II. Career Paths in Finance

E. Real Estate

The real estate industry is broad and diverse. Career positions in real estate include the sale, management, and analysis of land and properties. The real estate industry is one of the largest components of the overall economy and offers excellent career opportunities. Real estate positions tend to be entrepreneurial, and create opportunities for individuals to become wealthy if they have the right mix of analytical skills and entrepreneurial drive.

Career opportunities in real estate are broad and varied. Real estate developers use spreadsheets to project and analyze cash flows for proposed new developments. Agents and brokers in the field have considerable contact with customers on a day-to-day basis. Entrepreneurs and property owners and managers evaluate undervalued real estate buys and develop strategies for creating value.

There are a variety of ways to break into real estate. Those interested in real estate sales must obtain real estate sales licenses and generally work for commercial or residential brokers. Those interested in getting involved in property acquisition and analysis should obtain bachelor's degrees with specializations in real estate and apply for positions at property management companies. Other ways to enter the industry are through corporate site selection departments, governmental entities, and banks.

1. Personality Traits and Skill Requirements. Typical skill requirements in the real estate industry include the following:
   1. People Skills: High
   2. Sales Skills: Very High
   3. Communications Skills: High
   4. Computer Skills: Low to Medium
   5. Ability to Synthesize: Low
   6. Creative Ability: Medium
   7. Initiative: Very High
   8. Work Hours: 20-70/week

2. Key Career Areas
   1. Real Estate Agent/Broker. Real estate agents are usually independent sales professionals who contract with real estate brokers in exchange for a commission-sharing agreement (normally around six percent). To become a real estate broker, an individual must be at least eighteen years old, be a high school graduate, and pass a written test on real estate property laws and real estate transactions. Most states also require 30-90 hours of classroom training.

   2. Real Estate Appraisers. Real estate appraisers provide estimates of a property's value and quality. Appraisers usually work for banks or for real estate appraisal firms, and normally value properties by finding comparable sales in an area, or by estimating the discounted value of cash flows expected from a property. Demand for the services provided by appraisers is less cyclical than real estate brokerage services because appraisers are required when homes are refinanced--a time historically when the real estate market has been slow.

   3. Property Managers. Most large real estate owners require professional property managers. Property managers are responsible for negotiating leases, ensuring that tenants are satisfied, ensuring that tenants pay rent, and for following local real estate markets. Successful property managers require good interpersonal and analytical skills, and a fair amount of negotiating prowess.

   4. Real Estate Advisors. Institutional investors are purchasing real estate more and more. However, real estate is not like a stock or bond that you can buy and put in a vault. Real estate advisors help investors care for property and, more importantly, help investors select property by suggesting locations and property types that are likely to experience price appreciation in the future. Individuals who are good with statistics and possess excellent interpersonal skills will be successful real estate advisors.

   5. Real Estate Builders and Developers. Real estate builders and developers typically work long hours and must be capable of taking calculated risks in order to develop new properties. Individuals can enter this area of real estate by working for other developers, working as construction managers, or by investing on their own by starting with smaller transactions. Good developers are results-oriented and know how to complete work on time. Builders and developers are required to manage employees and contractors, establish time (phase) estimates, and assemble and organize the appropriate equipment operators and construction crews.

   6. Real Estate Entrepreneur. Some of the wealthiest persons in the world during the past fifty years have been real estate entrepreneurs. To be a successful real estate entrepreneur, an individual must be smart, hard-working, willing to take risks, and fortunate.

3. Salaries. Salaries in real estate depend a great deal upon the area of the industry in which you work. According to January 2001 data from Yahoo! Careers, the median base salary of real estate managers in the U.S. is $68,031 a year, and for appraisers, $45,840 a year. Salaries in real estate sales are a bit more difficult to characterize. Full-time sales associates can earn over $50,000 per year up to several hundred thousand dollars a year depending upon the economic climate and area of the country.

4. Suggested Coursework. Careers in real estate include activities related to the development, sale or management of real estate. Courses relevant to a real estate would include the following
   1. Strongly recommended:
      Corporate Finance
      Advanced Corporate Finance
      International Corporate Finance
      Investment Analysis and Portfolio Management
      Derivatives
      Money and Capital Markets
      Real Estate Investment Analysis
      Real Estate Management
      Real Estate Valuation

   2. Recommended:
      Investment Banking & Financial Intermediation
      Financial Statement Analysis
      Corporate Financial Reporting
      Corporate Strategy

   3. Other Suggested Courses:
      Decision Analysis
      Marketing Strategy

5. Useful Professional Certifications

   American Society of Appraisers (ASA)
   Certified Business Appraiser (CBA)
   

6. Internet Resources
   Real Estate Job Store
   Real-Jobs
   InRealty Job Line
   American Real Estate and Urban Economics Association (AUREA)
   National Association of Industrial and Office Properties
   National Association of Real Estate Investment Trusts (NAREIT)
   National Council of Real Estate Investment Fiduciaries (NCREIF)
   Real Estate Top Firms
   Real Estate Job Listings

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