(Learning CRE) What books are the Natenberg/Hull of CRE?
Hey All,

My background is in interest rate derivatives trading but I want to learn about CRE.

When a new person joins a desk in my industry we make sure that they read two books: 

* (1) Sheldon Natenberg (Option Vol and Pricing): for the tactics of how options are traded.
* (2) Hull (Options, Futures, and Other Derivatives): for an academic/modelling discussion.  

Do you have any suggestions for equivalent learning material in the CRE industry?  I'm looking to learn all that I can so that I can deploy some capital and diversify a bit.

Maybe books aren't the best way to learn about potential opportunities.  What is a good way?

NNN leases seem incredibly interesting to me since they seem to trade almost like a bond.  The public deals that I have seen so far look pretty unappealing though.

For instance I saw one that had:
Just under $1.1 million
18 year term with 6 five year renewal options
1% increase per year with 3% of revenue over a hurdle after 21 years
6.5% cap rate
Backed by a publicly traded large franchisee of a national mega chain in an OK suburb of a midwest city.

How do people normally hold something like that?  I modeled it out and it looks like your risk and whether or not you make money compared to a stock portfolio is almost wholly dependent on financing terms.  Where can I learn about current terms?  Is it possible to find an 18 year (lease term) loan at 4.5% and 25% down?  If so you would make a 12.5% return which seems good.  

A shorter loan with similar amortization will let you cashflow but then you get refinance risk.  Shorter amortization and you won't cash flow until you put down 50%, dropping your total return down to 8.5%.  

The 1% increase can also make it a bad deal since that property won't keep up with inflation.  I guess the answer to this issue is look at total return and reinvest in new properties?

How do I learn the right lenses to look at these deals with?

Thanks for your time and suggestions!
[{"id": "dxnabod", "text": "Asking for a book on CRE is very broad. Those books are probably suggested to people in your job because they directly relate to what the job is. So what area of CRE are you interested in? \n\nIf you are trying to stay in the financial analysis/investment arena, a lot of people will suggest that you take a financial modeling class specifically related to real estate. REFM is suggested a lot for that, specifically the New York Course. If you feel like you already understand excel/modeling, then I would tinker around with REFM's free excel tools and start to learn what the main drivers are in NNN/Base year leases.\n\nThere's a whole lot of bullshit salesmanship \"10 steps to success\" type materials out there in CRE. Be skeptical.", "replies": [], "depth": 1}, {"id": "dxoqb03", "text": "Crap I have an answer for you.  It's sitting at home right next to my copy of Hull, actually.\n\nAnd I've frequently described them in a similar way as you: they're each the fundamental text in their field (we're talking the analytics behind real estate, not just books of anecdotes or caste studies and whatnot).\n\nThe name's skipping me at the moment but when I'm home I'll repost.\n\n(other books that I would argue fit this \"fundamental text\" quality would be K&amp;R book on The C Programming language, Mises's Human Action on economics)\n\n\nEDIT: Just remembered:  It's by Bruggeman &amp; Fisher. ", "replies": [{"id": "dxpssdo", "text": "Second Brueggman and Fisher. It's also the top recommendation at WSO, for what that's worth", "replies": [], "depth": 2}], "depth": 1}, {"id": "dxq8zp2", "text": "Geltner/Miller/Clayton/Eichholtz is a canonical text.", "replies": [], "depth": 1}, {"id": "dxyormp", "text": "Has anyone got a pdf they could kindly send me? ", "replies": [], "depth": 1}, {"id": "dy27ihh", "text": "Commercial Real Estate Analysis and Investment \\(ISBN\\-13:  9780324305487\\), Professional Real Estate Development \\(ISBN\\-13: 9780874208948\\). But, I'd suggest you sit down with a developer or acquisition manager and ask them how they do what they do.\n\nEdit: Bruggenman &amp; Fisher, as mentioned below, is good too. ", "replies": [], "depth": 1}]