Can someone tell me the truth on CRE Brokerage profitability potential
Hi guys,
I just landed a brokerage internship at a top shop in a secondary market for next summer (I'll be a rising junior). I've been reading a lot of threads on this site recently about profitability within the brokerage side of CRE and it seems to be all over the place in terms of salary/potential commissions that could be earn. Most people on this site look down on CRE because they don't think it's "high brow" finance. Which is might be why they are downgrading the potential profitability upside in real estate.
Most people are saying that's it near impossible to reach 7 figures in brokerage. However, I know for a fact that everyone on good teams in Primary Markets (NYC, LA, SF, CHI) can easily touch that 10 years into the business if not sooner. I don't see why working hard and networking correctly couldn't lead to this success.
Why is everyone downgrading brokerage profitability?
Cheers,
That's because brokerage income is all over the place - even year to year with the same team or even same person. It's almost entirely deal, and thus commission, dependent. There's no way to ballpark comp like with entry to mid level acquisitions or development.
Maybe highschool wall street superstars do, but the real estate forum has been growing right along with the industry this cycle. Real estate is hardly the red headed step child of the industry and I believe the RE forum is the second most popular on this website, after only the banking forum. Jonathan Gray is the heir apparent of Blackstone. We're taking over.
I think you are taking the wrong message from what you are reading. No one denies that top brokers absolutely kill it. What people accurately point out is that you may not make a commission for 12 months after you become a broker. This has nothing to do with long term earning potential in the role.
What CRE and Ozymandia said above are completely accurate.
Elaborating on the sentence above a bit more: easily is a drastic understatement. It is not easy, it's incredibly difficult. The goal of a broker is to make it appear easy because that's how people get to trust them more.
10 years into the business has survivor bias in of itself. Most people wash out of brokerage because they want to be in more control and/ or have a more stable income (move to the ownership side- aka REPE/ Development) or because their personality isn't cut out for brokerage (mine isn't).
It's a grind. You'll see many former military/ former athletes in brokerage because they're great at putting their heads down and putting in the work. Got voice mails from 20 follow up calls this morning? No matter, knock out 20 more after lunch. Lost out on a deal to your competition? No matter, keep up with that person and see if you can get the next deal. If that is your type of attitude you can be successful. If you chase the money only it'll be a difficult road.
Income is volatile. The last several years we've been on an upswing in the markets. You see some insane income. Some will have insane income on the downturn too. If you are interested in it and love to grind away, by all means go be the best damn broker you can be.