Leveraged Breakdowns

One of the most frequent questions we get at Leveraged Breakdowns deals with understanding the mindset of the hiring manager at real estate private equity firms. What are they looking for? What questions will they ask? It is very natural to obsess on these questions from your own perspective, but it may be most helpful to look at things from his or her perspective. The View From 30,000 Feet Hiring is always a balancing act. On one hand, the hiring manager needs to assess both hard skills (job related) and soft skills (people related), but on the other hand he or she needs to address both the immediate job opening as well as the future needs of the firm. All of this is happening within the context of company’s prime objective: generating positive, out sized private equity real estate returns for investors. Skills Real Estate Private Equity is a high-pressure, high-stakes business. The hours can be grueling. Your interview will likely mirror this. To assess your hard skill...

As an REPE analyst, you will build very complex real estate private equity models and be responsible for their accuracy and completeness. Depending on the firm you work for, your model may take into account the tax effects on investment returns. If so, you may want to consider a cost segregation study for property acquisitions. What is a Cost Segregation Study? A cost segregation study is a detailed analysis of a property that breaks down the value of a building into different components in order to apply various GAAP or Tax depreciation schedules. As a quick real estate investment case study, if your firm purchased a stabilized office property for $20,000,000, a cost segregation study might break down that value into several components, as follows: Land Value: $2,500,000 Parking Lot: $500,000 Building Structure: $13,000,000 Heating and Cooling System: $1,500,000 Conveying Systems: $250,000 Tenant Finishes: $2,250,000 Breaking the purchase price down into the different...