup, sumif, if, ifs). Only strictly financial functions you would need are PMT, NPV, IRR etc. but those are only used in a handful of cells, whereas the general formulas apply nearly everywhere. Also is this timed? If so, you should be very comfortable with shortcuts. I think you're overthinking it. Do you have previous MF modeling experience?
In my experience there's a 50/50 chance you won't even have to use that on the test. It's more "Make sure you subtract expenses from income to get the NOI."
Commercial Real Estate Developer
You listed 2 REITS and one real estate investment company - so take this for what it is. Depending on whether or not you are interviewing for an re investment company you may be asked to model an equity waterfall. If it's a REIT you won't but something to be aware of nonetheless.
Took a test recently. The gave me the rent roll and all the various trending assumptions. For the debt they gave the rate, amortization, and DSCR limit on the debt and asked me to size the loan. Make sure you set up your inputs nicely and make the pro forma dynamic. When we test candidates I hate it when they burry the assumptions as hard coded values.
You also need to be comfortable with calculating the remaining principal on the loan for exit analysis. Every test I have taken only ask for one holding period scenario, but bonus points if you know how to make it dynamic.
They then gave a discount rate and asked me to come up with the value of the property. (Debt plus sum of PV of CFADS)
They then gave me another bid price and asked what the IRR would be on that. A good way to check these two answers is your IRR should equal the discount rate if you use the value you came up with as the purchase price in that calculation.
Good luck.
I've taken a couple of these and also seen a few others. Somewhere on this site is a prudential excel test floating around.
What they more often are testing, especially for acq, is your logic in evaluating a property. Thus you will often give you some type of old Broker tear sheet with property info, maybe an axiometrics demographics report, and an income statement.
oftentimes the question is as simple as "what is this property worth, would you buy it and why?".
Some other tests will get more specific with questions...i.e. they will give you an income statement, growth rate...and then ask you what the yield on cost is in year #.
One thing that they rarely ask about, which always surprised me, was debt metrics and info. If you think about it, most assets are leveraged at 65%+. So to have 65% of your asset tied up in a loan, I want my analyst to know every corner of the loan docs and how to model the term sheet. i.e. explain the meaning of certain covenants...simply how to build an amortization table for a loan with an IO period - you'd be surprised how many don't know how to do this.
just my two cents though.
If you can complete this test (https://imgur.com/a/W1HFd) comfortably in 2 hours, I think you'll be well set-up. I doubt they'll be looking for knowledge of any particular finance functions, but more so can you model Multifamily at a high level. Given this test includes lease-up, debt sizing, and a JV structure I can't see what else they may thrown in other than something like an extra credit cash sweep till you hit a certain threshold or similar.
if you're looking for a take-home test (24-48 hours of allotted time), i have come across a few. PM me with an email if you're interested
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