I am thinking of accepting an offer for a smaller commercial real estate firm which has some reach but not an overly developed platform for the asset class I am going in to. I am transitioning from 2 years of experience in a real estate related field and will be a broker for this company, this is all to get my feet wet in the industry. My intentions are to either to stay with this company for 1 year and try to make the jump to a CBRE or JLL type or stay on with the company if I see the light at the end of the tunnel.
My eventual plan will be to go to get my MBA in real estate (im 26) within a 2 year frame (assuming that I am not crushing it) and come out into a different part of the industry with more upside and less risk. I understand that getting a job at CBRE or Cushman would be better for exposure early, I have tried without much success. The pro for the smaller firm is I am getting offered a draw of over 40k for first year which makes the smaller firm offer appealing provided my described situation.
I am curious to all your thoughts on this plan and see any potential angles I have not thought of.
I've worked at a smaller firm since graduation and have not really enjoyed it. Not the worst thing, but my exposure has surely been limited. If it's for a couple years before grad school you should be ok, but do not expect to be able to jump to a larger brokerage without a strong deal sheet, which you will not get in a year.
What kind of market are you operating in? Would you suggest any potential asset class to really learn as much as possible?
I'm in a tier two city (Not LA, Chicago or NY).
Office or retail are probably the most important to learn.
What was your previous RE experience? Why don't you think you can land a gig at a CBRE/Cush?
I believe I could if I was in a different circumstance and I have heard the vast majority do not offer draws in the market I am looking (it's a secondary market but a top 50 most populated city in USA). I simply just don't want to take on the risk of 0 income with a car payment/student loan payment. I would be run dry of all of my funds. Previous experience is originating/servicing residential loans.
Take it, hardly any firm offer draw's unless you have a pipeline. Seems like a good offer and a good place to learn the industry.
Know that to get into a more finance field in real estate you will have to have some competency in excel and know how to model.
Tackling that as we speak. Almost certified for REFM level 1, I figured by the time I start I could be at least certified at level 2. I know this doesn't mean much but at least will give me a background on excel while I learn to implement the formulas in real time.
How is the REFM?
I've been looking to add a couple certifications and whatnot and like the price of that program.
I mean, the flaw is that it's a no-name company and a draw is just a loan. Doubt you make enough to cover it in the first year either after splitting commissions with the company, any partners, etc. unless you're teamed up with a true badass in the industry and he gives you generous splits.
I'm not saying not to do it, but there's more to life than brokerage, especially when your plan is explicitly to get out in a year. It's going to take 1-2 years just to get into the game, and maybe even more if you're not working at a flagship.
What would you recommend if you were to do it again? I am simply just trying to learn as much as possible, I understand maybe an analyst position would be nice but from my position it seems harder to enter than say if I was fresh out of college. It appears that last year the guy I would be working under cleared 30 mil in volume which doesn't seem like the best in the biz but is respectable enough to learn under. It appears my split with the broker will be 70/30 and vice versa depending on who generates the lead and first year split with firm is 45/55 and then 50/50 second year on.
Would you negotiate any part of this? I am relatively naive on splits so any advice there would be great as well.
I just know that the standard broker path is to be poor as shit for your first year or so before you start doing well. As a broker, you're investing in yourself those first few lean years, trying to get some deal experience, build a network, and get your name out there. I would be very concerned about going in debt $40k to the company as a new broker.
If you're actually going to be getting $120,000 your first year (following your numbers roughly) then of course you should do it, but I remember the days of getting $800 and $1000 commission checks after closing deals and just shaking my head at the amount of work I put in to get those. You can always negotiate splits, but entry-level guys don't usually win those arguments.
The other problem you need to face is that you could hate brokerage. When I was a market analyst, all I wanted was to be a broker. They made the real money. They had the respect in the company. When I became a broker and started cold calling, I quickly learned how much I did not want to be a broker. I specifically left brokerage because I didn't want to be indebted, via a draw, to a position I hated.
I think if you're looking for a one-year job in the industry, I would take a salary. Asset Management and operations aren't "sexy" either, but they come with a lot more security. Brokers are born, man. You have to want it. You don't go into it for a year.
If you don't want to be a broker then why become a broker?
You still haven't answered the question of what your previous 2 years RE related experience is. You're mentioning going to a small firm "to get your feet wet", which I would assume your previous two years was that? So why are you striving for a boutique brokerage gig?
Do not make the mistake of assuming a CBRE/JLL/Cushman type firm would offer better deal exposure and comp. If you are joining a small shop with a good team that will throw you onto deals, take it.
If you were to join a CBRE/JLL, they would most likely hand you a laptop and list of leads that have already been pounded into the ground.
Also, reading your comments below, be careful with draws. Not sure how yours is structured but most are no different than a 0% interest loan.
Why not just aim for CBRE/Cushman? It might take longer to get hired but it would be better than being stuck at the small shop.
I myself am in a similar situation, minus 2 years of RE experience. I think you could still shoot for a top 5 brokerage.
To answer most questions above, I have heard that most of the "top firms" in the area do not offer draws which is one of the reasons I am intrigued about the draw for a short term gig. I believe the boutique gig based off what I have heard to be one that will get me some deal exposure and really give me a feel for the grind of the business. While I realize it's not ideal I do view it as a good entry to the business as I try and figure out if CRE really is for me before I get my MBA. I am a strong believer that getting an MBA to enter into brokerage (which is relatively easy without one) is the biggest waste of time. I want to see what the business is like and then stay in it if I like it, if not I simply move onto to either a different industry or a different part of industry based off my exposure to the business. They always say there's nothing like experience...
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