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Several CRE Questions

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  • #13121
    __om
    Participant

    Quick background: Graduating in May with a BBA in Computer Information Systems with no CRE internships. This past year I have done a lot of studying/research into the industry and my market. I have also worked on my excel and finance skills/knowledge and have gotten decent at modeling. Can easily calculate things like cap rates, NOI, IRR.

    1) I’ve done some networking. Cold emails that led to some decent phone calls, but that was last Summer when I was 100% green to the industry. Everyone I talked to was in leasing, and that’s not what I am looking to get into. I have had a few coffee meetings as well, but those were connections through family.

    My question is how do I get people that I do not know or am not connected to whatsoever to get coffee with me? Can I cold email them asking to get coffee and skip the phone chat? I would much rather do that.

    2) What titles should I be targeting to get a coffee with? VP, SVP, MD, SMD?

    3) I have applied to a few places within the last few weeks and have not heard back. What is the best way to follow up? Can I do the cold email approach and ask for coffee? Do I cold email and ask for a phone call? Preferably I would like to do the cold email approach and ask for coffee, get to know themselves, their firm, and the position. Would this be acceptable?

    4) What do these guys/gals want to hear? Those who are in a position to hire someone, what are you looking for?

    5) How does hiring work in CRE? Is applying to job postings online sort of a waste of time, and I am much more likely to find a job straight through hard networking?

    6) Major differences in retail, office, and multifamily investment sales? Mostly interested in multifamily and retail.

    7) How exactly does bps work in debt/equity and investment sales? For example, from how I understand it, on a $25,000,000 loan @ ~60 bps you would get ~$75,000 after going 50/50 with the firm. Is that correct or what else should be factored in? And how does this work in investment sales?

    #13144
    Lev
    Keymaster

    __om,

    Great questions. My responses are below.

    My question is how do I get people that I do not know or am not connected to whatsoever to get coffee with me? Can I cold email them asking to get coffee and skip the phone chat? I would much rather do that.

    My responses below should paint a decent picture for my suggested strategy. In short, soften your sales pitch. Contact junior professionals for open-ended 15-30 minute conversations on the industry and their day-to-day. Most people do not wield unilateral power to hire anybody, and even the MDs/MPs with final say will defer to their junior teams for judgment. Thus, you can never really ask a single person for a job. My approach targets the group as a whole. If you speak with every single member of the team, you will be leagues ahead of your competition. When the team sits together and works to approach a consensus on the best hire, you’ve made their decision much easier if every single person spoke with you and enjoyed their conversation. Thus, you never really need to focus on asking for a job on any phone call. Rather, develop a rapport over 15-30 minutes, then ask to speak with somebody else on the team. This leaves a positive impression and maintains your momentum until you’ve covered the entire organization. More strategies written below.

    What titles should I be targeting to get a coffee with? VP, SVP, MD, SMD?

    I’d highlight that your list above should include the junior team members such as analysts and associates. These junior professionals will sit with you daily, so they represent a significant voice in the hiring process. For example, my strategy was to speak first with juniors, build a nice rapport over a 15-30 minute phone call, then at the end ask to speak with their ASO / VP, etc. This strategy would help me cover most levels of the corporate hierarchy after just a few calls. Starting at the bottom, I would develop a strong base with the analysts who would then recommend me to a senior person that might otherwise ignore my email or LinkedIn messages. By the time I spoke with the senior people that carried serious hiring firepower, I was able to namedrop and speak to the firm’s culture with much more authority than I would have managed had I started at the top. By speaking first with the junior analysts, I was able to figure out and then reflect their strengths while speaking with top brass.

    I have applied to a few places within the last few weeks and have not heard back. What is the best way to follow up? Can I do the cold email approach and ask for coffee? Do I cold email and ask for a phone call? Preferably I would like to do the cold email approach and ask for coffee, get to know themselves, their firm, and the position. Would this be acceptable?

    I know time is of the essence given your approaching graduation. However, you can turn leads off if you appear too hungry for a job. My advice is to email for an open-ended conversation to learn about their industry. If the conversation develops well, you’ve built a slight rapport. At the end of this first 15-30 minute phone call, which should be framed as a simple open-ended discussion about the industry and their day-to-day, you should then lean in and request an in-person follow-up and conversation with one of their colleagues over the phone.
    Dialing back, I think your direct-to-coffee approach may be too straightforward for some of these folks. I would soften your sales approach and start off easy with open-ended phone calls with no express purpose (such as asking about internship opportunities or full-time positions). Then, once you’ve established yourself as an agreeable individual who understands the industry, they will be more open to entertaining an in-person meet or supporting your potential candidacy.

    What do these guys/gals want to hear? Those who are in a position to hire someone, what are you looking for?

    Ultimately, every open position exists to do work that is currently being done by somebody who wants to offload that work onto somebody else. What that work specifically is and what personal characteristics make an individual a better candidate varies by industry. I get the feeling you’re interested in investment sales, so I will speak to that. At the junior level, your hiring manager will want somebody with:
    1) A strong passion for real estate (work this into your “walk me through your resume”)
    2) Knowledge of the firm’s history, current leadership, and recent large deals the firm executed
    3) Ability to crunch numbers, take direction, and work late without making any mistakes (in college, 99% is an A+ — in financial modeling, 1% error compounds and trashes your entire output)
    4) High probability of remaining at the firm to reduce employee churn

    How does hiring work in CRE? Is applying to job postings online sort of a waste of time, and I am much more likely to find a job straight through hard networking?

    If you haven’t read my interview with Chris, a non-target student who broke into REPE acquisitions, I suggest you read that ASAP. Chris got his job because he was the only person to pick up the phone and call for an internship. Online job postings aren’t even on the same plane as hard networking. First, online job applications are easy with low barriers to entry for your competition. You click a few buttons, and you’re done. What do you get for it? You put a one page PDF with high-level personal data into a stack of hundreds, if not thousands of other one page PDFs that vaguely describe each candidate. Phone and in-person networking, on the other hand, offer infinitely more depth for hiring managers to develop a relationship with you. Your goal is to build rapport — and just think which would have a greater impact: handing somebody a single page PDF among thousands, or being one of three or four people at most who ever pick up the phone and call? There’s no comparison, which is why I never advise anybody to rely on online job postings.

    Major differences in retail, office, and multifamily investment sales? Mostly interested in multifamily and retail.

    Retail and Office investment sales professionals would focus more on the individual tenancy, whereas multifamily investment sales speaks more in average terms about the general demographic that drives rental demand. Individual tenants drive large chunks of Retail and Office NOI, so your focus as a broker will dive into the softer nuances of tenant relationships, likelihood to renew, future CapEx upon renewal, and sourcing competitive private information on nearby leases to convince the next investor that the market story remains strong. Multifamily brokers, on the other hand, have access to more transparent market data since neighborhood rental rates are well represented by companies such as REIS and Axiometrics. Multifamily brokers care much less about individual tenancy (unless the first floor involves a significant retail component) as they do about market rents and submarket economics that will push rents forward for the next investor.

    How exactly does bps work in debt/equity and investment sales? For example, from how I understand it, on a $25,000,000 loan @ ~60 bps you would get ~$75,000 after going 50/50 with the firm. Is that correct or what else should be factored in? And how does this work in investment sales?

    I’d like to nitpick this a bit. The “bps” you’re referring to could mean anything, a “bps” is just a basis point, which means a percentage of a percent, or 0.0001. Unfortunately I’ve never worked in investment sales (I worked in REIB & now REPE), so simply referring to something as “bps” could be shorthand jargon that I’m not familiar with. I use bps on a daily basis to refer to all sorts of concepts that are presented as percentages. However, I think you may be referring to a broker commission or financing fee, which would be measured in basis points (“bps”). In that case, a debt issuance fee would just be Xbps * principal issued, same goes for equity, and investment sales are typically paid by the seller as Xbps * gross sales value.

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