Advice on potential career in Commercial Real Estate

Goldbears93's picture
Rank: Chimp | 13

Long post incoming:

So I recently just left my software sales job to be closer to my family and fiance (was doing long distance). Now that I am settled in where I want to be for the long term (Dallas), I am looking at a pontential career change.

A little background, I am 25 with a degree in business management and worked at a tech company right out of college for 2 years. In my time there, I worked my way up through 3 promos to a fairly high paying AE role ( low six figures). Although I thought I was good at it, there were a few things I really didn't care for:

1) the one-off nature of the sales weren't fulfilling for me as I liked building a great, long lasting, relationship with the prospect and there really wasn't much of that.

2) the "luck" involved in who was successful was highly frustrating. Harder work didn't = greater success, at times, the laziest in the room would get a huge inbound deal and smoke everyone for the quarter. Being a very hard worker this eventually was maddening to me.

However, the office culture and pay were great benefits. I could wear whatever I wanted to work and there was a great degree of freedom to the job. You took PTO whenever you wanted just as long as you were taking care of your business.

Anyways, I'm rambling...

Flash forward to now, I have been speaking with some mentors that have close friends in Commercial real estate (specifically investment sales). It sounds very interesting and so far I've read both great and bad things about the career.

It sounds like it plays to a lot of my strengths in the sense that I am a pretty happy go lucky, extreme extrovert that loves building new relationships.

However, there are a lot of things I'm unsure of or don't quite understand about the job...

It sounds like the first 2-3 years are an absolute grind, which I don't mind at all and I have money saved up, but after that does the grind slow down at any point / do these brokers for the most part enjoy their lives after the first few years? Are the cultures at some top firms really as toxic as people make them out to be? Also, is their any room for starting your own company / entrepreneurial aspirations in commercial real estate?

I am really trying to do my due diligence on this as it would be a complete career change, which I don't want to do too many times. I also don't really know what the outlook is for CRE brokers. Will this job go away or be replaced by tech anytime soon?

Any insight or advice is greatly appreciated!!

Comments (10)

Most Helpful
May 21, 2018

Others will hopefully chime in, but here's the pro/con in my mind with inv. sales specifically:

Pros:
-Can make a lot of money without having to invest in skin in the game (other than your time/effort)

-Possibility to form relationships with clients so that you aren't constantly prospecting at the later stages of your career. If you make it this far, generally the business comes to you.

-People in the industry are generally fun individuals and the travel/networking events that you go to are better than other industries I've been in.

Cons:
-Starting out, it's almost impossible in this market to go off on your own. The majority of CRE in the US has been institutionalized (especially everything $25M+), with the people at the top of the institutions having a few very deep-rooted relationships with top brokers at some of the largest firms. This means that unless you get in with one of these teams, you'll have a very hard time breaking through this particular barrier to entry. These relationships are generally willed down through the ranks of these teams, which brings me to the next point.

-You basically have to go one of two ways to 'make it' in the inv. sales side - either start as an analyst doing a ton of financial modeling and 'learning the business' of capital markets, or start as a leasing broker and moving over to the capital markets side once you've had some success with landlords/owners on that side of the business. As you alluded to, these processes can take anywhere from 2 years to "?". The question mark is due to many factors, one being how long you can withstand possibly $0 in income on the leasing side, and how good of an analyst/how much the brokers like you/if there happens to be a spot open for a junior broker on one of the big teams if you go the analyst route. This is 100% variable on each case, so if you work your ass off for a couple years there's no guarantee you will have the above ingredients 'click'. Many people go the analyst route for this reason, because it gives greater optionality (can go to principal side in event there's not a clear path to a brokerage spot on the team; obviously principal side is also the preference of many people as well, but I'm speaking to your situation specifically).

-The hours are definitely not 'great' for a while. The only people who set their own schedules truly are people at the absolute upper echelons of the biz, because most of their day just includes making phone calls and delegating things to other people on the team. Even at that level, you are somewhat beholden to the timelines of clients/investors. You have a big vacation coming up? Well Mr. X at firm Y has a $200 M portfolio that he wants to hit the market a month from now and he wants a valuation from you by next week. You aren't going to be able to handle it? Ok then he will just take the assignment to another brokerage team he knows.

Anyways, it's a great business and you can make a lot of money, but just go in eyes wide open as you mentioned. The biggest thing about your post that is a red flag to me is your comment on "2)". This business has a LOT of nepotism. So if you aren't ready to lose deals to people who maybe don't work as hard as you/aren't as smart as you, but play golf with Mr. MD's son on the weekends, then you're in for a rude awakening.

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May 23, 2018

Thanks for taking the time to reply to this, it's much appreciated. Your reply brings me to an interesting question... what does CRE look like in a market downturn? I mean... I imagine there's always deals to be had, so are brokers still doing okay or is everyone suffering?

Also, if you don't mind me asking, do you work in CRE? And if so, do you personally enjoy it? I can take getting kicked in the teeth for years, hell, I've already been through that... I just want to know what the upside is. My fiance is 1 year away from becoming a surgeon, and she suffered for years, but soon enough she will get to reap the rewards, is CRE comparable in that sense?

Thanks for the help!

May 21, 2018

Happy to help. Well, you may have seen me say similar things in different threads, and I don't mean to be coy/vague, but the answer is 'it depends'. I'm of the opinion (and it's exactly that, just an opinion based on what I've seen). That transaction-related jobs (acquisitions, dispositions, brokerage) are relatively 'safe' in times of a downturn as long as the market is moving (see '07/'08). They are not safe in times of stagnation (see '09/'10). Usually, brokerage and dispositions are better than acquisitions during/at the tail end of an upswing (last +/- 8 years) for obvious reasons. To me, asset management and development are the more 'dangerous' spots to be in during a true downturn since people are either selling off assets or putting a hold on projects. But the TL;DR version is yes, brokerage is still OK in a downturn as long as you have the client base to support you since people will be panic selling. If you do NOT have this base, however, it can be a tough patch since generally speaking sellers will flight to certainty in times like this (i.e., go with a more established brokerage team that has less execution risk).

Yes, I like CRE. I've had jobs in a couple of other industries and I like it the best compared to others I've had. Is it a walk in the park? No, but I don't know if I'd have as much net worth/money saved up/low level of financial stress as I do now in any other field, while having a relatively interesting/good time doing it.

In your specific situation, just be ready to have your fiance make substantially more money than you for 5-10 years. If you can handle that then you should be A-OK.

EDIT: Also, I did an AMA a while back which might be a good thread for you to read. Just search my post history and it should be there.

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May 21, 2018
Goldbears93:

a few things I really didn't care for:

2) the "luck" involved in who was successful was highly frustrating. Harder work didn't = greater success, at times, the laziest in the room would get a huge inbound deal and smoke everyone for the quarter. Being a very hard worker this eventually was maddening to me.

Just a heads up, any industry that has sales will require a vast array of luck; especially in commercial real estate where there is a lot of nepotism and much of your success is dependent on who you meet. You should not let this frustrate you ; instead, you might want to look at hard work as sort of a multiplier towards "gaining more luck". For example, the more cold calls you make, the higher prospect of landing a customer.

It will take practice. Just my 2 cents

As for breaking in, find a good team and go on draw (or salary if possible); you made good money at your old job, hopefully that can be used for some leeway getting started in brokerage.

May 23, 2018

Thanks for replying! I appreciate the insight. Excuse me if this is elementary, but I see folks keep mentioning getting in with a good "team". What could you elaborate on how the teams are structured and what role someone such as myself would play on this team. Also, is the team you have something you have any influence over or do you usually just get assigned one way or the other?

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May 21, 2018
  1. Each brokerage might be different in how they structure a team; it could be an informal arrangement of two brokers working together; it could be 1 managing director, 2 vice presidents (lieutenants) and 3 junior brokers; each team could have a certain niche (warhouses only, health care only, student housing only etc.) or be more generalist; some teams in certain cities might have 0 deals in that city and are just hunting national deals; other teams hunt smaller deals that are less competition. It is something you will have to ask in an interview and is a great way to show that you kind of have an idea how the industry plays out.
  2. Again, dependent on the brokerage. Some brokerages just assign you to whichever team is in need. If you get in the door of a brokerage through a certain broker, chances are that you would be on that broker's team or a friend of his. So implicitly, you kind of have a say if you target the right brokers and know their focus prior to reaching out.
  3. Your role would be either an analyst of some sort (market research, financial) or a junior broker (sales with a little help).
May 23, 2018

Almost all of the things you didn't like about sales will still occur in investment sales. Sales are sales - all of the good and the bad

May 23, 2018

All great points discussed already. A few things to consider, understand the turn over on the investment sales team from analyst to broker or out the door. Understand your "core" responsibilities and understand if you are ok being an analyst on an institutional or private capital team.

Firms such as HFF, Cushman, Eastdil, CBRE, etc tend to hire analyst who crunch numbers all day long. Can be challenging to move from analyst to broker because not many analysts have the skill set to be sales people. Also, you have to be a highly detailed analyst who can crunch numbers, write OMs, etc before you can make the jump to sales. An analyst at a top brokerage team selling institutional assets is similar to an investment banking analyst.

At shops like Marcus & Millichap, you are basically a "used car" sales man. You get a phone and a computer with some training, and it's your job to be a rock star or drown.

You are seeing a lot of CPAs, JDs and MBAs selling institutional deals due to the level of complexity.

In both the private capital and institutional side, you can make $$$ if you are good at it. Due to the somewhat complex nature of selling real estate, being on a team helps you learn pain points and concerns to advise customers and clients in a strategic manner.

I recently received an offer from one of the top shops in my market but turned down the offer because the broker expectations seemed insane. Some brokers want to "use" analysts and spit you out after a couple of years. It's very important to do your due diligence and join a "team" that also has your interest at heart. Nepotism is big component of commercial real estate business.

Feel free to ping me directly if you want additional insights to tell you about my experience.

Cheers.

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May 21, 2018

Very good synopsis here ^

May 21, 2018
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