Starting a side-hustle as an independent broker?
So like many of you I'd like to build a portfolio of real estate. The dream would be to have enough property cash flow that I wouldn't need a 'salary' job. Also like many of you, I'm located in a very high COL area (Los Angeles), which means it's extremely difficult to purchase anything in my back door.
I work in asset management and acquisitions at a small firm, but I have put in my paperwork to obtain and activate my CA broker's license. The thought I have is that I can pursue some small multifamily properties (2-10 units) in the very submarkets I know really well. If i'm successful, I can 1) sell the property as a listing broker and earn some more $$ to use for my own deals, or 2) obtain access to off-market properties to purchase myself + raise the money with a partner. A duplex where I live could go for $1.0-$2.0M, so I'm hoping that I could possibly work with an owner like this and earn some additional income.
I've never worked on the brokerage side as I've been a lender and on the principal side since college. I'm no expert on marketing or managing transaction so I plan on diving in head first with my head on fire and figuring it out in real time. I have a lot of basic questions, like 1) What CRM do I use? 2) Is this a stupid idea? 3) Should I open my own brokerage or find a brokerage shop I can hang my license while continuing to work full-time?
Does anyone have any thoughts on this? Does anyone have any books, blogs, guides, or any resources I can look at to learn more about being a broker, marketing, and running a brokerage?
It's a big topic, but definitely do-able and I think you're asking the right questions.
When you say "pursue some small multifamily properties" do you mean act as the broker for investors looking to purchase, or have some equity in the deal (or both)?
Excel + your phone contacts for now. No need to overcomplicate early-on. CRM is just data entry. Make a column in Excel that has the date you contacted them last. Then you can sort by last contacted and know who you haven't reached out to in a bit.
Not a stupid idea, but it can take a lot of time and I doubt you want it to impact your performance at work.
I would imagine you have to work under a licensed broker for a certain amount of time (in New York it's minimum of two years) before you can go out on your own.
My wild recommendation, and I'm sure others will disagree, is to get your license, but hang it at a reputable property mgmt shop (most are licensed brokers). In my experience (Manhattan and some Brooklyn) the first looks always go to mgmt cos before brokers because they're more intimately involved in the operations. This is not an uncommon conversation:
>Duder: "Hi Bob, how's 123 Main going? Everything squared away with the lease for 4-A?" > >Owner: "Yep, all good." > >Duder: "Also, second floor tenant is moving out of 125 Main--" > >Owner: "You know I've been thinking of selling that one. What are your thoughts on the market right now / what do you think I could get for it?"
Many owners will still use a multifamily broker for the above, but you'll be the first to know and may have some input in the hiring. If the operations are small enough and you can provide a marketing plan, you might just get the assignment anyway.
Just my $0.02 but wanted to make others aware of that scenario.
You know the amount of people whose "main hustle" is brokerage who make zero or insignificant money? About 50% of the people who come int the industry work 50+ hours a week looking for leads and are gone in a year with nothing to show for it. In 5 years its closer to 80% who move on from brokerage to take jobs elsewhere.
Unless you have family connections that will expedite the process, trying to compete on a part time basis with the slew of hungry brokers making hundreds of daily cold calls because they haven't gotten a check in months seems futile.
I forgot who said this originally but why don't you make your main hustle your side hustle. Meaning spend more time on your current job. Not necessarily just doing more work but networking and interviewing for the next step up. If you're already on the principal side of the business I without a doubt guaranty you have a better chance of networking yourself into a position with big calculable bonus or carry than you do making brokerage work part time.
This big time. Networking is underrated, and if you already have your foot in a good door, you can network into something not available to most.
I agree with SHB & Edifice .
OP - I like your mentality and have had it in the past, but chose to go this route and believe it is the best path forward. To be honest, I don't think there are any real 'side hustles' in commercial real estate that are worth pursuing. There are too many ambitious people doing full time what you'd be doing part time to gain meaningful traction. Your time is likely best spent doubling down your efforts to improve what you're currently doing or learning whatever it is you're trying to pivot to.
Thanks for all your comments guys (and gals)
Edifice In CA you can obtain a broker's license with a RE degree + other requirements, which I've passed and will be obtaining this license. I could hang my license as a broker-salesperson with another firm or open my own shop and pay all applicable E&O expenses, fees, etc. But I'm not sure and haven't deeply explored if other shops are cool with me working full-time and then part time for them.
SHB weaksaus I think my biggest weakness is that I'm a little scattered brained sometimes and I'm more of a generalist than a specialist, so I agree it would be better for me to focus 110% on one particular venture and I constantly weigh what you said against what I want to do "by nature".
I'm actually in a unique spot right now. I'm an early employee with a small amount of carry in my current principal role where we're extremely well capitalized. I work primarily on asset management duties executing on value-add strategies on multifamily, creative office, and retail properties. But since we're small I also help out on acquisitions. If everything goes perfectly well, we are well positioned to become a $1bn AUM firm over time.
I spend a lot of time networking with folks in my market already so maybe I'm viewing the side hustle broker idea as "extra gravy".
I'm kind of writing my thoughts down in real time so I'm not disagreeing or agreeing, but I appreciate the thoughts you all have shared.
That's great re: licensure.
Your current role sounds awesome.
Cool of you to talk it out in the forum. I'm a big fan of watching peoples' ideas come to fruition on this site. Hopefully you'll keep us posted!
There is a name for what you referred to as sourcing off market deals for yourself while acting as a broker....its called "being an unethical prick".
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