The commercial real estate world is different... It's an extremely rewarding sector, and there's a place for everyone. But where do you start? How do you get better?
We built our FastTrack program around the 8 modules that we believe define the real estate industry...
1. The CRE system:
You have to know the roles and how they're connected. You also have to fundamentally understand the four types of real estate transactions and be familiar with their related documents.
2. Real estate capital markets:
There are five debt providers and six equity providers (that fit into four risk profiles). Nine building blocks to build capital stacks with. They are all extremely connected to each other and to outside forces. They also turn off and on quickly.
3. Commercial leases:
This is the most common type of real estate transaction. Lease economics are important but so are options. Many early-career professionals are intimidated by lease documents, but there's no way around it. You have to dive in, understand the key issues, and have a sense of risk/reward balance.
4. Property valuation:
The most critical module. If you can come up with a reasonable value for any asset and have access to capital, you'll make a fortune in real estate over time.
5. Sale transactions and due diligence:
Unlike other assets, commercial properties aren't commodities. They're all different, and they don't trade instantaneously. Therefore, the process we use to buy and sell properties is unique.
6. Mortgages and leverage:
Real estate debt markets are notoriously violent. Big years are huge. Slow years are dead. Sometimes it makes a lot of sense to use a lot of debt, and other times it's a terrible idea. Savvy investors know the difference and have an intimate sense of lender measures and appetite.
7. Real estate development:
Ask real estate students what they want to do for a living, and you'll hear a common theme. Development. Everyone wants to be a developer. To outsiders, developers seem like a blend between artists and movie stars. But developers are more like movie directors; they're behind the camera, managing hundreds of details and processes. It's important to know their frameworks, especially around when and where to build.
8. Joint ventures:
Commercial real estate is a team sport. Assets and markets are complicated, which leads to specialization and the need for partnerships. We find that surprisingly few people understand waterfalls, much less the need to balance distributions with other critical aspects of partnerships.
PS: Interested in your feedback...
If you're a FastTrack alumn...
What was your favorite module?
If you're an experienced professional...
What module do you think is most important?
If you're an early-career professional...
What module is the most foreign to you?
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