Commercial Real Estate case study interview
I am currently interviewing at a commercial real estate investment and development firm and will be receiving a case study on a multi family property that I need model and then write an investment report on. I read on another reddit post that there was private equity model walk thrus on WallStreetOasis but could not find any. Does anyone have any advice on where to find a case study that I could practice with or something like a walk thru that I could study to help with my case study?
[{"id": "dxssbyv", "text": "Multi family is one of the easiest to models. Look at similar comps and create a base case and downside case scenarios. ", "replies": [], "depth": 1}, {"id": "dxsumit", "text": "RedIQ", "replies": [], "depth": 1}, {"id": "dxtcylt", "text": "As a word of advice, focus most of your energy on the actual writing of your investment report, and try to anticipate questions you'll be asked about it. I guarantee they'll quiz you more on the deal points than the numbers. Excel monkeys are easy to come by; it's much harder for a firm to find a good analyst who can write well and can quickly identify and summarize the strengths and weaknesses of a transaction. The firm will probably give you a template to work with. In the event they don't, keep it short, organized and easy to follow, and include a brief bullet point list of strengths and weaknesses somewhere on the first page (I know this sounds weirdly specific, but trust me). Make sure you can comfortably explain why you think the deal is a good/bad investment, and be prepared to defend your reasoning.\n\nThe other commenters saying that multifamily is one of the easiest property types to model are absolutely correct. Compared to other CRE asset types, modeling income at a MF property is pretty straightfoward. Try [this](https://www.adventuresincre.com/multifamily-apartment-acquisition-model-in-excel/) model. I think there's a walkthrough somewhere else on the website, too. It's definitely more sophisticated than you'll need for a case interview, but still useful. \n\nWhen you're building your model, focus on making it *neat and easy to follow*. Create an output page with key deal metrics (underwritten EGI, expenses, NOI, UIRR/LIRR, return on cost, etc.). Color-code user input cells differently.\n\nPlease feel free to PM me if you have any questions!", "replies": [{"id": "dxtg7qr", "text": "Thanks for the advice I will be sure to think about all the stuff you said. I get the case this Monday so I will have to see then what they are expecting. \n", "replies": [], "depth": 2}], "depth": 1}, {"id": "dxts8kx", "text": "Can anyone \\(including OP\\) please give me a list of the better real estate investment and development firms. I have tried doing some research and the field is incredibly varied. I would be looking to transfer from a data analysis role to an analyst role at a top investment and development firm with an end goal \\(7\\-8\\)  years of RE PE. I would really appreciate it!", "replies": [{"id": "dxuiarx", "text": "check out the career section of the acre website", "replies": [], "depth": 2}, {"id": "dxv2kau", "text": "It really depends on what you mean by \"better\".  Do you want bigger deals and more deal flow? More interesting deals? A more prestigious name? Better pay? If you want to get in with a big shop, especially as a career switcher, you're gonna need a compelling reason as to why you want to work for them specifically.\n\nAlso, keep in mind that many of the more well-known names in CRE will be connected to a specific type of CRE - ie, Prologis is a big name that almost exclusively deals in industrial assets, whereas Vornado specializes in premier office assets. Of course, these are institutional names, and only represent a fraction of real estate jobs. CRE is often highly regional, especially for developers. Some will only play in a region of the US or certain states, and some will only buy certain types of assets in specific cities. \n\nPM me and let's see if we can narrow things down a bit.", "replies": [{"id": "dxxyu84", "text": "Thank you for your response! I will PM you.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "dxtwk3x", "text": "Start with rents - project per unit and per sf ranges based on comp set. Determine what concessions are being offered in your market, or use an assumption of 1 month if none are available. Use market vacancy as stabilized but you\u2019ll want to determine absorption rate - 20/mo is typical unless you\u2019re in a tight market then maybe 30-50. In northern cal I\u2019ve seen a lot of projects that average 70.\n\nProject all your other line items for other income, reimbursements, opex, reserves etc.\n\nTo determine value- use sales comps, dcf and direct cap based on what you just projected.\n\nIf you need to continue to get leveraged returns, assume lesser of 75% ltv / 1.25x dscr with a rate of 165 bps over the 10 year for an assumption. You can get tighter these days but being conservative is fine.\n\nFor development, you\u2019ll use your hard cost and soft cost assumptions to come up with development cost without land. Plug that into your npv calc to determine what you can pay for the land.\n\nIn your write up, describe your assumptions, comps and the market. If you have time, do some sensitivities on the major inputs and talk about how that changes your returns.", "replies": [], "depth": 1}, {"id": "dxyqnw7", "text": "I think all of the advice below is solid. Much of underwriting is really understanding the \"story\" of the property. A lot of the story is related to the revenue side, but make sure to focus on operating expenses and capital as well. \nI'm not sure if they're providing you a historical operating statement to work with. However, if they do, take a review of expenses from top to bottom. Look at payroll (can we lean out operations? Maybe it is recently stabilized), marketing (how are we optimizing dollars spent? Can it be reallocated more efficiently), G&amp;A (Where can we cut or add? Are we renting things when it's more cost efficient to buy?), R&amp;M (can we capitalize any projects here to enhance NOI?), Contract Services (can we renegotiate better contracts for security, window cleaning, etc? Are the existing contracts union, if so can we go non-union?), Management Fee (can we reduce the fee with a new PM or enhance the incentive structure?), RE Taxes (know how they work in that state. CA has prop 13, Oregon reassesses annually, Chicago reassesses every 3 years). \n\nAre there required capital projects (reskinning a building, seismic retrofitting)? Are there any discretionary items you could complete to enhance the revenue portion (additional amenities, unit renovations)? \n\nRambling a bit, but I hope these give you some additional talking points to think about/prepare for. ", "replies": [], "depth": 1}, {"id": "dy2lc5h", "text": "This is probably going to be a re-position case study. Once you know the location, do some competitive property analysis to determine the sub-market rents and amenities. How does your property rank in terms of its competitors. Are the rates at market? Can you add amenities and charge additional rent (ie reposition the property?) CPM has a Rent comp survey sheet. Just google and you\u2019ll find it ", "replies": [], "depth": 1}, {"id": "dykojto", "text": "Google it and you\u2019ll find the related case studies or you should attend [real estate webinars](https://grel.org/) to learn more.", "replies": [], "depth": 1}]