I want this forum topic to be more motivational than anything........
Back in mid 2015 when I was at a crossroads in my career so I decided to embark on the journey of finding my place in Commercial Real Estate. I had a mentor growing up (and still to this day) who was very successful in the business and at that time in my career I decided to give it a chance. A year and a few months of networking, coffee meetings and cold emails/phone calls I can successfully say that I start my career in CRE on Monday November 14th.
As most people know, getting into this business isn't easy. It takes a lot of work to have someone trust you and see how much drive you have to be working for them. I'm writing this for those that post topics on how people get into the industry. DON'T GIVE UP!!! It may take you longer depending on the market you are in, but it will happen when the time is right. Each person that is in CRE has a different success story on how they got in and succeeded, but one thing I can say is that each person I've met so far by networking is extremely personable, and willing to give their time to help you out.
I can't wait to start my new career, and I can say that if it wasn't for this blog I would still be searching for positions.
Best, Chadwick
Best way to Prep for Career in CRE Brokerage? (Originally Posted: 12/11/2016)
I am 2 years out of school currently employed on the residential lending side. I am transitioning over to investment sales brokerage for a boutique in a secondary city. I was curious as to the best way to approach learning as much as possible before I get into this position, obviously a lot is learned on the job but I am looking for material to make the transition as smooth as possible.
Jaded broker here. Unless you are a stud salesman and have flexible morals, run the other way.
Or people just underestimate the amount of time and resources it takes to get started, the amount of luck, and the importance of family connections. I do, however, agree on the importance of not being afraid to call/sell/communicate/get in front of people, although i think the most successful people in any industry have this trait.
This is coming from a former office ten rep leasing broker who completed one of the largest transactions in the market in his rookie year without resources or family connections.
All of the 'successful' brokers in my office were born to affluent families with strong political or business connections, some real estate and some not. None of them had school loans and many were bankrolled by their parents through their first 3-5 years in the business. Those who did not fit that mold were in the right place at the right time, many of who admit it.
I'm not trying to be a Debbie downer here. Brokerage is a great way to get experience in the business and was an essential piece to me being where I'm at today. And I absolutely agree that sales is a numbers game. All i'm saying is that on average someone should to plan on 3-5 years in the business before they start making decent money (that gives them enough time to learn the basics and generate the sales volume to land a few deals.) Anything sooner is exceptional.
This all comes back around to what I've said before. The most important thing as a junior broker is finding the right team who will invest the time and money in you while you learn the business. The odds of you succeeding without that are slim.
I'm all for taking calculated risks. If you do it the right way brokerage can pay off. But going blind (i.e. without the support of a strong team or family backing,) into a business with a 90%+ failure rate is ludicrous in my opinion.
Get your hands on costar reports for as many commercial buildings as you can in your market. Memorize as much of this info as you can: -who owns them -who are the top 10 owners in your market and what are their investment goals/mission statements -who the major tenants are in those buildings and their remaining lease terms -what trophy, Class A/B/C assets trade for PSF within various neighborhoods -market rents for various neighborhoods -capital markets trends (rates, availability of financing)
Get your hands on 2-3 investments sales offering memorandums and get a feel for the structure of how they are written. Get a grasp on the market data within the OMs: neighborhood profiles, tenant profiles, how a rent roll is structured, how a basic DCF works.
Your value in the first 1-2 years will be boosted significantly if you can become as knowledgeable as possible about what is happening in your market relative to your peers. brokerage is an information business--become a go-to source of market comps, info, etc. for your team and you will be seen as valuable even if you take time to generate business yourself.
This is very good advice. To add to this, I would also advise the following to the extent they're applicable to your product type:
Operating Expenses: Learn what standard operating expenses look like for your property type. This will help you identify cost savings, market operstional upside if any, and assist in accurately valuing a property. This isn't typically a concern for NNN properties. Two expenses you should be able to easily find out are insurance expenses and property taxes which you need to readjust in the proforma on a new sale. Remember in your valuation you're looking at this from the perspective of a potential buyer. Don't get sucked in to the mentality of a telling an owner what they want to hear. If for instance in your market, the typical annual payroll is $100,000 and the owner has his wife handling management for $30,000 then you need to educate the owner on this. If he thinks his property is worth $X because he sees it as an 8 cap but it's really worth $Y at an 8 cap, because he's running it really lean below what are considered market norms then he needs to know this. This is a pretty common battle to have with owners. Some get it, some don't. The point is don't waste your time with an unreasonable owner who has a lofty undeliverable price for their property.
Financing Terms: Meet with a mortgage banker to discuss what loan products are common for your property specialty and become familiar with the financing terms of your property type. This will help you when having discussions with owners so you look like you know what you're talking about, you'll have current financing terms to create an accurate proforma, and most importantly if you develop relationships with mortgage bankers and refer them clients it is customary for them to kick back to you a quarter of the origination fee.
Capital Expenditures ("capex"): Also try to get a handle on understanding capex. If a property is performing like an 8% cap on paper but needs new roofs or plumbing and the owner is responsible for that repair then that all in cost could make it a 7% cap which means the valuation may need adjustment. Try to recognize common deferred maintenance issues and what they cost. This goes the same for value-add improvements. If you think rents can be raised 10% with $500k of capex, then model this as part of justifying your price and marketing the property. Remember cash on cash returns and IRR projections all come back to the all in cash basis of the buyer whether it's spending money to fix deferred maintenance and/or make value-add improvements.
Credibility: Don't be a car salesman. Be truthful and honest and this will take you a long way. You will earn respect from your clients, be seen as someone that is trustworthy and earn business this way.
Real Estate and Urban Analysis is an obvious one, both because you'll be learning about real estate and because it'll show you're genuinely interested in the career. It also sounds pretty interesting on my end, but hey, I'm a real estate nerd.
I'll also second cpgame and say that finance is far more important than marketing. Marketing in real estate is either generic or outsourced. You'll spend far more time critiquing a marketing firm's work than you will creating your own materials, so having an "eye" for it will be more important to you than taking extensive coursework in it.
Also, depending on what you want to do, I would caution you, as a woman, from being a marketing major going into commercial real estate in the first place. "Marketing girls" are secretaries that pull together marketing materials or half-heartedly manage social media at a lot of firms. You don't want to be in an interview with some old guy, all polished and with an impressive resume, and have him mentally drift to you being the help.