How To Pass a Real Estate Private Equity Excel Modeling Exam

Going through multiple rounds of interviews at a commercial real estate firm can be an extremely long and drawn-out process, but for most analyst and associate roles in the industry, you’re not out of the woods until you’ve gone through an Excel modeling exam.

I find that a lot of people tend to miss the forest for the trees when preparing for these, and aside from just focusing on technical training, there are a few main principles that can help set you apart from other applicants who have also made it to this stage.

So if you’re preparing for an Excel modeling case study and want to make sure you’re ready for the big day, this article walks through three of my biggest pieces of advice for succeeding in a real estate financial modeling interview exam, and how to maximize your chances of landing a job offer.

If video is more your thing, you can watch the video version of this article here:

Pay Extreme Attention To Detail

Regardless of what kind of time constraints are put on you, there is a tremendous amount of focus on the appearance of documents sent out to investors, lenders, and partners in commercial real estate.

As the analyst on a project, even though you’re going to be getting some oversight from your managers, you are ultimately responsible for putting together the investment pitch and financials that tell the story of a deal.

This is true in all parts of the business, with investment sales analysts putting together BOVs and offering memorandums, acquisitions analysts putting together equity memos and investment committee presentations, and lending analysts creating deal materials to get approval internally.

And to show that you can take on these tasks during an exam, make sure to take the time to read and follow all instructions carefully, double-check your spelling and grammar in any written materials you’ll be submitting, and make sure your model formatting is clean, organized, and easy to follow.

Real estate investment and brokerage firms tend to operate very similarly to investment banking or general private equity firms, in that something as small as a simple spelling error can be a very big deal if it makes it to a client’s desk. The more you can show yourself as someone who pays attention to detail up front and takes pride in submitting clean, concise, and accurate work, the more likely you’ll be to receive an offer.

“Gut-Check” Your Numbers

Because there’s so much pressure on timed exams, it can be easy to forget to step back and make sure the numbers you’re submitting actually make sense.

Especially with the way a dynamic real estate financial model works, one mistype in a formula or one extra zero in a manual input can affect your entire model as a whole, so zooming out and making sure your numbers make sense before submitting your work is a necessary step of the process.

This involves making sure that rental income in each month of your analysis roughly lines up with the in-place rent roll, making sure that expense reimbursements are being factored in on commercial leases, and estimating annual NOI based on current income and expenses.

Ultimately, employers want to make sure there’s reasoning and thought behind the work you submit, and there isn’t much value in an analyst that doesn’t actually analyze the models they’re creating.

Explain Your Assumptions

The prompts and assumptions you’re given on these assessments aren’t always perfectly clear, which can lead to some ambiguity as far as how to answer certain questions or how to model a given scenario.

If something is unclear and you’re not sure of what an exam is asking for regarding your answer to a question or an assumption you should be making, you’ll want to make sure to include comments directly on your assumptions in your Excel file.

For example, if you’re given information on an acquisition loan with an interest rate, but there’s no information to be found on an amortization period, you might assume that the loan is full-term interest-only, and you’ll want to add that assumption clearly in your work.

In many cases, companies will actually provide vague assumptions or prompts intentionally, to see how you deal with incomplete information and what kind of conclusions you’ll draw without all the answers provided.

In a general sense, you can think of a modeling test similar to a tryout for a high school basketball team, where you and a bunch of other candidates are going to be taking the court together, all trying to make the roster.

And while it’s easy to say, “I’m good at basketball and I’ve played a lot before,” a tryout gives a coaching staff a true sense of how you can actually play the game and how you would fit into the group.

In that scenario, a coach wouldn’t expect you to shoot 100% from the field and never turn the ball over, but they would want to see a high basketball IQ, strong fundamentals, good court awareness, and a general understanding of the rules of the game.

How To Prepare For an Excel Modeling Exam

If you want to make sure you’re ready to tackle a real estate financial modeling Excel exam that might be given to you during the interview process, make sure to check out our all-in-one membership training platform, Break Into CRE Academy.

A membership to the Academy will give you instant access to over 120 hours of video training on real estate financial modeling and analysis, you’ll get access to hundreds of practice Excel interview exam questions, sample acquisition case studies, and you’ll also get access to the Break Into CRE Analyst Certification Exam. This exam covers topics like real estate pro forma and development modeling, commercial real estate lease modeling, equity waterfall modeling, and many other real estate financial analysis concepts that will help you prove to employers that you have what it takes to tackle the responsibilities of an analyst or associate at a top real estate firm.

As always, thanks so much for reading, and make sure to check out the Break Into CRE YouTube channel for more content that can help you take the next step in your real estate career.