Hello,
I am a strategy consultant who is applying for real estate acquisitions jobs. I had a first round interview yesterday and it went well. The firm is bringing me back on Thursday to do a short excel test and a pencil and paper math test. Can anyone please tell me what I can expect and also where I could focus my preparation? If anyone has a sample test, that would be greatly appreciated.
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What firm?
It's a family-owned, firm that invests in multi-family property all over the US. None of the current analysts seem to have IB experience. I want to be prepared to successfully complete any excel or math test they fire at me.
What type of investor are they? Core, Value Add, Opportunistic? If they are value add/opp my assumption is they'll want you to model out a deal (looking at ROE/IRR/ROC). I'd study and know the key drivers of deals (timing, comps, cap rate, etc)-- knowing how these work and how to manipulate them to make the numbers do what you want them to do is important (both from the perspective of you manipulating the outcomes and knowing how others that send you deals might be manipulating outcomes). For the simple math test I have no real insight other than maybe working through how to value a piece of property (more looking at your thought process than actual numbers).
Hope this is helpful.
Is this firm located in the US out of curiousity?
I’ve never had to do a simple test, just given my background, but I can see it for someone with a non-finance background. I would know the basics – i.e. Walk down to NOI and value. For multi, high-level, assume potential rent ($100), less vacancy and credit loss ($10) = effective gross revenue ($90). Subtract op ex which for multi fam, the biggies are maintenance, taxes, insurance ($30) = NOI ($60). Assume a cap rate (6%), = $1,500 value.
I would think if you can do that, you’re good. Math test? Who knows. Could be anything. I’ve heard of people being asked 186 x 24 in their head. Obviously it’s easy if you think about it but I know of one guy that’ll ask stupid stuff like that just to see how flustered the person gets.
I’m sure they don’t expect you to be an expert since you’re coming from another industry but obviously do some basic prep work and have a story as to why RE, especially multi family, etc. Good luck man.
$60 / 6% = $1000
haha., nice catch...OP - I wouldn't get the job if I did that! Despite not actually doing the math, I hope the original point isn’t lost. Good luck
I just spent 20 seconds staring at that post and thinking "how does 60 / .06 not equal 1000?"
Thanks everyone! Very helpful!! I'll be back to help others when I nail this interview.
Ya, I'm curious to see what the pen and paper test could be...
Good luck, let us know how it goes
Thanks for everyone's help. The modeling interview was significantly easier than expected. They provided me with Income and Expenses and asked me to model NOI and to test the effects of various changes on NOI. The only thing that threw me for a loop was that they said one of the expenses was 25% of total expenses (including that item) so at first it was a circular reference in Excel. I finally figured it out, but that did stump me for a bit.
The 'simple math test' was just that...really simple math. Adding, subtracting, multiplying fractions, etc. Simple and easy but I did review my basic math beforehand to be sure I didn't make any stupid mistakes.
Is the strategy consulting that you are doing now real estate related (it sounds like it is)? Where did you come across the acquisitions opportunity?
I'm also curious about this. Can OP give us an update? Did you get the job?
did you do a goalseek to get the .25% of total exp?
the pen and paper test could just be quantitative aptitude. That's pretty standard at tons of firms. I've taken them for numerous positions, including my current job.
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