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After an REFM training session many years ago, one of the attendees observed to me that what makes an excellent analyst is the combination of three factors: strength in Excel, real estate modeling experience, and an attention to detail. I agree completely, and have fleshed out some thoughts below.
1. A strong facility with Excel – While this goes without saying, one of the fundamental problems when employers try to evaluate candidate Excel skills is that when they ask candidates in an interview how their Excel skills are, all of the candidates naturally say: “they’re great!” And can you blame the candidates for “rounding up” regarding their abilities? Nonetheless, what employers should value is an analyst who has logged a lot of hours in Excel building, auditing and retrofitting models that have addressed a wide variety of circumstances, especially on the financing and partnership waterfall side.
2. Real estate modeling knowledge – A true understanding of how transactions work and how to model them comes only with time. As they say, “experience is what you get when you don’t get what you want”, and this holds true with your analyst evolving from decent to good to great. You want an analyst who is “experienced”, meaning they have learned from making a lot of mistakes on someone else’s dime and on someone else’s time. There is a certain level of common sense that one gains as they go through the experience of modeling and carrying out transactions, and no matter how many times you try to verbally drill certain concepts into the heads of your analysts, it will only truly click for them once they have been through it on their own.
3. Meticulousness – Being a careless operator of an Excel model is like being a brain surgeon who swings the scalpel sloppily in between incisions (hopefully there aren’t any careless brain surgeons). You can corrupt your Excel model inadvertently in hundreds of different ways, including with an errant keystroke that you didn’t even realize you made. Hiring someone who is fastidious by nature is critical.