First Job Advice (Real Estate Analyst)
I am 22 years old and just graduated from college with a finance degree. I will start working on June 7th at a small commercial mortgage firm as a real estate analyst. The position is supposedly to get me ready to be a producer. I am writing to ask for opinions and tips of the commercial mortgaging industry. What route I should take with the start of my first job out of college?
[{"id": "cgtoa1k", "text": "Work hard and don't be afraid of long hours and working on weekends.\n\nExcel is your lifeblood. Learn it well. Do not use lazy Excel practices. Instead of throwing together the bare bones of what is being asked, go ahead and build a model. Because, inevitably, someone is going to come to you and say, \"yeah, but what if we stress it by 15%?\" If you've built a robust model of what your working on, then you can just plug in that variable. If not, it's back to the drawing board and someone (probably higher up than you) is forced to wait on you.\n\nDon't assume that the info you are given is correct.  \"In God we trust. All others must bring data.\"  \n\nAllow yourself time to think about what you are doing. Stop and look at things from the the perspective of all of he stakeholders (the lender, the underwriter, the president of your firm, the customer, the tenants, etc). That probably sounds corny, but it is helpful in giving you the ammunition you need to have informed conversations with the decision makers at the firm and eventually with the customers.\n\nOver time, as you are looking at deals, think about and internalize the trends you see in the most important metrics. It is not necessary to memorize all details from every deal, you will just end up getting burned out doing that. But being able to immediately draw upon an internal compass (from your brain) is an invaluable skill, will give you a competitive advantage, and will ultimately save you time by quickly pointing you in the direction of a deal's flaws or upside immediately rather than after hours of work. Examples: start internalizing what you see as trends in cap rates, lease rates, expense percentages, vacancy rates, absorption periods, etc for different property types and different geographic regions. For example: If you see something come across your desk being financed with only 10% equity on a 5% cap rate, in a market/property type that you have seen commanding a 9% cap rate, you can anticipate the problems immediately and act/advise accordingly.\n\nRealize that you will probably be under a ton of pressure from the lenders to help get their deals approved. And if you want to be a producer, it's important not to burn bridges with the established producers. But, you also have to realize hat you aren't doing that job yet. Probably, there is a different goal you are expected to achieve: produce an objective (and possibly conservative) analysis. You may think that lending is your only outlet for advancement in the firm, but don't let your reputation suffer by deferring to the whims of the lenders. They have different objectives and incentives than the analytical, risk management, or credit management teams do. ", "replies": [], "depth": 1}, {"id": "cgtp6pe", "text": "Eko gave some good advice. I want to emphasize a few things. \n\n1) At the end of the day, you want to do something that you like. I am a couple of years removed from doing commercial real estate underwriting/analysis, but I remember enjoying myself reading up some of the information in the appraisals that we received. That information gave me a very good understanding about the conditions in all of the markets. So much so that even now when I talk to one of our CRE analysts about a deal, I can guesstimate the appraised value of a property.\n\n2) The pressure from the lenders is real, but being able to manage that pressure is key. Remember to be respectful and understand where they are coming from, but at the same time your job is that of an analyst first.\n\n3) Most shops will have their own proprietary spreadsheets and I am sure you will not be asked to build one, but whenever you can look into the formulas and really understand how all of these ratios are being computed. The last thing you want is to have wrong numbers show up in your report and your answer to the question be that those are what the spreadsheet calculated.\n\n4) Lending is not for everyone. It is very competitive and your performance is measured quarterly. I have never been tempted to take that route, many of my colleagues that started with me in the 90s are now lenders and few remained in the credit/risk side. However, there are opportunities for advancement in credit, and the job is much more secure than as a lender.\n\n5) There is a lot of demand for experienced analysts. After two years of experience you can probably get 30% to 50% more money by jumping ship. And you can expect double digit increases by moving around every couple of years or just by staying put and getting promoted to II, III and eventually supervisor.\n", "replies": [], "depth": 1}]