Breaking Into Commercial Real Estate

chadwick411's picture
Rank: Baboon | banana points 141

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

Comments (96)

Nov 10, 2016

Congrats! What are you doing in CRE?

Nov 10, 2016

@REFinance516 thanks for the well wishes! I took a position as a credit underwriter for a bank that has a strong position in my region. I initially was aiming for the stars to get on with a broker's team, however with no experience it was almost unrealistic.

I'll be underwriting the Investment Real Estate portfolio starting out.

Feb 17, 2017

I think you have this backwards. It is easier in most cases to break into brokerage than banking with no experience. I've talked to a lot of people about credit analyst positions and management always wanted prior credit experience even in the so-called "entry level" positions.

Nov 10, 2016

Thanks for the thread. Encouraging as I'm someone who's been trying for almost 6 months now. Tons of cold emailing and mainly phone discussions as it's difficult for me to get into city to meet guys for coffee as I'm hour or so out. I'm taking modeling courses, starting Argus class next week, and doing everything I can to get out of my current Corporate RE position.

Congrats man!

Nov 10, 2016

Message me. I might be able to help you out. We're hiring

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Nov 10, 2016

PMed

Nov 14, 2016

What do you do in CRE?

Nov 10, 2016

@yankss101 keep it up! Sometimes thinking outside the box may help too being that you are an hour out of the city. I will stress the importance of being persistent. That was something I lacked initially. I urge you to keep pushing and don't give up! Keep us updated on your status!!

    • 1
Nov 14, 2016

What is a Corporate RE position ? Would working at a GP/REIT be considered a Corporate RE position?

Nov 10, 2016

I work in Corp RE as in the RE department of a F15 company. I think most people consider it out how I do of, basically the department of a corporation that is not a RE firm (managing the leases/any acquisitions, occupancy, etc) Im in my firms capital budgeting group which manages the total RE project budget. Probably most transferable to AM or a role within in Development which I'm striving for. Acquisitions is a long shot.

Nov 10, 2016

I would consider that to just a Corp Finance role doing financial reporting and analysis.

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Nov 16, 2016

I am in a similar position. I have a couple years under my belt in RE research and as a valuations analyst for a national MF investor. I have taken multiple classes etc. I am trying to get into an acquisitions, general RE analyst, IS or even an AM role but i'm not getting any call backs. Its definitely tough.

Do you have any tips on cold emailing? I haven't started doing that yet.

Feb 17, 2017

how much is argus?

Nov 15, 2016

It,s nice to be here i have been into investment and really loosing for a while know actually looking for whom will direct me on investment and also looking funding a project please advice me on how i can move ahead with funding of projects as an investor.
if some one here knows a good business/projects, i can fund it as well
bill.

    • 1
Feb 17, 2017

I'm in practically the exact same position as your (Big 4 dreading it a lot), so I can't tell you exactly how to get a job in RE but I can tell you some things that have helped me so far from people I've spoken with in industry:

2: This doesn't really address your point, but I bought a house recently with my dad and we're both did the renovations, as well as manage the property. That has helped to get into the right mindset.

4: "Breaking into Wall Street"'s RE valuation course was recommended to me by a lot of people, so I decided to get it. So far I like it a lot. REFM was another one that's out there, but from what I understand BIWS is more acquisitions oriented.

5: Trying to meet people in industry is pretty hard, but if you're in a large market (you'd probably be in the DC market if you're a tech grad), the first step would be to look up tech alums in the area that work in CRE. Ask them out to coffee and pretty much just take it from there, conversation should flow organically if you really like it. The goal (other than getting an interview for a FT position) is to find a mentor who you can occasionally shadow either after work or on the weekends, or better yet someone who is getting enough experience that they are planning to start their own side investments/firm, and would actually be able to use your help for modeling, etc. I'm currently doing this and it's been extremely informative, but I haven't been able to figure out how to put this on a resume, if it should even go there. Would sound great in interviews though.

6: I don't have any professional or even extra curricular experience with Argus, but from what it would seem like is that it's not the end of the world if you don't know it considering you would be looking at entry level positions. Check to see if there's anything you can download from tech's online databases if you still have access, or maybe get someone who you know that still goes there (kid in your fraternity or whatever) to download some stuff that you could get access to. I recall seeing somewhere that tech had a more RE-focused major but I could be wrong.

Not the best advice but hope that helped. Also, 21-16.

Feb 17, 2017

I appreciate the response. I could go on for days about how bad the assurance industry is so it's not surprising to hear that you are dreading it.

Was definitely considering the BIWS course as I had previously used some of their IB stuff and really liked it. The REFM courses look like they are broken down by industry and since I am looking for a more broad overview, the BIWS course covers the different areas (i.e. acquisitions, development, etc.).

I actually grew up a VT fan but didn't end up going there, but I'll definitely see what my school can give me access to. Fortunately I have built a pretty solid network from undergrad through working in assurance so I have some points of contact to hopefully get my foot in the door and continue to meet more people in the industry. Didn't think about shadowing anyone but that is a great idea especially given I have already left my previous firm and have plenty of free time during this interim period.

Definitely some beneficial advice though! 21-16? Would this be a basketball record reference? GT?

Feb 17, 2017

I just started at a CRE brokerage firm that focuses specifically on investment sales. I had no prior Argus experience and I have to admit that the MD was very hesitant to bring me on. It made me think that Argus experience was more important than I thought but honestly I rarely use it and when I do its pretty easy to understand. I would say learn the basic underlying mathematics to valuing CRE and you will be fine.

Feb 17, 2017

I was you a decade ago. Had excellent 10-key skills. Wanted to improve the workpapers (audit) but got beat down "don't change the workpapers that were suffice in prior year." I left the audit world and have not looked back (got my CPA though, why not get it. Just go inactive. Nice credential).

I got lucky and got an analyst position "out of my league" today in relation to schools they recruit. Work quality I was top.

The following helped my chances getting that acquisitions job after Audit.

  • I had a MAcc (masters of accounting) which gave me the perception of more experience and maturity compared to other candidates out of UG or one year of work experience. This was for an analyst position doing acquisitions. Let's just say I work hard, play hard, but perception is reality.
  • I had a good story why real estate. Where I'm from, real estate is a great industry to be in, however capital always came from outside. So, one, during college I interned in accounting for real estate companies. And two, I wanted to become the "money guy" and my firm I eventually worked for invested where I was from. So I had a purpose being there.
  • alumni relations. This I later found to be a big help, a couple years into the job. The hiring manager was hired by someone who graduated from the same non-target school as me and the manager had a Big 4 background just like me. Count my lucky stars. During the Great Recession, I interviewed for a start tech company analyst role and the hiring manager was ex IB and Google. It was strange. I got to the final round but didn't get the job. I would have made a lot of money there though.
  • so Fit is very important and how you think, because you are developing judgement. It's the investors mindset. With transactions you are getting mental reps. Ok fit. It's ok to be "eager beaver" but show some polish and seasoning. Go into an interview with a good study of history and investment cycles. Real estate can be a shitty field of work. It's not always great. You know what, when you are the most successful, everything is also expensive. If I cashed out Facebook IPO during the recession, I could have bought a lot of properties cheap. Our success runs cyclical with the economy. That sucks. What is your investment philosophy? Know that folks you work with will shape that philosophy until you see things and think to yourself, "what would ____ do in this situation?" How you think is important. Are you rationale?
  • lastly, personality. I wrote about this before. What are you? Are you a hyper active deal person or do you like going steady with 2-3 projects for 4 years? Or are you a tweener (don't worry now, but later in your career worry)? Some people are risk adverse personally but hard charging with OPM. Others rather have work life balance. Do you have a dream project or are you in this biz to make a lot of money? Are you somehow want to do things beyond yourself and help others? Shape the lives of others, which I see big developments doing inherently.

I'm by no means a big shot success, but I probably got enough of what I needed to know out of working corporate. I worked for great brands. How I did that though was luck, I knew what I wanted, and I fit the deal junky mentality mainly because I had vision and drive (less so douchebaggery which is good sometimes).

Early in your career, working for big brands will help you get your next jobs. Sorry for the long post.

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Nov 15, 2016

Congrats man. I can agree it's pretty tough, I've been trying for about a year as well.

Nov 10, 2016

@tengleha Thank you! Keep up the work and I'll will definitely pay off!

Feb 17, 2017

So if you already had a REPE internship does this make it breaking in part 2? The sequel? II? Breaking further in, the story of Middle Man? Nah depends what part of CRE you want to be in. One internship probably isn't going to touch them all

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Feb 17, 2017

Haha you're right. I guess "breaking in part 2" would've made more sense. I was speaking from the lack of experience I gained from my 1 internship. I essentially only assisted their brokerage team with sourcing new deals via online newsletters, journals, etc., and scanned offering memorandums for errors.

In regard to your question:

As of now, I'm contemplating beginning by starting in brokerage or an analyst role at a financial institution of some sort; whether it be a REIT or REPE firm. I'm assuming the brokerage position would give me more exposure to networking, legal aspects, sourcing good deals, and creating marketing material and the analyst role would give me more exposure to the financial aspects such as valuation models, calculating returns, etc.

I'm interested in certain aspects of both of these positions but unsure on which would provide me with more exposure to the industry where I'll be able to learn and progress faster. I'm also unsure of what type of internship I should be looking to attain right now, in order to qualify myself for these future positions.

Do you have any advice on why one of these positions would be better than the other? And what I can do, right now, to put myself in a more attractive spot to eventually land one of these positions at a reputable company?

I appreciate any advice/input you have.

Thanks,
Middle - Man

Nov 10, 2016

I know people talk about the networking aspect of breaking in, which is entirely true, but you do need at least some experience in the field under your belt. Speaking towards getting into roles on the buyside in acquisitions for example. Doing my rounds of networking, almost every tells me the same as in it's extremely hard to go straight into acquisitions without any other experience under your belt. Whether it be brokerage, IB, lending. One guy I spoke with compared it to your guys doing banking then jumping ship to PE. Except with RE there's a lot more ways to get experience to jump ship.

Feb 17, 2017

@yankss101 I appreciate the input. Can you give some examples of some of the positions/ways that would be best to get experience to "jump ship" ?

Thanks!

Nov 17, 2016

I am starting out, so I am happy to hear an encouraging story. Congrats!

Feb 17, 2017

I didn't know anyone aspires to be a CRE analyst

I'm being facetious but there is some truth to that statement, and therein you will have something of an advantage over many of the kids that sort of fall into it

Feb 17, 2017
Lizard Brain:

I didn't know anyone aspires to be a CRE analyst

That's how you know we're getting towards the end of the cycle...

    • 4
Feb 17, 2017
Lizard Brain:

I didn't know anyone aspires to be a CRE analyst

I meant it as a strong stone. Obviously I don't want to remain at such a low level. I suppose I should have worded it a bit differently.

What can I do now to set myself up better for my future real estate financial career?

Feb 17, 2017

Regarding OP's question though, I would shoot to take as many finance related courses as you possibly can. CRE valuation will not be that difficult if you can model financial statements. Unfortunately, I did not take any real estate finance classes in undergrad and I'm not sure if my school even had that many. However, I remember we spoke about REITS and the Agencies (Fannie, Freddie, etc.) in my Financial Markets and Institutions class.

I would recommend trying to get an internship with a developer, bank, mortgage banking company (brokerage) sometime during your 4 years.

Feb 17, 2017

This. I was an econ and finance major undergrad, but got a job/internship during my junior year that not only taught me WAY more than I would've learned in school, but also became my full time job after graduating, and really became a great foundation to a career in real estate.

I recommend you take as many finance/real estate-related classes as you can, but more importantly, get out into the field and work for whomever you can get a job with. Anything (broker, bank, PE shop, small shop, big shop) that you do will be productive, even if it just helps you learn what you DON'T want to do. Plus, you'll always be surprised by how much you'll learn from any job you take, no matter how menial the tasks might be.

PS: I should explicitly point out - any internship you take while in school is nothing more than an extended job interview. Treat it as such even if you don't want to work at that particular firm. You never know who might be hiring down the road, and people value real life work product and ethic more than what they think someone might be capable of on paper.

Feb 17, 2017

You're going to learn far more outside of class than in class. Get out in the industry, see sites, talk to professionals, and buy the following books:

https://www.amazon.com/gp/product/0940352168/ref=o... https://www.amazon.com/gp/product/1138025178/ref=o...
https://www.amazon.com/gp/product/0874201632/ref=o... https://www.amazon.com/gp/product/0874201578/ref=o...

Anything by Linnemann is great too.

Feb 17, 2017

Become a student member of ULI, NAIOP and ICSC. They all have student memberships and hold industry events which are a good place to network and tee up internships.

While I actually consider the certificate a joke because it's primarily based on concepts, not application, getting an ARGUS certification will go a long way to distinguish you from others. Once you get in the field and get the underwriting experience the certification is useless, but when you're firing through a stack of resumes you usually snag the ARGUS kids. It's expensive, but it's worth it.

Spend time learning the fundamentals of real estate finance. Understand the lingo, there's a bunch of different ways to say the same thing. Ex: Selling cap rate=Terminal cap rate=exiting cap rate.

It helps to see some deal flow, plenty of brokerages hire interns and look for them. Ideally you link up with a brokerage near your school and intern with them consistently over your time at school. Doing multiple internships over one summer helps too.

There are a plethora of websites with real estate analysis exercises, take advantage of them (you can google these pretty easily).

Learn how to navigate property appraiser websites and if you can get into them industry software (CoStar, LoopNet, Marshall & Swift, ect.).

ICSC is arguably the most student friendly trade group, they have events at conferences literally just for students with professionals that offer mentorship and can open doors for you. If you only picked one group to join I would advocate for this one.

Feb 17, 2017
TheCREHermes:

ICSC is arguably the most student friendly trade group, they have events at conferences literally just for students with professionals that offer mentorship and can open doors for you. If you only picked one group to join I would advocate for this one.

Going to throw my hat in for ULI, in contrast. Whereas ICSC will give you terrific insight on retail, ULI covers all product types and has plenty of "Young Leader" opportunities.

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Feb 16, 2017

I am also working on breaking into the CRE business. I have transferable indirect real estate experience from my previous role and started my second master degree that is RICS accredited. I already had few interviews which is great but so far everyone wanted me to have direct property exposure too. So it is definitely encouraging to read your "do not give up" sign.
I am sure it will happen for me too. :-)

    • 1
Feb 17, 2017

Step 1, get your real estate license. After that, it isn't too hard to get a job, in a middle market firm. If you want to do a larger firm, try and intern now.

Feb 17, 2017

Just curious, what aspect of brokerage would you like to get involved in? Debt/ Equity Placement, Investment Sales, Leasing?

Feb 17, 2017

Get your license, look for internships in the market you want to be in, network like a bandit, etc. Not that hard.

The longer version is work on your soft skills while getting your license, learn some modeling, major in something useful(business, finance, economics, etc and not basketweaving or biology), keep networking, keep meeting people, read EVERYTHING YOU CAN(start with asotreg.com and keep going), meet more people, have solid grades, do a couple of internships, graduate and hopefully have an offer. That being said, do at least one internship outside of brokerage. PE, hell banking, anything where you'll be exposed to modelling and/or the rest of the business world. The experience would be good exposure and you have the time. The most important pieces of brokerage are communication ability and interest. If you show interest, and are able to convince someone of any stature(ie not a 23 year old) to meet you for coffee or allow you to intern, then you can handle it. It's really not hard though, don't mean to scare you.

Feb 17, 2017

See if any of your parents friends are brokers. Reach out to them, don't ask for anything at first but just ask for advice. If not reach out to brokers in your market. If you're really striking out you might have to work for free. Brokers will pretty much take anyone that works for free. Most people won't get back to you right away, just keep (reasonably) reaching out to them until you get a response.

Feb 17, 2017

As others have said, get your license (be sure in the state you want to work in) and try and get some experience on your resume. Also, look into student memberships in organizations such as NAIOP, ULI, CREW (if you're a woman), etc.

Feb 17, 2017

It took me 9 months of networking as well to finally break in. Turned down a fair share of offers for research jobs because I was dead-set on an investment role. Finally culminated in two offers, one in lending and one in acquisitions/development, both coming in the same two weeks or so. Point is don't give up, don't settle, relationships that yield results take time to develop. At the end of the day it only takes one yes.

Nov 10, 2016

@cre_questions congratulations and best of luck! Let us know what your final decision is!

Feb 17, 2017

analyst level work at a fund or other investment firm where you can see a lot of deal flow will prepare you well for any direction you want to go in the industry

Feb 17, 2017

Don't another job to "break into" commercial real estate. There are many entry level real estate roles, from analyst programs to brokerage to property management to construction to appraisal, etc. The key for real estate is doing something actually in the industry.

Don't worry about moving around a couple times too. Obviously you don't want to move to a new city every year, but a few times early in your career isn't going to kill you.

    • 1
Feb 17, 2017

9 months and counting, still looking. Don't settle.

Feb 17, 2017

DC will definitely offer more opportunities as that is the HQ for mortgage bankers association and every fannie/freddie/fha lender has an office in the area. There are also a decent amount of development companies out there. What are you wanting to do in CRE (lending, investment sales, etc.)?

Alex

Feb 17, 2017

Any particular focus within the CRE industry? Which areas are you interested in?

Feb 17, 2017

@ODoyleRules and @biffanderson - I'd love to get into the development side of things eventually. Looking at some of the big mixed-use projects going on (like the City Center project or Burnham Place at Union Station, for example), they just seem like they'd be really exciting, neighborhood changing projects to be involved in. Now, I realize those are massive projects that are once in a career (if that) type of projects, but potentially being a part of building something like that really excites me.

Feb 17, 2017

I don't know much about Baltimore, but @Virginia Tech 4ever" is your man to talk to about DC, among a couple others whose names I forget. I think this board has some solid DC real estate connections.

Feb 17, 2017

Jaded broker here. Unless you are a stud salesman and have flexible morals, run the other way.

Feb 17, 2017

Curious to have you elaborate on your comment. What caused you to be so jaded? What advice would you give outside of the obvious that you do not like your current career?

Feb 17, 2017

I can't speak for manieac42, but generally, CRE brokerage has a very high turn over rate. Most people who first enter the business do not last more than 2 years. Like anything else to be successful, you have to be very good. I personally believe a lot of people think they're initially well suited for sales and view CRE brokerage as a quick, easy way to make a lot of money. They quickly discover they're not good at sales and producing is harder than expected which eventually turns into them burning out, because they've got no listings, leads, or transactions. So when they eventually fail, they become jaded and like most people think there is "something wrong" with the industry or the people in it rather than themselves. I also notice that unsuccessful brokers will not do the one thing they need to do to become successful: pick up the phone. The saying "dial for dollars" is absolutely no joke in brokerage. A lot of people surprisingly can't do this. They have a fear of talking to people they don't know or being rejected. The reality is that this is the nature of the beast. You will get a lot of "no"s but all it takes is for one "yes" to make some money. The more you build up your transaction experience and reputation the more "yes"s you get and eventually after enough farming the prospects start coming to you. It takes discipline and a lot of persistence. Many people simply don't have the will power or skill set to hang in there and make it work.

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Feb 17, 2017

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.

    • 3
Feb 17, 2017

Resources are huge and when someone is looking to join a brokerage, it is a factor that should be at the top of their considerations. My first gig was at a small boutique brokerage. I closed a large deal there which spring boarded me to my current firm which is a national very well known company. It was like moving from a life raft to a battleship. And luck is a factor... The more calls I make, the luckier I get. It's all a numbers game. The more calls a broker makes = the more opportunities created = the higher likelihood a transaction happens.

Occasionally, there might be someone born into the lucky sperm club. I'm hoping that will be my kids one day if they decide to work for me. In my market, there is only one family owned shop. Most of my colleagues and my competitors come from different walks of life and to my knowledge weren't born into any real estate dynasties. Not to say those competitors don't exist, but if they do they don't appear to be prevalent.

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Best Response
Feb 17, 2017

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.

    • 6
Feb 17, 2017

It has been a frustruating couple years for me as a new broker in a tertiary market. The market is incredibly saturated with brokers and I can count the serious players here on my hands. There are some institutional level assets here but those all get some through the CBRE/JLL office. I hustled and took any listing I could get and did some tenant rep to generate some cash flow.

I built up a pipeline that I was proud of. I thought I would end up just under 100k for the year...maybe closer to 200 if everything went right, instead all my deals started blowing up in my face for reasons that were out of my control. Between the frustration with my ,deals, financial stress, watching people my age work their familiy portfolios with no effort, and seeing a lot of brokers who play loose with the facts, I have just had enough. Is this my fault for not doing more to be in a position to weather the storm? Absolutelty, it is a sales role after all.

Thankfully, the learning curve was very steep. I got some great (almost) deal exposure and made great relationships. I got into brokerage with the goal of sponsoring my own deals. I figure with my,experience and technical ability I can go make a living in a more analytical role and save my pennies.

Feb 17, 2017

You'll need to have a way to pay bills early on unless you are with a fantastic team that can offer a salary or draw. Plan on 18mo with no income.

I disagree with the previous post. Flexible morals are not needed. The best brokers are know and have met over 20 years are not great sales people, super aggressive or have flexible morals. What they have is fantastic follow up. Time and time again the broker with great follow up that asks for the business always wins.

    • 1
Feb 17, 2017

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.

    • 4
Feb 17, 2017

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.

    • 5
Feb 17, 2017

I'm contemplating getting into a brokerage but I just can't see how anyone survives on like no pay or benefits for over a year. I know people say it's a good start to make the switch to buy side but I'm not sure i can do it. I do not come from a rich family nor do I have contacts already in the industry. I am not talking about an Analyst gig with an HFF or other big guns who pay their Analysts.

Feb 17, 2017

You basically have to have your parents or gf support you or you need to have a large savings. Once you get a large deal done you can cruise for a while but it's tough. Most guys try to roll large commissions into either their own properties or into stocks to generate some monthly cashflow.

Feb 17, 2017

IF you can make it work for a year or two ,and look at is as purely a stepping stone, I would reccomend it. I worked as a broker in a small market for two years at a SVN/KW/REMAX franchise that had a pretty good reputation. I basically arranged an interest free non recourse draw with my managing director. He gave me enough to survive but not get comfortable. Every dollar I made in commission went towards the draw until it was paid back. I sourced some of my own deals and offered my help to senior guys and they would cut me in on their commission for doing grunt & analytical work.

I recently accepted an acquisitions role at a multifamily fund and the experience I had as a broker gave me a leg up because I could crunch the numbers but I also had experience negotiating a deal.

Feb 17, 2017

Know what type of consulting/deals the company works on. Why you're interested in real estate and why their firm. Brush up on RE metrics. NOI, Cap Rate, EM, DSCR, LTV, LTC, etc. Good luck man.

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Feb 17, 2017

I would double major in 1) finance and 2) real estate (or major in finance and minor in RE) but assuming real estate and urban analysis has a healthy amount of real estate and finance coursework, I like #4. Shoot for electives in macroeconomics and accrual accounting if you can find them as they will be helpful to understand.

Feb 17, 2017

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.

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Feb 17, 2017

We have marketing guys too :-) Their graphic design game is off the charts.

Feb 17, 2017

Start networking in Philly ASAP. Contact the top producing brokers in your city, and ask if you can take 30 minutes of their time to learn more about what they do. Ask good questions, know the deals they've just closed on and be interested in them. The best thing you can do now is to start getting your name out there, and making a good impression on the top producers. Also, if you really hit it off with someone, ask if they'd ever consider hiring a summer intern to carry their briefcase and fetch their coffee (a bit drastic but you get the point). Brokers love young kids that are hungry and willing to do anything to learn.

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Feb 17, 2017

Thank you I appreciate the advice.

Feb 17, 2017

Definitely cold-call some local shops (center city, suburbs). Philly real estate professionals have been super willing to mentor local kids in my experience. Cast a wide net in your search!

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