​In my last piece, we covered why Excel modelling capabilities have become so crucial in modern real estate and why employers should get behind training their staff within it.

In short, the move toward the repurposing of assets over the past few years has meant that modelling capabilities are needed not only by those in analytical disciplines, but by those within asset management, corporate real estate, development, agency, and other roles in the space.

Here, I focus on how employees in these areas can upskill themselves and how to pass that all-important modelling test, from the perspective of someone who interviews clients and candidates in this space every day, and so can see the growing importance of modelling capabilities and how they can help a candidate take the next step in their career.

How can employees improve their modelling capabilities?

Many typical Real Estate University courses, and even the two-year APC, are not adequately preparing trainee Surveyors for the fiercely financial career they are about to enter into. The MSc courses with explicit modules on modelling help a lot more, but even then, I often see that these candidates find themselves struggling when it comes to the hurdle of passing modelling tests.

One immediate way to improve your modelling skills is to raise your hand with your existing workplace to get involved with cashflow analysis. If your team works within areas such as Capital Markets and Valuation, the request to have more Excel-centric work as part of your job can be straightforward and may even be glowing news to your existing boss. It can be much harder however, when a candidate is looking to upskill in a division like Property Management, Leasing, or Landlord & Tenant, where either analysis via Argus is sufficient, or analysis does not form part of the role at all.

So, I’d like to highlight a further way modelling skills can be improved, and this is via specialist Real Estate Excel courses. These are courses that can take place over a single day, a few days, or even a period of weeks, depending on the extent of the need. I’ve seen first-hand in my recruitment of Real Estate professionals over the past few years how much these can improve a candidate’s competency. The Bayfield Modelling Course, as an example, has become a regular fixture I’ll look for in a CV to give comfort that a candidate has undergone specific modelling training.

How to pass your modelling test

Stemming from over a decade of issuing, coaching, and delivering countless amounts of feedback on the highs and lows of candidates' modelling test performances, despite not taking the tests, I feel well-placed to offer advice on what these tests typically entail.

The gold standard is to be able to create a discounted cashflow from scratch from information that the organisation provides you. Classically, but not always, they will take the form of:

• Tab 1: The scenario (i.e. we’re targeting the acquisition of a BTR asset in Copenhagen, in X timeframe, with a target IRR and timespan)

• Tab 2: The tenancy schedule and any other considerations that need to be taken into account

• Tab 3: A completely blank tab where you’ll build the model using your own formulas to arrive at a levered or unlevered IRR.

Some more advanced tests may ask you to produce a sensitivity table or promote structure, but as a general rule for most, all you’ll NEED to be able to do, is build a basic DCF model to reach a levered IRR. You’ll generally have 2-3 hours to do this and it's as much about your logic and formatting as it is about producing the correct IRR – I’ve seen plenty of modelling tests arrive at different IRR’s but still succeed in passing.

As these tests are time-limited, my top tips would be to make sure that your set-up (i.e. Windows/Mac, screen set up, physical calculator and programs) are all updated and are as similar to your normal working environment as possible for the test. And if I were to advise on the biggest pitfalls to avoid, I’d say that I’ve seen candidates too often rush into the cashflow itself, rather than take the time to read the initial summary of the asset or read-through fully the tenancy schedule. This leads to instances where candidates miss crucial break clauses, or produce a quarterly model rather than a monthly one etc..

But the biggest advice I can give individuals – is to practice. Practice is absolutely essential, and frankly you may fail your first three or so modelling tests (some of the best candidates and indeed clients I speak to have) – but if you keep a record of the test and practice again in your free time, by that fourth or fifth test you’ll know exactly what to expect (the tests are remarkably similar across businesses) – and the muscle memory and routine you’ve developed will help you ace the test with time to spare. Connected to this, speak to friends or peers who have been through modelling tests too and ask if they have any old materials you can practice with, or advice from their own experiences with tests to pass on to you. Bayfield also offer a specific course on how to pass a modelling test, with a deeper dive into the technical aspects to consider during your exam.

We’re currently hiring across a number of Real Estate roles – many of which require prior modelling capabilities but some do not.

If you’re interested in one of these positions, or want to understand how enhanced modelling capabilities could benefit your real estate career and the opportunities that could be available, please get in touch with me below.

Email: tenefer@cobaltrecruitment.com

Phone number: +44(0)20 7478 2512

Bayfield Training is the market leader in of CPD-accredited courses in Real Estate financial modelling, strategy, leadership and management. Contact them as a contact of Cobalt’s and get up to 20% off their upcoming courses.

Join us on our next webinars with Bayfield:

Thursday 19th September at 1pm: How to sell your CV effectively and secure practical experience in Real Estate.

Tuesday 19th November at 1pm: How market forces impact funds, REITS and Private Equity firms in Real Estate.

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See the highlights from the webinar with Bayfield on passing a modelling test below:

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