CRE Underwriter interview
Hey everyone,

I have an interview next week with a commercial real estate company in Nashville for a position as an underwriter. If I get the job, it will be my first job in the industry, as I have spent the past year out of school working in Defense Contracting. Below are a couple of requirements for the job that I wanted to get some comments on if any of you are so willing. Trying to get my ducks in a row before my interview Monday. Thanks.

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• Performance of complex financial modeling in Excel and other financial systems

What excel functions do you use as an underwriter? graphs, formulas, etc.

• Evaluation of commercial loans

If I were to compare two, what should I be looking for to distinguish one from another?

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For any of you who were an underwriter, worked closely with an underwriter, or just know the role of an underwriter well, I would love to hear any words of the wise you may have.

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Best,
[{"id": "f8bu4b0", "text": "If this is an entry level job for you I wouldn\u2019t sweat it. Your going to have to learn on the job. I\u2019m assuming knowing your way around excel is one basic requirement and then a company willing to train you up is probably the other.", "replies": [{"id": "f8bwcrz", "text": "Hoping that is the case. Thanks for the reinforcement.", "replies": [{"id": "f8e92ey", "text": "The way I see it either they know you have no background and want a young/cheaper worker they can train up and in the short term help out OR they didn\u2019t read your resume correctly and they need someone more experienced. Either way just be honest and communicate a willingness to learn. I\u2019ve interviewed some folks who did not fit the job description at all,  but we found something else for them to work on. The hardest part is finding good people with the right attitude, everything else can be taught.", "replies": [], "depth": 3}, {"id": "f9n3l9e", "text": "Any update on the interview?", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "f8buwl6", "text": "* Performance of complex financial modeling in Excel and other financial systems\n\nWhat excel functions do you use as an underwriter? graphs, formulas, etc. - **I work as a production analyst for a commercial brokage. Common formulas include vlookup, index, match, sumif/averageif, pmt, npv, IRR. Actual functions used in standard commercial lending are not complex. What's more important is do you understand concepts such as absolute referencing, paste special (formulas/values/formatting), etc. Will you come in day-1 with a fundamental understanding of how excel works?**  \n\n\u2022 Evaluation of commercial loans\n\nIf I were to compare two, what should I be looking for to distinguish one from another? - **Can you reframe this question? Evaluating commercial loans primarily involves income &amp; expense underwriting, which at its core means you need to understand what comprises the standard buckets for income (rent, parking, lease income, utility reimbursements) and expenses (repairs, office expenses, payroll, taxes, insurance...). Your work will also require knowledge of general loan sizing parameters (Loan to Value (LTV), Debt Service Coverage Ratio (DSCR), and Debt Yield (NOI/Loan Amount), and how each of these metrics are used to cirlce in on an appropriate loan.**", "replies": [{"id": "f8bw90m", "text": "I think that covers some basics that I can hone in on over the next few days and get a simple grip on. Not planning to go in there and act like I know what I am talking about, because I don't, but to go in and be able to perform some excel functions if asked (like my previous jobs interview) and then know a little language is what I am looking for. I appreciate the feedback!", "replies": [{"id": "f8bxjg4", "text": "My pleasure. I suggest focusing on learning the following terms if you want to go in and speak the language.\n\n&amp;#x200B;\n\n* LTV (Loan to Value)\n* DSCR (Debt Service Coverage Ratio)\n* Debt Yield\n* Cap Rate\n* NOI (Net Operating Income)\n* GPR (Gross Potential Rent)\n* EGI (Effective Gross Income)\n* Rent Roll - document that consolodates all rentable space at a property. Lists tenant names, unit sizes, market rents, lease rents, and lease terms\n* T-12 - Trailing 12 month income and expense statement. Most commmon financial statement in CRE alongside a rent roll\n\n&amp;#x200B;\n\nGood luck!", "replies": [{"id": "f8c50gh", "text": "Nothing to add to this other than these are all great answers and if you know these moving into the position, your bosses will be thoroughly impressed!", "replies": [], "depth": 4}, {"id": "f8cwu6d", "text": "This person knows his/her stuff. Great reply.", "replies": [], "depth": 4}], "depth": 3}, {"id": "f8bxvlp", "text": "I'm in a very similar job and this is a solid overview and starting point. As long as you have a solid base knowledge of excel you should be fine. I'd read up on ARGUS software. You will probably end up using it dependent upon what property type you work on. Just understand what the platform does.", "replies": [{"id": "f8c8qfs", "text": "The property type is primarily multifamily/apt with some retail scattered throughout. This is my first experience on Reddit. You all have been super helpful. Thanks  so much!", "replies": [{"id": "f8cedmr", "text": "If you understand the terms above and can perform basic excel functions, you\u2019ll be in good shape.  If you are good with those and interview well, I\u2019d hire you. \n\nA basic understanding of accounting helps as well (e.g. balance sheets, financial statements, working capital, net worth, etc)\n\nSource: am a MF UWer", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "f8bv8r1", "text": "Not in CRE but I\u2019ve been in underwriting for 3yrs mostly middle market corporate. \n\nDepending on the size of the company you\u2019re interviewing with you\u2019ll most likely be working on excel models that are already built out and you\u2019ll mostly be entering in financial for the deal you are working on. \n\nModels typically serve to show debt service coverage and collateral coverage. Debt service coverage is the cash flow of the company or property divided by debt service (principal and interest). Collateral coverage is the value of the collateral to the amount of debt. In CRE it\u2019s typically LTV (loan to value). \n\nIf you have to pick between two loans the better loan will have higher debt service coverage and a lower LTV (higher collateral coverage). \n\nWanted to keep this simple hope this helps", "replies": [{"id": "f8bxawa", "text": "At this point, simplicity is ideal and this defintiely helps. I get bored plugging away at excel and can forget about what point some models serve in the bigger picture, so that's great information. Gotta pay my dues before trying to get on as a broker somewhere. Thanks, mate", "replies": [], "depth": 2}], "depth": 1}, {"id": "f8bvtb8", "text": "Hey I'm not a professional underwriter, but looking at my CRE Analysis class notes, I would review the following (not an exhaustive list):\n\ndifferent types of default: (1) income/servicing/operating default and (2) maturity/balloon/asset-value default\n\nasset-value criteria: LTV &lt;= 75%\n\nproperty-income criteria: DCR &gt;= 120%, BER &lt;= 85%, EBTCF, Multiyear Proforma Projection, cyclical considerations\n\nloan terms: amount, maturity, guarantees, rate, recourse v non recourse, cramdown insurance, etc.\n\nGood luck!", "replies": [{"id": "f8bxiud", "text": "Got a lot of good stuff to review now. Thanks for the additions!", "replies": [], "depth": 2}], "depth": 1}, {"id": "f8c20zm", "text": "Check out adventures in cre. Lots of good info on there and they walk though a model test, which I assume you\u2019ll have to do?", "replies": [{"id": "f8c90s0", "text": "Great, going to check it out now. Not sure if I will have to do a model test or not, but if there is a chance that they'll ask about it and the right answer can save me from another week of unemployment, I'll learn it.", "replies": [], "depth": 2}], "depth": 1}, {"id": "f9747wv", "text": "How did the interview go?", "replies": [], "depth": 1}, {"id": "f9olr8s", "text": "Hey, thanks for asking! I went in office for the second round of interviews today. I think it went well. The only reservations were Excel related. They asked me to rate my Excel proficiency 1-10 and I gave them an honest 6. I said I was able to do everything Excel related my last analyst position required of me, but that was pivot tables and other fairly basic functions. I said I know there\u2019s more I need to learn and I\u2019d be willing to do so. Then he brought it back up at the end of the interview and said he might send some problems in a spreadsheet later on to get a better read on where I stand. That was the only speed bump I felt, but that seemed to be a meaty part of the job. We\u2019ll see. I\u2019ll be brushing up on Excel until I hear back haha. I appreciate you checking back!", "replies": [], "depth": 1}]