The commercial and residential real estate industry generated an estimated $3 trillion in 2014, with some 35% of sector revenue coming from leasing activities. Other revenue was attributed to net gains from property sales, brokerage fees and rental income. Most estimates of total global gross domestic product fall in the $75 trillion to $90 trillion range, meaning the real estate sector makes up between 3.33% and 4% of total world output.
Money, prestige, or a perception of the industry as the “next big thing” will get you shown the door. Of course, those already working in private equity would be lying if they said they didn't enjoy those things. But ultimately, once the money's in the bank and the person's name is in boldface in the newspaper, the challenge is what keeps them coming back. Private equity, to those in the industry, represents the very pinnacle of investing. Turning around whole companies, finding value where there doesn't appear to be any… these are what keep private equity folks in the game.
Interviewers love to test interviewees' knowledge by pulling out an arcane term that is specific to the industry and testing what you know about it. For example, do you know the difference between a triple net lease and a gross lease? (For reference, a triple net lease requires the tenant to pay taxes, insurance and building maintenance along with his rent, while a tenant with a gross lease pays only rent with the landlord covering the other expenses.)
Policy manuals are generally boring and dry. However, most policy manuals are written to legally protect the company, and you should read and know the policy manual of your firm. It's a red flag if your potential broker does not have a policy manual.
Social media is a leading way real estate agents in which market themselves and their properties to potential buyers and sellers. Technology has created new ways for consumers to buy properties and for real estate agents to market those properties and themselves. Finding a real estate agent who is able to help you maneuver through financial and legal paperwork is important in order to decrease the stress and mistakes that may come along with trying to buy or sell property. People turn to their computers and the Internet to research every aspect of a sale, from their potential agent to property values and past sales of homes. While traditional avenues of marketing such as direct mailings, newspaper ads and magazine layouts are still utilized, online marketing avenues are necessary to compete in the real estate market.
Marketing is the core of what agents do. The marketing materials provided by brokerages vary from firm to firm, but be aware of the guidelines for use of each marketing medium within the firm.
Often the firm will know what words and images are best for promoting your properties and protecting you from litigation.
A net-net-net lease, also known as a triple net or NNN lease, is a type of real estate lease that requires the tenant to pay, in addition to rent, all of the property's associated costs. The three nets in a triple net lease are real estate taxes, property insurance and maintenance costs. Because the landlord shifts these extra costs to the tenant, the rent he charges for a triple net lease is almost always less than for a comparable lease in which the landlord assumes these costs.
This should be relatively easy. For most positions, it's someone with an eye for opportunities to create value, developing plans to create value, executing said plans, etc. The whole point of a private equity firm is to wring as much value as one can out of an investment. And that should be the focus of your answer.
If you're young and going after the equivalent of an analyst or associate position, feel free to talk about other opportunities. Perhaps you want to get an MBA if you don't have one already, or even a doctorate. Perhaps you want to build on your experience and join a portfolio company. It's good to have other ideas, but make sure that your position in private equity takes priority. It's perfectly fine to say, “I don't know, but I'm eager to find out what kind of opportunities would present themselves if I get the chance to work here.” If you're older and applying for an experienced associate, VP, or managing director position, the firm isn't going to want to hear anything other than a commitment to staying and growing with the firm. They're potentially going to throw a lot of money at you, so reassure them that their return on investment will last a good long while.
You need to be up to speed on the state of major deals out there, financing, future growth, fund raising, the whole thing. Don't be surprised if an article in The Wall Street Journal from that very morning is mentioned, and be prepared to respond to it. Naturally, a reasonably bullish outlook for the industry is likely an asset-why else are you applying?-but don't sugarcoat it, either. Talk about the challenges facing the industry in a reasonable way, how the industry might overcome them, and why you ultimately think the industry will continue to grow and prosper.