Leveraged Breakdowns

A real estate private equity career path will put you face-to-face with uncertainty. You’ll never have perfect information. And even if you do, you will never have a crystal ball. Even the best laid plans can fall to waste against an uncertain future . Many incredibly talented investors were caught off guard by industrial’s precipitous rise and retail’s dramatic crash. That said, some investors consistently (and statistically significantly) outperform others . This begs the question - what real estate private equity skills set the best investors apart from the pack? Diligence Diligence means you leave no stone unturned. You push every question to the furthest conclusion possible, until you’ve reached the best possible answer you could hope for. For instance, you should understand every in and out of a ground lease before building a buyout model. If you’re forecasting taxes, you should know the millage rate, assessment ratio, and propensity of reassessment at entry and exit for the ju...

Back in June we discussed the number one skill that will help you become your fund’s favorite analyst . This month we want to talk about the number one character trait that will make you into the most trusted analyst in your real estate private equity firm . This character trait will also establish the trajectory of your real estate equity career path . What is this trait? Integrity . Can I Trust The Model? One of the greatest temptations you will face as an analyst is to force a model to create the results you really want (or the results your boss really wants). There are all sorts of ways to manipulate a model. Trim one of the expense line items a little more than is really achievable. Assume lease-up occurs faster than what the leasing team expects. Cut the capital expenditures beyond what is prudent. The list is endless, because the variables that go into the model are endless. Resist the temptation. Let the results speak for themselves. Be disciplined in understanding the ...