For the past 10 years, I had the privilege of assisting undergraduate and graduate students in developing their real estate knowledge and their Excel skills for transaction modeling. During our training sessions, students targeting analytical roles at the undergraduate level often ask me how they can be valuable to employers beyond being strong modelers.
I generally tell them that there are a few more ways they can contribute on a meaningful basis:
- Bring an off-market deal
- Build a relationship that leads to an off-market deal
- Bring in a new capital source
- Bring deep asset and market knowledge.
New deals are the lifeblood of real estate firms. Off-market deals are preferred, as on-market deals are easier to find, and are competitively priced. All else equal, you don’t have to pay the highest price among peers to win a deal.
Capital is the lifeblood of deals. Expanding the pool of potential capital providers is naturally a good thing. And deep asset and market knowledge allows your firm to work perhaps a bit smarter and faster than its competitors.
Unfortunately, the chances are slim that the typical freshman graduate can bring any of the 4 above. These are all the right things to strive for, but it usually takes years to become viable for a young professional just starting out in the business. That is why the number one-way young CRE professionals can add value is through being a reliable, fast and practical financial modeler.
Reliable and fast requires no explanation – you’re there when you need to be, and you can turn fault-free work quickly. By insight, I mean that you are doing your job with an appreciation of how much responsibility you have been given at such a young age and at such an early stage of your career. An analytical role serves as the first level of filtering out potential deals, and as such, can have a major impact on the deals that happen in your firm.
An appreciation for your potential impact – and humility – will manifest in the insight you gain from careful, thoughtful selection of your assumptions and sensitivity that runs around base case values. This is where deep asset and market knowledge enters the picture. For example, what should you consider for the hard cost basis of construction of a new glassy box office development in a particular neighbourhood? What should you assume for rent and operating expenses? These inputs value the current in-the-ballpark values at your fingertips, as it takes time to research these things and validate data points.
It can be frustrating when you first start a business, because you don’t know what you don’t know, and it takes a long time to gain knowledge and build relationships. The most important piece of advice I have for young CRE professionals is to appreciate the opportunities ahead of you in the careers ahead of you, and work as hard as you can to help your team succeed. As my mentor Mr. Parth Shah puts it, “Why ever do less than your best?”