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Real estate is one of the most practical investments and consists of property, land, and buildings. The real estate sector is often the most difficult sector to invest in. It can be incredibly volatile and risky. However, getting in on this investment type early on can help you gain significant capital over time. One of the most popular investments in real estate is commercial property, which includes office buildings, industrial properties, retail properties and land for industrial or commercial uses.

For context, United States real estate market is the world’s largest financial asset, valued at US$22 trillion in 2009, and US$25 trillion in 2010. Between 2006 and 2010, U.S real estate prices increased by 39% while the average price of a house increased from $258,000 to $322,800 over the same period. Real estate especially in countries like the US is also one of the most scalable forms of investment available with high returns if invested wisely.

How are Real Estate Deals Structured?

Real estate deals can be structured in many ways, with each deal coming with its own set of risks and rewards. The main ways real estate deals are structured is through debt, equity or a combination of both debt and equity. Debt and equity real estate investments can be structured as either commercial mortgages or residential mortgages.

Commercial Vs Residential Real Estate.

Commercial real estate involves the purchase of any business including, but not limited to, shopping malls, office buildings, industrial properties, hotels, gas stations and restaurants. The market for commercial real estate is very liquid with over $1.4 trillion in annual proceeds. The average transaction size for commercial real estate has been approximately $24 million over the last 20 years. Commercial real estate deals are typically structured as either a long-term loan or a combination of debt and equity. Debt is an asset-backed loan that is secured by specific assets such as land or buildings. Equity is a share of the ownership of a specific asset. Commercial mortgages typically involve long-term investments, from 5–30 years, and require large down payments and higher interest rates than residential mortgages.

Residential real estate involves the purchase of single-family homes and condominiums. Residential transactions tend to be smaller than commercial real estate transactions with an average price of $171,500 over the last 25 years. The average annual proceeds for residential real estate have been approximately $329 billion over the same time period. Residential mortgages tend to be collateralized by land and buildings as well as personal property such as appliances and furniture. Residential real estate is typically financed by residential mortgages which account for approximately 30% of the United States gross domestic product (GDP) and roughly 50% of the GDP of developed countries such as Canada, Australia and the United Kingdom. Residential mortgages are short-term, with an average term of 25 years.

The investor will generally seek to earn a return on his or her investment by: The expected return on a real estate investment is dependent on:

1) The amount invested,

2) How long the investor holds the asset and

3) The expected rate of return on their investment. There is no single formula or standard which can be applied to all real estate investments. However, many factors such as the risk involved in each investment and their cost of acquisition can be evaluated to determine return projections.

The forecasted return calculated by an investor involves:

1) The anticipated annual income from the real estate investment and

2) The anticipated appreciation, inflation and brokerage fees/expenses incurred during the investment’s life. Many factors such as: how much will you earn per unit (e.g.: rental), how much do you need to cover your expenses (e.g. mortgage expense), how much do you need to cover the taxes (e.g.: property tax) and how much do you need to sell it for (e.g.: resale price), vary from one deal to the next.

Real Estate Financing

To better understand the differences between these two types of investments, it’s important to first learn about the basics of debt, equity and debt-equity (debt and equity) real estate finance. The primary difference between these two types of financial instruments is that debt-equity investors make payments and receive cash flows from their investment (i.e. the house) while equity-only investors own their investment (i.e. the house).

Debt real estate finance is used to purchase assets such as houses or businesses using assets as collateral. This is commonly referred to as a mortgage, or loan. A home mortgage works in the same way as many other debt instruments such as car loans and business loans, except that real estate mortgages are typically long term and allow for ample refinancing options should the value of the asset drop below the creditors value (or collateral value). The lender receives monthly payments in the form of principal and interest from the borrower. The borrower then typically pays for the house, property taxes, utilities, etc. with these monthly mortgage payments. The lender’s profit comes from interest on the loan, while risk is assumed by both parties.

Real estate equity finance is used to purchase assets such as houses or businesses in return for an ownership share in the asset being purchased. Equity investors are entitled to share in any revenue generated by their investment including rental income and any gains when they sell their investment to a third party.

Real Estate Risks

Real estate investments come with a variety of risks that may include:

1) The risk that property will not be able to be rented out

2) The risk that the owner of the property will not be able to afford their mortgage in a soft real estate market

3) The risk in investments in general and

4) The risk of inflation and other economic factors affecting interest rates or rental income.

There are risks in both residential and commercial investments. While residential real estate is more stable with only 3–5% of all residential real estate transactions failing to close, the inherent risks make seeking some kind of expert advice when an investor chooses this form of investment as a smart choice.

Hire the best Real Estate specialists in 2,900+ industries

Fintalent is the invite-only community for top-tier M&A consultants and Strategy talent. Hire global Real Estate consultants with extensive experience in over 2,900 industries. Our platform allows you to build your team of independent Real Estate specialists in 48 hours. Welcome to the future of Mergers & Acquisitions!

Why hire top Real Estate experts?

Trusted Network

Every Fintalent is exclusively invited and vetted.

Ready in 48h​​​

Hire efficiently. Your M&A team is ready in 2 days or less.​​​​

Specialized Skills​

Fintalents are best-in-class - and specialized in 2,900+ industries.​

Code of Ethics​​

We guarantee highest integrity and ethical principles.​​​

Selected Clients and Partners

Frequently asked questions

Most frequent questions and answers

What clients usually engage your Real Estate Consultants?

We work with clients from all over the world. Our clients range from enterprise and corporate clients to companies that are backed by Private Equity or Venture Capital funds. Furthermore, we work directly with Family Offices, Private Equity firms, and Asset Managers. Most of our enterprise clients have dedicated Corporate Development, M&A, and Strategy divisions which are utilizing our pool of Real Estate talent to add on-demand and flexible resources, expertise, or staff to their in-house team.

How is Fintalent different?

Fintalent is not a staffing agency. We are a community of best-in-class Real Estate professionals, highly specialized within their domains. We have streamlined the process of engaging the best Real Estate talent and are able to provide clients with Real Estate professionals within 48 hours of first engaging them. We believe that our platform provides more value for Corporates, Ventures, Private Equity and Venture Capital firms, and Family Offices.

Our Hiring Process – What do ‘Community-Approach’ and ‘Invite-to-Apply’ mean?

‘Invite-to-Apply’ is the process by which we shortlist candidates for the majority of projects on our platform. Often, due to the confidential nature of our clients’ projects, we do not release projects to our whole platform but using the matching technology and expertise of our internal team we select candidates who are the best fit for our clients’ needs. This approach also ensures engagement with our community of professionals on the Fintalent platform, and is a benefit both to our clients and independent professionals, as our freelancers have direct access to the roles best suited to their skills and are more likely to take an interest in a project if they have been sought out directly. In addition, if a member of our community is unavailable for a project but knows someone whose skill set perfectly fits the brief, they are able to invite them to apply for the role, utilizing the personal networks of each talent on our platform.

Which skills and expertise do your Fintalents have?

The Fintalents are hand-picked and vetted Real Estate professionals, speak over 55 languages, and have professional experience in all geographical markets. Our Real Estate consultants’ experience ranges from 3+ years as analysts at top investment banks and Strategy consultancies, to later career C-level executives. The average working experience is 6.9 years and 80% of all Fintalents range from 3-12 years into their careers.

Our Real Estate consultants have experience in leading firms as well as interfacing with clients and wider corporate structures and management. What makes our Real Estate talent pool stand out is the fact that they have technical backgrounds in over 2,900 industries.

How does the screening and onboarding of your Real Estate talent work?

Fintalent.io is an invite-only platform and we believe in the power of referrals and a closed-loop community. Members of our community are able to invite a small number of professionals onto the platform. In addition, our team actively scouts for the best talent who have experience in investment banking or have worked at a global top management consultancy. All of our community-referred talent and scouted talent are subject to a rigorous screening process. As such, over the last 18 months totaling more than 750 hours of onboarding calls, of which only 40% have received an invite-link after the call.

What happens if I am not satisfied with my Real Estate consultant’s work?

During your initial engagement with a member of our Fintalent talent pool with no risk. If you are not satisfied with the quality of your hire for any reason then we are able to find a replacement at short notice. There is no minimum commitment per project, but generally projects last at least 5 days and can last 12+ months.

Interested in our invite-only community of tier-1 Real Estate experts?

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