Hello. I am considering begining the process for obtaining the CFA designation (would take Level I in Dec.). However, I am wondering about how useful it will be in my chosen career path. I am interested in moving my career into “institutional” real estate. For example, a real estate investment management firm that invests in “hard” real estate assets on behalf of pension funds, etc. I used to work in acquistions for a real estate development firm and currently work for a commercial appraisal firm that analyzes Class A real estate for institional investors. Long term goal is to get an asset management or acquisitions position with an investment management firm focused on real estate. I have a Master’s in Real Estate Development which gave me a basic grounding in finance; however, I believe the CFA designation will take me to the next level. Anyone out there in real estate want to offer any advice or suggetions. Do you think it’s worth the time and effort to go for the CFA? I hear from some people that it’s not necessary. That said, I do see SOME people in those type of firms with the CFA designation. Thanks for any input.
I would think that the CFA is relevant, although there’s a lot of stuff you’ll be tested on that is not directly applicable to real estate, and not too much direct testing of real estate stuff. Probably the most useful thing about the CFA would be the sections on portfolio management, and after that the “general investment management mindset.” CFA would not help you very much in figuring out which properties to invest in, but it could help you think through how to manage a real estate portfolio and information that might help you sell RE portfolios to institutional clients. It’s a lot of extra work for stuff that doesn’t necessarily help you in real estate, but my guess is that the charter is still respected there, and if you ever change your mind and want to do equities or fixed income or stuff, it would let you move around. Check with your other real estate colleagues about how they value the CFA. If they think it’s good, go for it.
bchadwick: Thanks for the reply. Yes, I think you make some good points. One follow up question to your post: How tough would it be to make a move from “real estate” to equities (assuming I had the CFA designation)? Just seems like two different worlds, but I am increasingly interested in equities so that could be a path I’d want to explore. Thanks again.
With your background, a move to an investment management firm or to the sell-side as an analyst focusing on REIT securities wouldn’t be too far-fetched. Of course, if you obtained the charter first, a move like that would be much easier. If you were to get very aggressive, another degree, such as an MBA or MSF, couldn’t hurt your chances, either. My guess is that the vast majority of people you see with the CFA in positions like yours (acquisitions) likely came to that position from the investment side, as in from an institutional investor (pension, insurance, real estate advisory, asset management, etc.). I view the CFA as being most helpful, in real estate, for those types of positions that involve the need for attracting capital or directing capital, such as investment consultants (who may help decide real estate public fund allocations), or the previously listed institutional investors, or for sell-side analysts. I think in your position, you would do just fine without a CFA. I would look at it as more of a career-enhancement tool that may enable you to move to the types of roles I mentioned in the preceding paragraph.
Some people have their CFA charters in the real estate industry, but it’s pretty useless overall. You make $ in real estate through your knowledge, abilities, and contacts. Studying for 3 years+ for the charter is a waste of your time IF–IF–you want to stick to real estate. After passing L1 and signing up for L2, I dropped out. So few people have it in our field. It’s just really not relevant. My question is, why would you want to move from real estate to equities? There is SOOOOOO much money to be made here. It’s sick–in both the good times and bad.
if you have the time, have an intellectual curiosity, and can deal with no social life from January till the first Saturday in June,for at least the next 3 years…go for it…
Thanks to all for the replies. KKENT: Most likely plan to stay in real estate but it is nice to have options. Do you mind if I ask what end of the real estate industry you are in?? I know lots of people in real estate who are hurting bad right now (even people with MBAs, Law Degrees, etc). Glad to hear you are doing well.
He must be in foreclosures…
I work in underwriting of apartments. Things are getting tougher, but we’re staying afloat–pay and bonuses are still very good. But I’m not really referring to your 9-5 (or 8-7 
) jobs, I’m just talking real estate in general–development, finance, etc. I know guys who are just racking in the dough…right now (where a door closes, a window opens every time)! I love the fact that I’m generating marketable/transferrable skills that will eventually allow me to move to bigger money and eventually will allow me to transfer my skills into real estate entrepreneurship, where the big money is. Frankly, you can’t just walk into big money real estate and make money–you need the knowledge and contacts, which you are developing now (I know–I worked in commercial appraisal less than a year ago!). Having done the whole L1 thing, I just don’t see how real estate acquisitions and “hard” investments in real estate would really have much association with CFA material. In fact, I’m not sure we will even be able to get work experience credit for our jobs, which was the nail in the coffin for me dropping out. Nevertheless, taking the tests can’t hurt you. I’m just not sure it’s worth your time and money that could be put to better use.
IsleSea Wrote: ------------------------------------------------------- > How tough would it be to make a move from “real > estate” to equities (assuming I had the CFA > designation)? Just seems like two different > worlds, but I am increasingly interested in > equities so that could be a path I’d want to > explore. Thanks again. I don’t know for sure, but I think that it would certainly be easier to move with the CFA than without. If you wanted to do it, you could try to be an equity analyst for the housing and construction industries, or be a fund analyst for REITs. At a minimum, the CFA would tell employers that you have some exposure to equity and fixed income models. kkent’s point that “Nevertheless, taking the tests can’t hurt you. I’m just not sure it’s worth your time and money that could be put to better use” is a good one. The CFA is not a huge money commitment, but it is a BIG time and energy commitment, so it may be overkill if you just want to stay in real estate.
Again, thanks to both of you. Yes, I go back and forth on it. Really would love the knowledge and the designation. Than again, I can’t help but think about opportunity costs associated with such a move. And if my work experience doesn’t count, than I really start to wonder…but I think a REIT analyst job could be very interesting. So kkent you were in appraisal and now it sounds like you are in acquisitions for apartments. I used to work for an apartment developer. Really like that property type and hope to get back with an investment firm/fund that does mulitifamily. Just trying to ride out the recession in appraisal until I can get find a better gig. What market are you based in?
I worked in institutional real estate (buy side) for almost 3 years in Australia. My input comes from the Australian market and may not be relevant for the American market. Based on what you’ve said about your work profile and where you want to go in the short term, the CFA charter is not relevant to you. The direct real estate industry does not have too much awareness about the charter and will not care much about it. Like kkent said, its about your local knowledge, skills and most importantly, your network. However, over the longer term, if you want to shift to a more finance type role, you could definitely use your RE skills and combine them with a CFA to land an equity research role covering REITs and RE developers. I reckon thats a good combination. CFA + RE experience may also look attractive to IBD in the real estate team.
I’m currently on the buy side as well, in portfolio management, here in the US. I agree with kkent and Syd in that if you want to be focused on acquisitions or asset management, the CFA designation is not necessary especially given your Masters. However, given that you are targeting the institutional space and may want to explore other avenues later on I think it would be helpful. You’ll have a much broader understanding of what your clients or investors are facing, where else they are invested, and how outside events will affect your underwriting. Even if you were to stay in acquisitions, once you get to the larger institutional quality deals many of them involve more complicated debt and equity structures, partnerships, and other issues that are covered elsewhere in the curriculum - the actual RE sections don’t cover anything you don’t already know. In asset management, being able to underwrite a tenant’s financials is especially important. Long story short - a CFA isn’t needed to make $ in real estate, but the further you get into the institutional side of things the more value it will have for you.
anc, I agree with that, and since I work in affordable apartment housing–the world’s most complicated debt/equity structures–I can’t help but agree with you (IsleSea, to your question–my market is all 50 states and Puerto Rico). My finance degree and studies in L1 have certainly been helpful. In fact, they’ve been very helpful insofar as knowledge of financial mechanisms and financial mathematics has been very helpful.
anc417 hit it right on the head. I’m in institutional real estate and you’ll find that the CFA isn’t that useful within the real estate community. However once you step out and deal with the sources of capital they all know the designation and are more comfortable knowing that their funds are placed with a manager who has that background. Clients like that their real estate practitioners understand the investment alternatives, because real estate can be a bit of an island otherwise. If I had to do it again I would still choose to get my designation.
Thanks again to all of you. Very good discussion all around.
I’ll have to be the voice of dissent. I’m in Australia and work in institutional real estate in direct property acquisitions, after coming from a background as a commercial real estate valuer (appraiser). Ian has hit the nail on the head as far as why the CFA is useful for institutional property. My boss suggested the CFA for me (he’s an ex investment banker who previously headed up a local real estate division) for the reasons that Ian outlined. I guess it depends on what kind of property career that you are interested in. I’d never bother if I wanted to work in property development or management, but it’s fairly useful for what I do.
I work in Acquisitions and have the charter. Stick with it, you may not use all the info, but then again, who does?