Navigating Ambiguity

As of writing this post, I am now almost two weeks into my internship experience with Carysfort Capital, a real estate investment firm in Dublin, Ireland. Although it hasn’t been a long amount of time, I have been very fortunate to have already worked on a few projects that could become possible deals for the company, as well as constructed financial models based on excel to help automate and create estimates for different residential projects that could be of interest to the firm. For example, for my most recent internship project, I scoped out a potential property in the surrounding Dublin area and ran it through our financial model. To do this, I needed to create another model where I would input rent prices from the same and surrounding area in order to estimate the potential inflow of cash the property would bring in. This would then go into the main model which would estimate investment returns over time and other key metrics.

There have been a few instances where I have run into ambiguity, uncertainty, or unclear directions although I have only been in my internship for a short time. Starting off, the firm I am interning at looks at tons of different possible deals per day but will only choose a very select few to actually pursue and invest capital into. Due to the possible potential of many different deals, they all have to be analyzed in order to determine if any of them are worth continuing. Throw other competing firms into the mix, and there are a lot of deals being looked at and analyzed all at the same time. For example, I was recently working on one potential property north of Dublin, in a more rural area, but was still not far enough from the city to allow for a commute to the city center and airport in under an hour. After developing estimates on potential rental properties and inputting each individual apartment into the excel model, I was gearing up to create a presentation pitch to the company’s CEO on why we should pursue this deal. However, before I could start the presentation, the potential deal had to be thrown out as another investment firm bid higher than we were comfortable with going above. This led to the whole idea being scrapped and moving on to another potential deal, showing how uncertain if a potential deal can happen even after all the modeling and estimates check out. In order to better handle uncertainty in terms of if a potential deal will be thrown out or not, I have learned to automate more of the excel model so that if a potential deal goes downhill, I would have spent less time inputting all the information for estimates as excel will just do it for me.

An example of ambiguity I have experienced so far is when I first received the master excel model file, I had to go through it myself and take it apart piece-by-piece in order to understand what inputs affect which outputs, what the various definitions mean as I wasn’t previously familiar with real estate abbreviations and terms, as well as how to control the excel chart in order to best capture the most accurate picture of what the firm can expect to receive in regards to returns from a potential deal and the costs that may come with it. The excel model included automated financial statements, as well as had adjustments for how the inputs interact with the Irish tax code, as well as separate estimates regarding taxes for either an ICAV (the Irish equivalent of a corporation) and a BV (limited partnership). In order to overcome the ambiguity I had surrounding all these different factors, I started out by taking notes on each abbreviation or word I didn’t know the meaning of and researched online what they all meant in order to understand the words on the excel sheets. I then created a separate excel of all the equations involved and which parts of the excel are inputs, creating a graphic model so I know exactly what goes where and how it connects when I have to input data into the model. Lastly, I conducted my own test run of the model with one of our potential deals so I could learn how to input data as well as experimented with automating part of it in order to take up less time so I could focus on other tasks the firm may have for me to work on.