Real Estate Career from Scratch
Hello Monkeys, I have an interview Wednesday at a commercial mortgage banking firm for an Analyst position and I have no idea where to start in preparation for it. The firm has organized debt financing for retail centers, office buildings, industrial parks, storage facilities, hotels and others. This firm also operates in a mid-size market in the southwest part of the country.
My professional background thus far consists of a Financial Analyst role at a small company ($100m in revenues) and a Risk Analyst role at a very non-BB bank (~$5b AUM)
I have been reading around WSO and M&I for general information, but would love to be able to get some tips from anyone here who wants to provide their own advice. As someone with zero RE experience, I have a few questions such as; What are key formulas I should know? Aside from researching the company and being prepared to talk about recent deals they have completed, what are some major curveball questions that these firms like to ask?
Thanks!
NPV/XIRR/SUMIF/INDEXMATCH/VLOOKUP/HLOOKUP/OFFSET
If you have no real estate experience, I wouldn't expect crazy curves, maybe valuation methods, diff between irr/npv, reimbursement methods and other debt stuff (dscr, debt yield, loan constant)?
Thank you. I noticed the DSCR is listed on their website for some of the deals, but the ratio seems fairly low. Should I be worried about the stability of the firm if that ratio seems to be on a significantly risky end of the spectrum?
I wouldn't read too much into DSCR unless you know the entirety of the debt structure/the deal. A 1.10x on a 10 year IO loan that was done at a 3.75% isn't the same thing as a 1.10x on a 30/30 at a 5.75%.
This is a bank right not private equity so their underwriting criteria is fairly standard. RE is not complicated unless you're doing a hotel or some RE operating business. Know the following:
I doubt you will actually be negotiating the terms of the loan itself (prepayment, defeasance, release of funds, cure rights, events of default, etc) since those are worked on by counsel and more senior level guys at the bank, probably all fairly standard too.
As for modelling, doubt you will be doing traditional real estate cash flow modelling since again you're at the top of the cap structure and you're not really concerned with equity IRR, just the % of equity in the cap stack
GL.
I was bamboozled. It was a position where you would be working with the models they already have, going out to do site inspections, analysis of negotiated terms to determine if the firm can put it together, and a little bit of client facing networking. My current modelling and analysis experience blew their minds since it was much more advanced and complex than what they normally deal with which I guess got them thinking that I was overqualified. After running through my experience, they started talking more about how much you could make with them once you're promoted from being an analyst to an associate as opposed to the actual analyst opportunity or things you would learn in it.
Not really what I was expecting or what it was marketed as (unless I read it completely wrong, which is possible). It wouldn't be worth a $25k drop in pay, so I had to say no thanks.
anyone buy the REFM real estate modeling training? I'm trying to get others' opinion before I buy
Real Estate Technicals help! (Originally Posted: 10/22/2012)
I have a second round interview coming up for a real estate investment analysis position. The first interview was all fit and I believe that the second one will be more technical. I was wondering what some of the basic real estate technical questions are and how I should go about preparing for the interview.
Thanks in advance!
bump
Must Knows for Real Estate Interview (Originally Posted: 03/28/2015)
I have an interview with a REPE firm in a few days. My knowledge on the industry is not as proficient as I would like to to be. What are some must knows for an interview situation?
Cap rates, NOI, basic lease structures, comps, Differences in different asset classes multifamily, retail, office, hotel, industrial. And if you are interviewing in REPE you should probably know enough about the industry to articulate why you want to be in REPE it is a pretty specific field
Interview tips for mortgage/real estate products group (Originally Posted: 08/08/2012)
Hello everyone!
I have an interview with a Canadian asset mgmt firm (~C$35 bn AUM) for their mortgages and real estate products group. I have copied the job description below.
If you could help me out by highlighting potential questions they may ask or good things to read up on (i.e. industry trends, mortgage/RE primer, etc) that would be greatly appreciated.
Thanks in advance!
This role involves supporting the real estate & mortgages product specialist in the Toronto office.
Responsibilities include (but are not limited to): - Supporting the quarterly presentation and reporting processes - Supporting the creation of material to respond to client requests - Building presentations and material to support the real estate and mortgage related client service and business development activities - Researching the prevalence of select real estate investment products within Canadian, US and international markets - Researching the underling composition and structure of select investment products - Researching the key drivers of the Canadian real estate & mortgage investment market - General support to members of the real estate and mortgages investment management team
A good understanding of both marketing and financial concepts, an interest in further developing real estate & mortgage related research and communication skills, and an understanding of real estate concepts for the Canadian marketplace are required. You will be an individual with an enthusiastic interest in all aspects of the financial and marketing world evidenced by completion of a number of finance and marketing/communications courses. As well, strong computer skills, good oral and written communication accuracy and attention to detail are essential.
It's more like a research role.
Real Estate Interview (Originally Posted: 12/15/2011)
Hey,
I have a final round interview coming up with a boutique IB focused on real estate. I have been working with more FI based products so I'm not really sure what to expect. They are a small shop that does a a lot of private placements, PIPEs and sell side M&A. Are there any good resources for getting caught up on the Real Estate Industry and RE in general? Also the types of questions I can expect regarding placements, PIPEs and acquisition/recap models.
Thanks in advance
I am assuming this for entry-level, correct? If so, know:
*cap rate and what it means *IRR and NPV *what an operating statement looks likes *the advanced excel functions (sumif, countif, vlookup, transpose, etc)
I think there may be more I didnt cover. Search my old posts. I find myself ansewering these questions a lot.
Overall, the interview will be more about "fit" than about your understanding of real estate finance.
^ what he said - also, if your'e doing PIPEs and M&A, it'll be more 'investment banking' than 'real estate,' so just study as if it's for an M&A job.
as far as resources for getting caught up on the industry, check out pere news, costar news, globest, real estate section of dealbook, etc. Might also try to get your hands on an ER report on a REIT to understand how multiples/valuation are different (FFO, NAV, etc)
That's actually a great idea, never thought about that. That info is always public for public REITs, correct? Silver banana for you.
Awesome guys. Thanks for the help.
real estate interviews (Originally Posted: 03/23/2007)
anyone know what to expect in RE interviews? am looking into mainly buy side RE PE and RE acquisitions jobs currently. how different are their technical questions from IB questions (standard DCF/WACC/capital structure questions)? anyone have any experience?
I don't know how much technical knowledge you have of RE, but RE is basically run off of cap rates and value creation as your two main drivers.
Assuming you're familiar with a RE income statement/cash flow, you want to take your beginning NOI and divide it by your cap rate to get to your purchase price, and ending NOI/cap rate to get to your exit price. Obviously cap rate is the percentage of NOI to price, and has an inverse relationship to your price. In other words, the lower the cap rate, the higher the value.
I would probably be aware of how RE statements flow from the sources and uses, to the income statement down to NOI then from there how to calculate cash available for debt repayment, FFO, AFFO, etc. If I was feeling ambitious I'd study up on cash flow waterfalls and seniority of debt, how different traunches of debt allow for juicier returns (i.e. mezz with x% current pay coupon, x% PIK).
thanks gametheory! this is helpful. i guess it sounds somewhat similar to the DCFs i've been building but need to get more acquainted with RE statements.
anyone know of a good RE valuation book?
also, anyone know modeling in argus differs from excel?
I'm currently a financial analyst with a REIT, and work alot with acquisition analyses and the like. I can tell you from my experience that alot of the modeling is all about projections within given markets. The numbers we are focusing on are Cap Rates and IRR's. Alot of work with excel (of course) building models. As noted above, common language includes FFO & AFFO. As for books, you can search some out at bookstores and online of course, but I feel there are alot of websites out there that go over RE terminology specific to the industry.
Argus has its own format, but you do have the ability to copy and paste what it spits out into an excel document. I'm beginning to work with the program, and it seems very straight forward.
As for interviewing, I'll assume you are appplying for an analyst type of position, where you will be crunching numbers and reporting to managers. If you show you have the ability to learn the concepts (should be a training period where you learn firm/industry specific skills), interepret results and report back, you should be good to go. Obviously, you have to prove to them why you are a better candidate than the other interviewees.
thanks LU Pitcher.. i had a chance to read up on RE valuation this weekend. its slightly different from your typical DCF. also, direct capitalization was a new concept to me. however, i think i should be able to grasp everything without any problems.
do you or another other ppl on this board know any specific interview questions they ask for an entry-level acquisitions analyst position?
Need advice from someone with real estate experience (Originally Posted: 07/21/2010)
I am currently interviewing for the job description below for an entry level commercial real estate analyst position at a 3 person real estate Asset Management firm. I am not familiar with what an entry-level commercial real estate analyst would do at a real estate asset management firm as the lending side of commercial real estate has always been more interesting to me.
Is this job inline with what someone would do at a larger firm and is this experience going to meaningful in a few years? Would this be a stepping stone into a decent career in real estate? Your thoughts?
Commercial Real Estate Analyst - maintain and update tenant insurance files - correspond and liaise with insurance brokers and tenants regarding the annual renewal of tenant's insurance certificates - ensure insurance policies are in compliance with the terms of tenant leases - visit and audit properties - analyze real estate market trends - analyze leasing, construction and sales projects and monitor and supervise their progress - interfacing with the brokerage and mortgage community - coordinate and evaluate operating budgets and marketing initiatives - prepare and coordinate property operating reports between accounting, property management and client communications - co-ordinate between property management and accounting on monthly operating expenses and ongoing building maintenance - other special analysis projects as they arise.
so your an asset manager for RE properties. I think you would want to be on the acquisitions side, at least thats what I prefer. You basically have a portfolio of commercial RE properties that you overlook, do market research, value on a quarterly/yearly basis for the books, and make sure everything is running good. (hire new prop manager, talk with leasing officers often, drive up vacancy). You are basically over shadowing everyone that has to do with the property.
Cool job, not very exciting unless you love RE.
I'm on the Acq side, so once I close a deal, I send it over to AM and they manage it.
agree with nutsaboutWS. Asset management is a great start. Just make sure you get some modeling experience while you're there
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