What is a Real Estate Analyst?
The path to becoming a real estate analyst is not unlike that to become an investment banking analyst. There may be more paths open to candidates in this field since in addition to dedicated real estate investment firms, most investment banks and some private equity firms have a real estate division as a well. In any setting, a real estate analyst will need to offer applicable internship experience, a solid quantitative foundation, modeling and excel skills, and an understanding of sector specific principles.
Key Learning Points
- A real estate analyst gathers, organizes, and analyzes the financial data underlying real estate transactions and/or assets within a portfolio.
- An internship in either a real estate-related or financial firm will establish the credentials needed for this career path.
- Traditional financial statement analysis is not as relevant but financial analysis, including an understanding of debt and equity, investment returns, and performance ratios is critical.
- Real estate analysts are found in investment banks, asset management firms, private equity shops, and real estate-specific companies such as real estate finance firms, commercial real estate leasing firms, real estate investment firms, and REIT management companies.
What Does a Real Estate Analyst Do?
A real estate analyst is a junior within the professional hierarchy and team structure. A real estate analyst takes market and transaction data to incorporate into cash flow forecasts, lease analysis, acquisition, and exit analysis, as well as returns analysis for investors. In real estate, a successful deal is defined by paying the right price, choosing the correct capital structure, running the asset to the highest levels of efficiency, and selling at the right time and price. A real estate analyst will be at the center of all the data analysis involved in each of those decisions.
Education and Work Experience Requirements for a Real Estate Analyst
Most real estate analysts have an undergraduate or bachelor’s degree. While a business or real estate- specific degree is helpful, it is not essential. For those interested in working in the leasing/brokerage area, certification is required. Evidence of quantitative coursework is helpful. For those looking to make a career change into real estate, a background in investment banking, asset management, private equity or the capital markets will be a significant benefit.
As for most financial analyst positions, competition is intense. One benefit to seeking a real estate position is that there many kinds of firms with real estate functions. Access the free download to see the types of firms that employ real estate analysts.
A real estate internship can help a candidate learn more about the industry, which should make targeting opportunities a little easier. On the other hand, an internship in finance will provide some of the hard skills required to succeed in the position, including basic modeling and excel skills, introduction to the jargon and terminology, and an application of the metrics used in analysis. Our Real Estate Financial Modeling Course is a great way to gain foundational knowledge as well as a certification.
Real Estate Analyst Salaries
Average salaries for real estate analysts can vary based on factors such as experience, skills, and location, and these figures are subject to change over time:
- In the US, average real estate analyst salary is $75,712 per year, with estimated cash compensation of $5,774.
- In the UK, average real estate analyst salary is $50,310 per year, with estimated cash compensation of £12,509.
Real Estate Analyst Hours
The working hours for a real estate analyst can vary depending on the organization, project deadlines, and workload. In many cases, real estate analysts can expect to work standard office hours from 9:00 AM to 6:00 PM, Monday to Friday.
During busy periods, such as when deadlines for financial modeling, market analysis, or deal evaluations approach, analysts may be required to work longer hours to meet project requirements and client expectations, including evenings and weekends.
Real estate analysts working in certain sectors like investment banking, may have more demanding schedules with longer hours compared to those in other areas of real estate, like asset management or brokerage.
Real Estate Analyst Career Path
The typical career path for a Real Estate Analyst can vary depending on the individual’s interests and goals. Here is an example of a typical career path:
Real Estate Analyst – An entry-level position, analysts conduct research, provide financial analysis, and evaluate real estate market trends. They undertake complex financial analysis, carry out property valuation, and conduct market research.
Senior Analyst or Associate – After gaining experience and demonstrating competence, an analyst might progress to a senior analyst or associate position. The senior or associate role involves more responsibility, and often overseeing junior analysts in the firm.
Manager or Vice President – Associates can advance to managerial roles or senior roles like vice president. This required strategic decision-making and leadership skills.
Property Manager or Portfolio Manager – Some analysts may decide to specialize in property or portfolio management, overseeing properties and real estate assets.
Investment or Transaction Manager – Analysts in a more deal-oriented role, might advance to investment or transaction manager roles.
Real Estate Analyst Exit Opportunities
Real Estate Analysts have a variety of exit opportunities. Here are some of the common paths they might take:
Brokerage – After spending around 3-4 years at the analyst level, brokerage professionals generally have the option to either stay in brokerage and become a 100% commission-based producer, or transition to work for a client in an acquisitions, capital markets, or loan originations role.
Asset Management – Real estate asset management is a possible exit route for real estate analysts, overseeing the performance and value of real estate assets within a portfolio
Private Equity – Real estate analysts might transition to private equity firms that specialize in real estate investments. Evaluating potential investments, conducting due diligence, and managing portfolio companies.
Consulting – Consulting firms often hire real estate analysts to provide strategic advice to clients in the real estate industry. This could involve market research, feasibility studies, or investment analysis.
Development – Analysts might move into development roles, where they are involved in the planning, financing, and execution of real estate projects.
Real Estate Technology – The rise of real estate technology (proptech) has created opportunities for analysts to work for companies developing software, platforms, or solutions for the real estate industry.
Key Skills for a Real Estate Analyst
- Leases drive much of the analysis in real estate. An understanding of the various types of real estate leases (sometimes referred to as triple net, full service, modified gross) will come in handy
- Modeling leases, as well as entire properties, can be very complicated and there is sophisticated software available to handle much of the heavy lifting
- Most real estate analysts have a solid understanding of Excel
- Real estate investing is cash flow based. Much of the analysis in real estate is very similar to that undertaken in private equity – levered and unlevered cash flows, IRR, and multiples of invested capital (MoIC)
- For those interested in REITs, an understanding of three statement modeling will be very helpful as REITs are corporations and not just single asset investments
Here is an example of rent roll analysis that a real estate analyst might perform to analyze lease values:
Real estate financing is a very prominent subset of the industry. Understanding the principles of debt and equity is very important. While there is some specialization in financing products for real estate, analysts typically deal with the same kinds of senior and junior loans, and common and preferred equity seen in corporate finance. Given the overlap of the real estate and private equity analysis and financing structures, it would be worthwhile to consider the Private Equity Associate microdegree as preparation as well.
Conclusion
There are many opportunities for real estate analysts – from traditional investment banking to commercial real estate firms. As with any business, it is helpful to understand why you would like to specialize in that area. Understanding the role of different kinds of firms within real estate is not only helpful to a candidate in narrowing down the choices available, but it’s also a way to stand out in the interview process. Gaining a firm footing in the fundamentals of real estate, finance, and modeling is a requirement before taking that first step.
The Real Estate Analyst course is perfect for anyone who wants to break into the commercial real estate industry, prepare for interviews or an internship, or stand out from the crowd when preparing for a new role in commercial real estate, private equity, or investment banking. Master the analytical skills needed for real estate financial modeling, and learn how to interpret property market data and evaluate investment opportunities like a real estate analyst.