Building a successful career in real estate private equity in the United States can sometimes take a lot of resources, especially brain power, so why even bother?
The plain truth is that if you find your way into the industry, you can begin to count your fortunes. It’s a rewarding industry! That’s why it remains the most sought-after career.
However, as exciting as it may be, without proper information about the nitty-gritty of this industry, it’s not possible. I’ve seen many students give up even before they make their first attempt.
In this article, I’ve put together the only comprehensive guide that you need to make a difference and realize your career goals in this industry in no time.
Here is a breakdown of the questions I’ll cover for you:
- What Does Real Estate Private Equity Involve?
- How to Get into Real Estate Private Equity
- The Real Estate Private Equity Career Path
- Pros and Cons of Real Estate Private Equity
- Real Estate Private Equity Job Descriptions and Salary Levels and Other Related Jobs
- The Real Estate Private Equity Interview Process
- What are Real Estate Private Equity Interview Questions
- And so much more…
If you’re ready, let’s get straight into it!
What Does Real Estate Private Equity Involve?
Let’s dive into a bit more detail.
In simple terms, “real estate private equity” refers to firms that raise capital to acquire, develop, operate, improve, and sell buildings in order to generate returns for their investors.
Examples of private equity real estate include:
- Office buildings
- Industrial properties
- Retail properties, shopping centers
- Multifamily apartments
If you’re going to become a professional in this field, your work would then revolve around raising capital to acquire, develop, and sell these properties to generate returns for the investors in your firm.
Is this career right for you? If yes, then how do you get started? Let’s take a look at the next section.
How to Get into Real Estate Private Equity
As I stated early on, this is a dynamic industry. There is not really a definitive guide to the industry; however, if you do the right thing (as I’m about to show you), you’ll hit the start button.
Here are some of the proven paths that can get you into real estate private equity:
- Straight out of undergrad with a degree in real estate or finance related.
- Join real estate investment banking groups at BBs and EBs
- Join real estate brokerage firms like CBRE and JLL.
- Join commercial real estate lending or real estate debt funds.
- Acquisitions roles at REITs or REOCs
- Through property development roles.
- Through business schools
Just like in any other career, you can’t just wake up and start working. You need to put in some efforts that demonstrate your interest in and commitment to the industry.
Here are some of the strategies that you need:
- Enroll in real estate-related internships and volunteer opportunities
- Join industry associations like the Urban Land Institute (ULI), the Commercial Real Estate Development Association (NAIOP), the International Council of Shopping Centers (ICSC), Young Real Estate Professionals (YREP), and other professional bodies.
- Network your way into the heart of the industry
- Build a strong resume or portofolio
- Focus on learning asset-level skills (take additional short courses on top of your degree(s)).
- Start a blog or free newsletter in the real estate industry.
Pro tip: If you’re interested in learning more about breaking into this career, check out our latest article on how to make a career in top private equity firms.
Real Estate Private Equity (REPE): Career Path
When talking about career paths in real estate private equity, there are usually two terms that come to mind: most people have a vague idea of what they are, and in so doing, they fail to get it right on their way into the industry. The two career entry points to REPE include:
- Traditional Private Equity: In this category, junior-level professionals are normally recruited from investment banks, and mid-level professionals are recruited from MBA programs or internal promotions.
- Real Estate Private Equity: In this category, junior and mid-level professionals come from varying backgrounds, including investment banking, investment sales brokerage, asset management, and lending.
Real Estate Private Equity Jobs: The Full Description
To be successful in a real estate private equity job, candidates must have a strong understanding of real estate finance, investment analysis, and market trends.
Here are some of the real estate private equity jobs and their descriptions:
- Investment Manager: Their roles are to analyze and assess potential investments, conduct due diligence, negotiate deals, and manage relationships with investors.
- Asset Manager: Responsible for managing a real estate portfolio to maximize its value and returns.
- Portfolio Manager: Responsible for managing a portfolio of assets and ensuring its alignment with the overall investment strategy of the firm management.
- Analyst (Investment, Financial, or Research): Responsible for conducting financial and market analysis to support investment decisions.
- Underwriter: Responsible for analyzing and assessing potential real estate investments to determine their viability and risk.
- Due Diligence Specialist: Responsible for conducting due diligence on potential investments to identify and assess risks.
- Deal Sourcing Specialist: Responsible for identifying and sourcing potential investment opportunities.
- Acquisitions Manager: Responsible for managing the acquisition process, including negotiating deals and securing financing.
- Development Manager: Responsible for managing real estate development projects, including site acquisition, entitlements, and construction management.
- Investor Relations Manager: Responsible for managing relationships with investors, providing regular updates on the portfolio’s performance, and communicating the firm’s investment strategy.
- Fund Accountant: Responsible for managing the accounting and financial reporting for a real estate fund.
- Compliance Officer: Responsible for ensuring that the firm operates in compliance with applicable laws and regulations.
- Operations Manager: Responsible for managing the operations of the firm, including human resources, information technology, and office management.
- Marketing Manager: Responsible for developing and executing marketing strategies to promote the firm and its investment products.
- Risk Manager: Responsible for assessing and managing risks associated with the firm’s investments.
Real Estate Private Equity Salary + Bonus Levels + Carry
From the start of this article, I mentioned that careers in real estate private equity are highly rewarding.
In this section, I’ll share some of the industry average estimates for salaries and bonuses. So, whether you are a beginner or advanced in the hierarchy of leadership and job categories, here is what you can expect:
|Position Title||Typical Age Range||Base Salary + Bonus (USD)||Carry||Time for Promotion to Next Level|
|Senior Associate||26-32||$250-$400K||Small||2-3 years|
|Vice President (VP)||30-35||$350-$500K||Growing||3-4 years|
|Director or Principal||33-39||$500-$800K||Large||3-4 years|
|Managing Director (MD) or Partner||36+||$700-$2M||Very Large||N/A|
Note: This are industry averages based on statistics and data collected by Glassdoors.
Pro Tip: In the real estate private equity industry, the jobs are more rewarding in terms of salaries and bonuses based on performance than anything else. After all, that’s how the firms make a profit out of the investment and sales of the properties.
So, instead of focusing on what your basic salary is, try as much as possible to be result-oriented so that you can have a more handsome salary at the end of the day.
Additionally, different firms pay differently even for the same job role. So, it’s important that you keep an eye on the right firm that can help you meet your salary projections or grow up the ladder in one firm.
Let’s pause for a moment. Do you still feel like a career in the real estate private equity industry is the right thing for you? Okay, let’s get into more details in the next section!
Real estate private equity recruiting process
I know you’ve heard it! Jobs in the private equity industry are awesome. However, the recruitment process is also rigorous and highly competitive. Learning about the recruitment process will give you a competitive advantage over everyone else.
So, how does private equity recruitment work?
The private equity firms source, interview, and hire candidates based on qualification and experience, among other key considerations.
You can be recruited into a private equity firm in the following ways:
- As an undergraduate (analyst)
- As an investment banking analyst
- From another private equity firm
Basically, once you submit your formal application, qualified or preferred candidates will be selected and interviews will be conducted.
That’s a critical process that you need to be well acquainted with so that you don’t waste opportunities as they come.
So, then, the things you need to work on are ensuring you have the necessary experience and qualifications and the right resume that can land you that job.
Let’s talk a little bit about your resume and how it should look:
- Highlight your relevant investment banking and deal experience.
- Mention previous volunteer opportunities, internships, and jobs briefly
- Briefly include educational credentials (University, GPA, SAT scores)
- Mention skills, activities, and interests
Pro-tip: Always make sure your resume is personalized to you and highlights a story about yourself. Avoid generalizing your resume!
What are Real Estate Private Equity Interview Process and Questions
In an ideal situation, the interview process for private equity candidates takes about 2-3 rounds of interactions between you and the interviewers.
Well, that’s rigorous, right? Yeah, this is true because hiring managers want to get the right candidate who can knock their responsibilities out of the park. There is also a wide range of aspects to cover in the interviews, which include:
- Technical knowledge e.g finance, accounting, and modeling
- Transaction experience in terms of deals you’ve completed
- Firm knowledge in terms of where you’ve worked before
- Cultural fit in terms of personality
- Complete a case study
It goes without saying that you need to demonstrate the utmost consistency and confidence in your interviews.
Let’s address the big question here. What are some of the questions you can expect in a real estate private equity interview?
#1. Technical Knowledge
- What are the limitations of a DCF model?
- What are the most important factors in a merger & acquisition model?
- What indicators would quickly tell you if an M&A deal is accretive or dilutive?
- What assumptions is an LBO model most sensitive to?
- Given two companies (A and B), how would you determine which one to invest in?
#2. Transaction Experience Private Equity Interview Questions
- Describe a deal you worked on at Investment Bank X
#3. PE Firm-Specific Private Equity Interview Questions
- What do you know about us, and why do you want to work at our firm?
- What do you think about some of our portfolio companies?
- What is our firm’s investment strategy?
#4. Culture Fit Private Equity Interview Questions
- Why do you want to work in private equity?
- Walk me through your resume.
- What are your personal strengths and weaknesses?
- What do you like to do when you’re not working?
- How do you de-stress?
- How do you manage risk in your personal life?
That’s a wrap!
But are those all the questions you can expect in an interview? Not that I know. I’d advise you to take an extra minute to familiarize yourself with the industry so that you’re better placed to answer any question with ease.
Is ARGUS a Requirement for Real Estate Interviews?
I want to make sure I don’t lose anyone. So, what is ARGUS? ARGUS Taliance is real estate fund management software that is trusted by fund managers to manage the performance of their funds and REITs.
So is it part of the requirements for real estate interviews? To be honest, it may or may not be a requirement. However, there is no harm in learning how to use the software because it will give you a competitive advantage in the interview process.
So, go out of your way and train yourself how to use it, or if you already have, include that in your resume.
Real Estate Modeling Test
This is a type of exam that assesses your ability to build a financial model for a given property. In private equity interviews, the modeling text helps private equity firms evaluate the potential investment return of the property. Therefore, if you turn out to be a candidate who can knock it out of the park, you stand a better chance of getting the job.
In conclusion, Real Estate Private Equity (REPE) is a lucrative industry that can be rewarding for those who put in the effort to understand the nitty-gritty of the business.
You need a strong understanding of real estate finance, investment analysis, and market trends to break into this industry.
That’s why I placed an emphasis on creating a guide that can help you build a career in this industry, covering topics such as what REPE involves, how to get into REPE, the career path, job descriptions and salary levels, the interview process, and more.
Use the strategies in this guide as you network your way to your dream job, one section at a time.
Frequently Asked Questions (FAQs):
1. Everyone tells me to “network,” but how do I actually go about doing that?
Networking is a key ingredient in securing the right opportunities from the right people in the private equity industry. The right way to network is to ensure you join professional bodies and associations that have the right people you can learn from. You can start by making friends and end up influencing people in the direction that you want.
2. How do I actually find solid job opportunities?
It may sound difficult at the start, but if done correctly, you can break your way into any job that you want in any industry. Here is how to get started;
- Online Job Boards: Visit popular online job boards like LinkedIn to search for job openings in your field.
- Company Career Pages: Check out the career pages of companies that interest you. Many companies list their job openings on their website.
- Networking: Let your friends, family, and professional contacts know that you are job hunting. They may be able to refer you to job openings or connect you with people who are hiring.
- Recruitment Agencies: Recruitment agencies can help match you with job opportunities that fit your skills and experience.
- Social Media: Use social media platforms like LinkedIn and Twitter to connect with companies and recruiters in your industry.
- Industry Events: Attend industry events and job fairs to meet potential employers and learn about job openings in your field.
Remember, it’s important to apply to multiple job openings and not limit yourself to just one. Keep your resume and cover letter up to date and tailor them to each job you apply for.
3. What skills do you need for real estate private equity?
To work in real estate private equity, you typically need a combination of financial and real estate expertise. Here are some of the key skills you may need:
- Financial analysis
- Investment underwriting
- Due diligence
- Communication skills
- Negotiation skills
- Real estate knowledge
- Strategic thinking
4. Is real estate private equity worth it?
Whether real estate private equity is worth it depends on your goals, interests, and personal circumstances. This is a lucrative and rewarding career path for those who have a passion for real estate and finance, enjoy working in a fast-paced environment, and are willing to put in the time and effort to succeed.
5. How do I get into private equity with no experience?
- Pursuing an MBA from a top business school is a common route to breaking into private equity.
- Internships and volunteer opportunities in finance or related fields
- Start in careers like investment banking, management consulting, or corporate finance to gain relevant experience.
- Develop strong financial modeling and analytical skills
- Networking and building connections
While it is possible to break into private equity careers without experience, it’s important that you focus on showing your interest in and commitment to the industry.
My parting shot would be that opportunities are available for career entrants that deserve them. If you’re going to follow all of my recommendations to the core and never give up on opportunities, you’ll have it rather easy in private equity.