CRE Capital Markets: Qs to help navigate potential career change?
CRE Capital markets questions
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For reference, I am currently in bizdev in an unrelated industry (pandemic made me) and before that I was at an mREIT, but in a back office type role. I had some exposure to cap mkts while there and interested in the debt / equity piece (vs. investment sales type jobs) and wanting to get a better picture of what it would take to try and get back into CRE. Really appreciate ANY insight, know this is quite dense; thank you!
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how difficult is it to break into for someone wanting to make a career change, 6 years out of uni? (I still feel young…!) Are applicants more compelling with an MBA? How about completing those certificates at higher ranked schools like NYU or Columbia? Is it more about networking, RE knowledge on the landscape etc and knowing how to model? Some combo of everything? 🥴

What kinds of firms are best for someone new to get started at? Brokerage? REIT? PE? Others? (Throwing it all out there, I realize that it is v challenging to get PE jobs) And are they hiring? 

What is the most challenging aspect of interviews?

Is work / life balance entirely dependent on team? Does work / life balance indicate a lack of deal flow and potential for good experience and exposure? Also is remote work completely out the window? 

Is capital markets dominated by men? Will it suck as a woman trying to get in the group? 

How does the role change as you move up?

What do pay ranges look like starting out? Are there huge disparities in the major metros (NY, LA, Seattle, SF, Chicago etc.)?
[{"id": "hia5dhv", "text": "I can only speak on the Brokerage side, as I'm going through this process as we speak. Background on me: Been in the CRE industry for just over a year now (2020 Graduation). At a smaller firm rn, looking to make a switch into one of the big time players (CW or CBRE). \n\nInterviewed at both through my network (they called me) - not sure if this is typical, it may depend on your market/area. But for incoming junior brokers, both positions are 100% commission based. A potential draw option if you have a great relationship with the seniors. Working under a team that will 'hopefully' spend time with you &amp; craft you into a 'player'. Brokerage is tough, it's eat what you kill - that's my one worry. Why would one of these seniors spend time with me &amp; build me up? It's extremely cut through, I would say the percentage of juniors that 'make it' is under 25%. Typical turnover is 2 years - that's when you can tell. \n\nExpect not to make much first 2 -3 years. Make yourself valuable to the team, or else they can replace you/ not 'feed' you. There's no guarantees in this industry, fight &amp; hustle for everything (At least that's my opinion :D). Good luck out there.", "replies": [], "depth": 1}, {"id": "hiaifez", "text": "It's 100% a sales job if you are originating. All that matters is that you have the ability to build relationships and bring business in. You could be the best underwriter in the world and still not close anything if you can't bring in business. \n\nThe women I have met in our industry are some of the best people I have dealt with.", "replies": [], "depth": 1}, {"id": "hiapvj3", "text": "You use too many abbreviations and acronymns in your post for me to know what you are asking. And a lot of the words you are using mean different things at different shops. Are you asking about roles where your team is selling buildings or roles where your team is raising debt and equity capital?", "replies": [{"id": "hiawawu", "text": "My mistake, I edited to clarify BD but I think REIT, CRE and PE are fairly common here? \n\nI mean more of the latter, raising and then placing equity / debt", "replies": [{"id": "hib129t", "text": "Debt/equity brokerage is a fascinating field. When I did it my team was on a salary plus bonus structure so I didnt have to worry about commission while learning the business. \n\nThat version of capital markets IS dominated by men but men just gravitate to it, a pretty woman will clean house in the role. Most of the capital relationships have a large number of women on their teams in senior positions so it wont be a sausage fest, brokerage just has a shit ton of guys. I wouldnt worry about it. Now I am going to ramble a bit with some word vomit and poor formatting on my phone so stay with me. Also gonna focus on the analyst role since that is most relevant to you.\n\nRole progression is generally start as an analyst where you will mostly be putting together offering materials, doing market research, pulling comps and running analysis. There is a large amount of reading leases, begging \ud83d\ude4f \ud83e\udd7a sponsors to please send you  info that they have on hand so you can get their deal done, and tracking questions and answers from capital providers. So basically a client will come (assuming you dont have to pitch them) in who needs money raised, the team will agree to do it for a fee around 10bps to 100bps of the funds raised and then you the analyst will start gathering their info on the deal like how much they wanna raise, rent rolls, projections, pictures etc and start putting together a pitch book usually. The whole pitch will consist of a financial model, a bunch of back up due diligence materials and an offering memorandum that just summarizes the previous with some snazzy pics. Most of your time will be spent putting these materials together and going back and forth with the client to get them to approve this packet before you can take to market. The other parts of your time will be spent working on models but that depends if the sponsor has a good model of their own or not. Sometimes you will use an existing sponsor model and sometimes you have an unsophisticated sponsor and you have to build the model from scratch. When you first start you will spend most time doing grunt work which is writing content for the offering materials and less time doing modeling but that changes as time goes on and frankly once they hire someone newer to do the grunt work. Once the deal gets \"launched\" aka sent to a bucnch of lenders and equity shops you will be following up to ensure receipt of materials and answering questions or aggregating the ones you cant answer and passing back to sponsorship. Eventually some lenders are gonna bite and send in term sheets laying out the terms under which they might be willing to make a deal \ud83e\udd1d. You will then be responsible for laying these out side y side so the sponsor can make a decision. Your boss will be advising the client here and will have been guiding you this whole time on the materials and be leading calls with lenders to get to this point. I kindha start using lenders here because I am lazy and because debt placement will be your bread and butter.\n\nAs you get reliable in terms of putting material together and can be trusted to handle a deal all by yourself gathering materials, pulling comps etc and putting a pitch together on your own that tells a good story you get promoted to associate and then VP. This just means you spend less time doing grunt work and more time doing analysis and start leading more calls with capital providers. Your bosses respect you and trust you to not say something dumb to blow up a deal because you have done a lot of these before. Still salary plus bonus.\n\nThen you get promoted to director. Now you do no grunt work at all and barely if ever even touch the model. You can read a model fairly effortlessly and are telling subordinates what to do. Almost all your time is spent on the phone with capital providers and sponsors trying to get new clients to come in. Your new metric of success is actually closing deals. This is the first stage at which if you prove yourself you might get commision, maybe. You also spend time staffing deals from the guys below you.\n\nManaging director. Get good at closing deals and now you have years in the industry so you have connects. You are bringing in deals and are a full senior partner getting commissions. Your day is never ending but fuck it you get paid well for it. You spend your day on calls legitimately all day long talking to capital providers but the most important thing you do is bring in more business from your network of connections and friends who now run all the other real estate shops.\n\nBeyond that you are set for life. Of course it is a long role and most leave brokerage during the analyst and associate stage to go work in a shop that buys real estate so at a potential client because fuck it that is why most of us got into the industry. But if you can stick around and are good at it and a bit cutthroat you can make millions. Analysts and associates in a major city are taking home mid 100 thousands to mid 200 thousands after all once bonus comes into play. Do expect to have no real work life balance since your shop is always chasing the next fee. Its a good role given the volume of transactions you will see and can set you up for success down the road but you do have to be careful to focus on the skillsets you want to have for future roles that brokerage will not teach you. Your technical skills can fall behind in brokerage very easy and just lean on your sales skills. \n\nBut you will work on very interesting deals (easy deals dont need a broker's help afterall so every deal you do will be a dumpster fire) and you will be fielding questions all the time with very smart people slinging millions and occasionally billions of dollars around so you are going to feel very stupid at first and then get very smart very fast or be very fired. I think it lends a certain confidence once it is all said and done and you will have more deal experience than most people not in brokerage by a lot so your technicals may not be great but you end up with much better deal sense.\n\nHopefully that incoherent stream of thoughts js useful to you.", "replies": [{"id": "hicugy2", "text": "Wow this is super helpful. Thanks for sharing!!", "replies": [{"id": "hidfxry", "text": "No problem. As an addendum the relevant technical skillsets for this role that you can work on right now are\n\n- Build a sources and uses (this is your bread and butter)\n- Build a proforma\n- calculate DSCR, debt yield, LTV (Debt yield is going to be your most used word more even than cap rate)\n- Demonstrate valuation via, direct capitalization, DCF and sales comparison methods\n- Demonstrate ability to comp rents and sale metrics\n- Build a debt draw schedule (actually kindha hard at first) and be able to show funding with multiple debt sources as well as paydown.\n- Calculate leveraged and unlevered cash flow\n- calculate IRR, equity multiple, profit\n- Build a equity waterfall (unlikely to come up on a modeling test but it could and will definitely come up in the role)\n\nAnd exit opps are\n1. Other brokerage shops\n2. Lenders\n3. Real estate private equity", "replies": [{"id": "hidgv9d", "text": "Ramble was just what the doctor ordered. Thank you! I worry about my technical skill set, as the people I\u2019ve met all started out in RE and majored in it and have 5 years of experience as a first year analyst lol. This level of detail / realness has been difficult for me to find. (So thanks again!!)\n\nYou somewhat imply that you\u2019re no longer doing this, may I ask what you are currently doing if this is the case? Or are you just referring to not being an analyst anymore \ud83d\ude06 \ud83d\ude4c", "replies": [{"id": "hidipqr", "text": "On the technicals. When I started I had none. No experience except for a breaking into CRE course another poster mentioned above. I wouldn't worry too much because you can learn it. Yes you will initially be behind those with real estate degrees but you can catch up if you take initiative. Most people never intentionally learn anything outside of school but if you can you can catch up and even surpass them as long as you spend some of your own time learning and practicing. Yes that means working like a dog all week and then getting up Saturday morning on the little bit of time you have and spending an hour or two on some intentional practice. Don't be intimidated by that, real estate is not hard at all, and you will grow into your role by doing it. Dont be surprised if it takes you about a year and a half to start feeling competent as you get reps in and start to understand the pieces, just work hard, show up and ask questions along the way.\n\nFor more specific technicals I recommend either the breaking into CRE courses the other poster mentioned (you have to pay but not much and the courses are good, that is what I started with) or [adventures in CRE](https://www.adventuresincre.com/re-education/a-cre-101-basic-concepts-in-commercial-real-estate/watch-me-build/) which is free if you sign up for educational use. That will teach you all you need to know and I would just do all of the watch me builds like four times so you get comfortable with them all.\n\nYeah. I switched to PE.", "replies": [{"id": "hidvwh7", "text": "Wow... very interesting. Thanks for sharing your insight, for someone who is just starting their career in CRE this gives a great forecast on what to expect. I'm curious, what made you switch over to PE?", "replies": [{"id": "hie2xy0", "text": "1. Brokerage can be soul sucking and all consuming serving many clients and always chasing the next fee. Every client thinks you just work for them and they have unrealistic demands but in reality you are working on like 7-10 deals at a time in various stages of the process. I was burnt out working 80+ hours weekly and never really taking vacation. PE runs the gamut based on shop between soul sucking sweatshops like Blackstone and much more chill shops where comp is similar or better in some cases than brokerage for far fewer hours.\n\n2. Got into real estate to learn how to own real estate. That is what PE does and not what brokerage (which is ultimately sales) does. Brokerage was always a stepping stone for me.", "replies": [{"id": "hie5n8h", "text": "If you don't mind me asking:\n\n1. How long did you stay on the brokerage side?\n\n2. When switching to PE, was it tough getting into that sector only having experience in brokerage? Or is it more so a networking/ relationship factor.", "replies": [{"id": "hies1jd", "text": "PE will require you to be very good at the technicals and you will have a high bar to clear proving you can model. You wont get in if you cant build a proforma, size debt and equity, calculate return metrics and build a multitiered waterfall as well as answer questions on a 1-3 hour timed modeling test. that can be done but they will also discriminate against brokers for lack of experience on the acquisitions side which you just have to convince them you have seen enough deals at enough stages of the process that your experience is equivalent. Not impossible at all. A lot of these companies may also be your clients so if you do good work for them they will certainly consider you. Everyone kindha knows each other with only a few degrees of seperation in the industry.", "replies": [{"id": "hifr5g0", "text": "These answers are awesome! May I also just ask what city you\u2019re in?\n\nThanks for the insight \ud83d\ude03", "replies": [], "depth": 12}], "depth": 11}], "depth": 10}], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hicwudu", "text": "I really hope my advice helps as I had just accepted an offer for a capital market analyst role (investment sales advisory) today at one of the big 3 brokerage firms without any \u201creal\u201d underwriting / financial modeling experience. \n\nTo give you some context, I graduated from USC in 2016 and started out as a financial statement auditor -&gt; tax accountant focusing on real estate partnerships -&gt; corporate finance analyst at a very reputable public REIT. None of my previous jobs taught me how to underwrite / build a pro-forma from scratch so I started to take classes on my own.\n\nBelow are the courses I took and found extremely helpful before I started interviewing:\n\n1. Break into CRE courses by Justin Kivel \n- CRE 101\n- financial modeling \n- waterfall analysis \n- private equity interview exam guide\n\n**You can find his courses on Udemy. I bought a bunch of them and only spent &lt; $100 during their big sales event (90% off if I\u2019m not mistaken) and that was the best $100 I have ever spent looking back.**\n\n2. REFM (real estate financial modeling) level 1-3 certification \n\nI was able to answer all the technical questions that were thrown at me during the entire interview process (with multiple companies) and even finished one assessment test in which I had 4 hours to build a pro forma from scratch with only a handful of assumptions and an OM. \n\nWithout going into all the details, those courses helped me break into CRE. Keep in mind, that was only half of the equation. Networking and interview skills are just as important to get through the interviews. Feel free to DM if you have any specific questions. If you are in LA i can share more info with you in person. If I can do it anyone can do it too. Best of luck to you!", "replies": [{"id": "hidg3n8", "text": "Thank you, this is a helpful overview. I have access to BIWS real estate course so I might try to see how that is first but will fall back to this.\n\ndid grad school at USC and also a CPA although inactive; this is extremely encouraging and will def reach out once I dive in a little deeper", "replies": [{"id": "hidz336", "text": "I wish I knew anyone with similar backgrounds before I started taking initiatives to break into CRE. We should connect on LinkedIn!", "replies": [{"id": "hifqwe4", "text": "Yea PM me your name and I\u2019ll add you \ud83d\ude03", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]