Brokers: Long-term goals?
I have an intense passion for what I do and really love it, but every once in a while I get these gut feelings that I’m not dreaming big enough. I mean how far can one go in brokerage? If you’re at the very top of your market, $1-2 M a year seems like a cap. And that’s if you are at the very top. Most successful brokers will end up making six figures.
I know these are large incomes that could be sufficient to live a successful and happy life, but I feel as though I’m not dreaming big enough. Do any of you want to own a massive portfolio of real estate or go into development? These seem to be the only ways in real estate that could lead to a $100M + net worth. Yes, I know that money isn’t everything and that chasing it could be a poor decision. To me, it isn’t about the money, but rather the feeling of success. I feel as though if you hit a net worth like that, you have reached heights that barely anyone reaches.
To wrap it up, my main goal in brokerage is to be the best at what I do, which I know would be really fulfilling (being a master of your craft). After all, I really enjoy it. However, as a kid, I’ve always dreamed big and I feel like I’ll never reach those levels being a broker all my life. Thoughts?
What market are you in if you don't mind me asking? I currently work on a pretty successful team of brokers. Not saying this to brag but 2 of the brokers are making $10M+, 1 broker is making $2-3M, and 3 others are making $500K+. We are definitely one of the top 3 teams in our market that the large players go to. I think there are plenty of brokers making $1-2M in HCOL cities. It's just about finding your niche market. Are you focused on the mom and pops? or are you focused on working with developers, funds, and institutions? Both paths can lead to very successful careers. I know for a fact that a few people on my team have net worths of upwards $100-200M.
I’m in a non LA/SF west coast market, so the top brokers in my market might be different than ones in markets such as those big cities. We’re a smaller firm so we mainly deal with mom and pop size tenants and Landlords, only in office and industrial. However, I’ve only been in the business a few years out of college so I am not stuck with mom and pops forever (if I choose not to be).
I’m surprised to hear those numbers. Ik it’s possible with guys like Kevin Shannon who started out in 1 city and now do deals all over the west coast from LA to Seattle to Arizona. It’s comforting to know there’s many more people out there pulling those kinds of numbers.
Ahh, that's definitely understandable. My hometown is a smaller tier 2 city that is similar to what you described. I know a few of the top brokers from my hometown and they're only making $1-3M+ which is not too shabby. I moved over to a NY/SF/LA market because I knew there was a lot more potential and you definitely see a big difference in market regions.
It's definitely possible even if you work in one specific city. Our team has done a few out-of-state transactions and deals in nearby cities but we try to focus only on deals within our market, especially when prospecting.
If you don’t mind me asking, what market are you in? I’d think that if multiple individuals on a team are netting those type of numbers, the team wouldn’t just be a top 3 in a market, but rather be a top team in the country. When factoring house splits, team splits, and commission caps, the individual that’d be bringing in $10M+ would probably be a top 10 broker in the country.
Sure, I'm in a NY/SF/LA market. You're right, the team I work on is definitely a top 3 team in the country. I work for a decent mid size brokerage and I think compensation varies greatly depending on the market you're in. Personally, I know 5-6 other brokers in my office netting $1-2M besides the team I'm currently on. We work with a wide range of institutions, funds, low-income housing, and smaller 25-50 unit properties.
I'm not too sure about being a top 10 broker nationwide compared to all of the other brokerages but we definitely have a good market share of the deals that are transacted. There are certain areas within the city that I work in where our team dominates and controls upwards of 50-60% market share. I think this is why our brokers kill it in the market. Because everyone comes to us once they see our track record and the number of deals we transact.
If you don't mind me asking, what market are you in? I'd think that if multiple individuals on a team are netting those type of numbers, the team wouldn't just be a top 3 in a market, but rather be a top team in the country. When factoring house splits, team splits, and commission caps, the individual that'd be bringing in $10M+ would probably be a top 10 broker in the country.
This seems highly unlikely. Maybe in one phenomenal year, but that's probably $7-8 billion in sales, every year. At least. That's... a lot.
I know brokers in big markets who break 8 figures in major markets regularly, but those numbers are often "gross" with a lot of expenses which might include salary/bonuses to juniors yet to be deducted. Still clearing 7 figures, but it's not so easy to see "net" vs. "gross" in brokers earnings. Still, I am friends with some top brokers in secondary cities who often clear 7 figures, not every year, but do able. To note, those seem to do both IS and leasing within the same product group.
redever is right. These numbers are often gross based on what I need to enter into our internal system to make sure our brokers are paid out. I know for a fact that 2 of the brokers on our team are absolutely killing it and netting around $8-10M after fees. You're not wrong when you say we do a crazy amount of sales per year. We're more so looking at $4-5B in sales a year but we take a decent amount of fees from various deals. Strictly IS and no leasing on our part and we focus on 1-2 asset classes.
How can you know that as a "fact"?
I am an analyst on a successful brokerage team and I too often wonder how big I am dreaming. We are in a tier 2 market, so the prospect of netting 8 figures seems out of reach. With that said, the team is still growing and has already produced some brokers who are top 10 or top 20 in the firm (Newmark/CBRE/C&W/Etc.). I have a colleague who is saying screw the analyst grind, and is starting his own acquisitions firm with another IS brokerage analyst from another market. They’ve already received committed investors and I am happy for my colleague but questioning what the fuck am I doing. I know I can make it to the next tier and generate my own business and be a successful broker, but damn does doing your own deals sound interesting.
Does anyone have thoughts on the idea of grinding in brokerage for a couple years and then going out and sourcing your own deals? I view it as a way to build a strong network, make good money, and gain additional experience. Or would doing that just be a waste of time and if you really want to do your own thing you should start tomorrow? or should I go the principal side to learn the ropes there?
A very common path is to do brokerage, go to buy side and then perhaps do your own deals. However, there are so many ways to go about it. I was talking to a founder of small shop a few weeks ago and he started in brokerage. Spent five years as a broker, was successful and then left to work for a developer for a year or so, before going off and doing his own deals. He’s been running his own shop for around three years now and is pretty damn successful.
The brokers where I intern also do their own deals on the side. None of them make or have ever made 8 figures, but they are successful (mid six to low seven figures). They invest in clients deals and own their own stuff as well. Can’t give you specific advice, but that’s some anecdotal stuff much more experienced people have told me.
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My former boss made $5M+ annually running a small boutique. All our deals were $75M-$100M+ and clients paid big fees for access to a hands-on advisor. I don't think I saw a single fee voucher for less than $750k at our shop. By far the smartest person I've ever met in real estate... 10/10 in terms of both technical ability (dude can jam in excel, legal docs, etc.) but also had emotional intelligence and EQ like nobody's business. He was probably a sociopath tbh.
Not to discourage you but most people quite frankly don't have the requisite qualities to be rainmaker brokers or bankers, and of the ones who do, many don't really want to work that hard for so long. I'd liken it to the difference between a professional athlete and the "Kobe" or "MJ" of their sport - everyone in the league has the requisite qualities (freak athletes and competitive) but who the fuck wants to grind that hard for so many years? Very few. Not to get off topic but guys like Tiger, MJ, Kobe etc. not only gifted they are fucking psychos when it comes to their work ethics. You need to be wired like this if you want to play at the top of your profession.
Assuming you have the requisite qualities, develop a superior skill set over the years, and forge DEEP relationships - yes you can make $5M+ when you catch your groove but it's not a bunch of gumdrops and rainbows. You're going to eat a lot of shit day-in-day-out to get those sexy deals that make the headlines on the Observer. These guys and girls are ALWAYS on 24/7... or as Doug Harmon has said: "There are no weekends and never any picnics.
Well said.
I know a guy who does $5MM deals. 6% commission, split half with house, so $300K per deal, $150K for him. He does 10-20 deals a year, sometimes little bit lower commission but constantly $1M-$3MM a year, almost never misses. He has been hitting 7 figures since his mid-20's. I mean if you think about it, this is likely the 0.1% of the country.
My current boss, a partner at a development/acquisition shop, makes like $300K a year if deal flow is slow, but we currently have a $3B portfolio about to hit the market and his promote is like $100MM....Life is about risk and return I guess.
Do you guys build multi? Holy shit
No this particular portfolio is non-resi that we amassed over the past several years with floating rate debt when interest rates and cap rates were higher. Cap rate compression helps us a lot here.
But the thing is my boss (he is really the owner) is almost 60, but the broker guy is now in mid 30's. I would want to be that broker guy even though he will never get a $100M check from commissions.
Regarding the broker making 6% commissions - are these NNN deals? Curious what he is selling that gets such a high percentage.
Multifamily mainly owned by mom and pops and NNN retail.
I am a successful broker, worked at a small firm, started my own small shop and pulled in >$1.2mm this year working middle market deals. It’s great money but ultimately it sometimes feels like you aren’t actually creating/doing something interesting, which I struggle with, despite the money.
Long term, I’m looking to buy my own small/medium deals and amass a portfolio that cash flows.
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