Commercial Real Estate Broker 2016?
Hi everyone- I was wondering if there is anyone still looking to break into CRE brokerage in 2016? I am currently working in finance, get paid decently but am super interested in being a broker. I got an offer from Marcus & Millichap and am tempted to take up the offer but am afraid the market environment in CRE might impact my performance no matter how hard I work. Any feedback on working in a potential downturn? I also am studying for my CFA level I as a backup if things dont work out. I am 25 and in NYC.
Thanks in advance!
What are you doing in finance right now? If you are like doing financial analysis stuff, I'd shoot for like a CB, CW, HFF rather than an M&M. m&m can you be good in certain markets or completely terrible...
Thanks- I am in IR consulting. What would you say about m&m in NYC? I was thinking about joining their leasing team. Would you say a potential market downturn would hurt overall production? I am afraid that I am joining at the peak of the market (general consensus) and dont want to have to starve until the next up cycle.
M&M doesn't do any leasing. They only do investment sales and financings. With that said, in a down market, all commissions get squeezed (sales might not occur and leasing rates might decline), but in regards to leasing, leases are always expiring, so leases are always begin done, and therefore, commissions always exist.
They are commission based correct? I personally wouldn't if you make decent salary now unless its the top m&m team. I don't know much about their nyc leasing team..but i'd rather wait for a salaried position at another shop if you are worried about the downside
bump as i am curious about the outlook at well. Will be heading to a top full service shop for investment sales but kinda feel like things are going to come to halt about a year or two in.
Thanks for the responses everyone. Much appreciated. I'm really looking at my career long term and am looking at where is the greatest opportunity for a guy like me. I'm not an Ivy League guy but I networked my way to a pretty good firm (Goldman/Blackstone subsidiary). I am working on my CFA now and believe that'll put me somewhere decent in the next couple of years however, generally speaking there is an obvious cap in the amount of money I'll earn over the course of my career just because my resume has to compete with Ivy leaguers in the "high finance" industry. I don't want to sound like a greedy person but I don't want to put all of my time and efforts into something that'll cap me out at 150-200k a year and only to reach that kind of salary in my early to mid 30s at best. Here is where commercial real estate comes in- I know brokers that are making an absolute killing and are in their mid 20s. That said, I am willing to starve in the short term to build a fruitful career in the industry because I know I have the work ethic and persistence to take on the uphill battle. However, I also don't want to get stuck in an industry with no deal flow because of the macro environment no matter how hard I work. Do I have the right approach here? I have a real hunger to work hard and do what it takes but I'm trigger shy on this because I am unsure if this is where a truly great opportunity sits.
If your question is 100% purely about financial compensation, it is a valid point. Long story short, if you are not successful in working your way into a role where you have equity participation in deals (via either carried interest or stock), I think you stand to make significantly more money (on average) over a 30 year career in leasing than you will on salary, no matter what your title is as an asset manager/acquisitions guy/whatever (with obvious exceptions). That is if you are good at leasing. However, typically (again, just in my experience), there are two caveats. 1) most top brokers make a lot, but not more than maybe $1-1.5M/year 2) $1-1.5M is usually a top-performing year, many other years will be less (maybe $500k, again if you are a top dog).
The flip side is that depending on your role, you may stand to make far more money on average via equity participation as a principal owner. Not that $500K-$1M in brokerage is small potatoes, but your ceiling is far higher on the principal side if you can execute. It really comes down to a risk reward question...excluding everything else like relative learning experiences, etc.
Dear lord please no more M&M brokers...
Lol jeez I didn't know M&M had such a bad rep. Are they one of those brokers that are easy on hiring and end up getting a bad batch of brokers?
They hire anyone and sweatshop them for two years or until they die. If you succeed, great, if not, they don't really care. At least that's what I hear second hand from a few friends who did their program and decided there were better options elsewhere.
Thanks everyone for your input. Truly appreciate it. Any thoughts on Eastern Consolidated?
Never heard of them. They're not a national player. They could be big in NYC though - someone else might know.
I have some broker-related posts in the link in my signature line back from when I was in the game if you want to read them though.
Thank you! I will check them out.
Eastern Consolidated is a fantastic NYC boutique. Most of their deal flow is middle market.
At M&M the new hires just cold call all day for two years and aren't allowed to go on many meetings.
Our fees have gotten squeezed a lot lately. At the top of the market fees are getting squeezed in IS because sellers know your job is a joke. However, things are definitely slowing. It's taking a while to get the same deals done and earnings will be down this year as compared to last year when it was a complete bonanza.
I don't do any leasing but it's my understanding that through most of the market cycle you're less likely to get squeezed on fees and on the ultra high end you're getting bigger fees.
You can make a lot of money in brokerage but keep in mind you get a lot of competitive bros that you're fighting with. It's not an intellectual pursuit by any means. It's like a sport which is why it appeals to many former athletes. If you want to hustle and you're very competitive then it may be for you.
Once you've done brokerage for a while and have the system down it's very simple which is either attractive to someone or a complete turn off. It's just a hustle-fest.
If you're a sharp guy and end up dealing with non-institutional assets you're going to want to blow your brains out, especially in NYC. A lot of the guys that own non-institutional assets are complete morons. I'm not exaggerating... some of the dumbest, meanest, and genuinely unpleasant people I've ever met own millions upon millions of dollars of NYC real estate. Every other week I've got guys trying to commit tax fraud on 1031s.
Hopefully that adds some real flavor.
EDIT: I just read CRE's old blog posts about brokerage. I'd suggest reading them, especially the one on compensation.
This is hilarious, and true.
dumb question - How do you go to a users blog? I have stumbled on them before but not sure how to go to a specific user's blog area.
I'm honestly not sure if there's an easy way or not, but I believe it was inserted into my signature line at some point
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After working for CBRE and now development firm for the past few years, I believe M&M is actually a great spot to start out. They will hire anyone if you are willing to fork up the cash to join their training program, but its like a boot camp for cold calling. Any hesitation you might have had prior to their training will be long gone after 2 weeks. I believe it to be very beneficial for their training program, then leave for another brokerage firm. Definitely depends on product type. As I know CBRE is amazing for Office Leasing, but virtually has little to no Multifamily brokerage (at least not in Los Angeles).
Keep in mind, Brokers make money when the market is expanding and contracting. It is when the market is stagnant that they do not make any money. Value the business cycle, the real estate cycle, and the credit cycle, and where they are, then make your decision.
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