Private equity real estate (PERE) attracts a lot of curiosity from bankers and real estate agents alike— the field being a dynamic blend of the two industries. For many, the curiosity of a career in PERE stems from the potential of big returns and payoffs. Consulting successful professionals in the PERE industry, such as Steven Taylor is a great way to gain some insight into the competitive world of commercial real estate. if you are considering a career in PERE, here are some things to consider.
Real Estate Private Equity: What It is and How it Works
PERE became a popular industry during the 1990s when investors used falling property prices to acquire a large amount of commercial real estate at a low cost. Today, PERE firms raise capital from outside investors, referred to as Limited Partners (LPs), and use the funds to buy and develop commercial real estate. LPs can take a variety of forms, such as pension funds, wealthy individuals, or endowments.
PERE firms typically choose to buy properties that need some improvement and renovation. Additionally, PERE firms like to focus on commercial real estate over residential properties due to the much greater return on investment. Most PERE investing involves acquiring specialized buildings such as offices, malls, or warehouses.
A Career in Real Estate Private
Starting a career in PERE looks a lot like starting a career in private equity. Entry-level careers in PERE involve a lot of analyzing investment opportunities, building financial models, and portfolio monitoring. The biggest differentiator between private equity and PERE is that rather than dealing with a portfolio of companies, you’re managing a portfolio of properties. One of the best strategies for building your career is to consult with a PERE firm, such as
Key Differences Between Private Equity and PERE
In PERE, there is a lot of on the groundwork and logistical management that needs to happen to be successful— your office expands to include construction sites and various properties. In-person visits to your properties matter a lot. When it comes to properties, data can only tell you so much—you need the full picture. The only way to intimately know the ins and outs of your portfolio of properties is to visit them on a regular basis.
The work-life of a PERE professional varies from day-to-day. On some days, your work might involve a lot of number crunching and financial modeling, whereas others it might require socializing with construction workers. The two biggest elements of your work will be property visitations and financial modeling. One of the key benefits of a career in PERE over private equity is the financial modeling in PERE is less complex.
General interest in PERE has been on the rise since its proliferation in the 90s. Investment bankers and real estate agents are increasingly looking to the field due to its potential for lucrative deals with high returns. A unique blend of private equity and real estate, PERE is a great option for professionals looking for a career that offers a lot of day-to-day diversity.