Transitioning from Residential RE to Commercial RE - Advice needed, please.

So I've been scouring the internet by doing simple Google searches where I've coming across some helpful YouTube interviews/audio-programs to eventually finding some insightful posts on Reddit to then coming across a post on Reddit that recommended WSO as the go-to place to find information on IB, PE, CRE, etc etc. To give some context, I'm 24 years old, I have a son (2 years old), I've been in the residential real estate industry for 2.5 years now, have an Applied Science degree in Finance from a community college, some experience in underwriting (residential BRRRR, flips, and buy&hold deals), no background in commercial real estate, no connections within the CRE industry but the reason that I would like to make the transition is that I'm a lot more interested in CRE (not so much interested in the money but I know the money that can be made is definitely a plus) and see myself investing in / developing multi-family and retail projects so right now I am thinking to myself, "why not transition into CRE to gain the knowledge needed to get started in the industry (on the development/investment sales side), build relationships with the right people, and maybe find a mentor/coach that I can learn from in the process."

With apartments, I like that you have the ability to buy a (value-add) building, renovate as many units as you choose, hold it for x amount of years then exit or simply convert some units to condos and sell them off then keep the rest to obtain your passive income. On the retail side, I find it interesting that a leasing advisor can somewhat customize which businesses they reach out to fill a space for tenancy. I know that this business isn't simple nor is it easy but that's what intrigues me even more is that the barrier to entry is set to a higher standard whereas in residential the barrier to entry isn't. My marketplace has almost 15k resi agents and around 600 commercial agents - IMO, I'd prefer to be a big fish in a small pond and standout as a true specialist/professional versus just another "Realtor".

Here is my overall plan for the next 12-18 months:

  • Continue working in Residential to save money (I've heard that on average it takes about 12-24 months to close your first deal in apartments, not sure about tenant representation) while building my database of connections in the CRE industry (meeting with whoever will meet with me over lunch or coffee), referring off any leads and shadowing the referral agent to gain hands-on experience, etc.

  • While doing this, I'm planning to get my California RE license because this is where I can see myself settling down, growing my business, etc; I am hoping to move to San Diego/La Jolla within the next 5-6 years - I currently reside in Las Vegas and our local University (UNLV) doesn't offer an MSRE or MRED program as of now which I'm not sure is necessarily required for what I'm looking to do/achieve but I continue to see it mentioned in other threads and forum posts from time to time. 

  • And slowly but surely become the go-to person for the people who I meet with to take a chance on me to help them either buy, sell, or lease to start to gain the traction needed to grow my business because I feel that CRE is all about who you know and how they talk about you when you're not around (i.e., are you a flake or are you someone that can GSD without hesitation?) I'm still figuring myself out in this aspect. 

Ultimately, my main questions are:

  1. Am I on the right path with my ideology of getting into CRE if my long-term goal is to eventually invest in CRE (retail and multifamily) projects? Or does it seem like I am trying to be a jack of all trades?

  2. If I'm looking to move to a different market, should I just continue in residential and then make the switch to CRE once I've moved to the new market or should I start the groundwork now of gaining the experience beforehand so that I'm on the right track once I get ready to move?

  3. This is a question for seasoned Brokers - If you were to start over from ground zero, what would you do differently and/or what would you continue doing (macro-level, I'm not looking to steal anyone's strategies)? Any books that you may recommend?

  4. Being that CRE can be a very cyclical business, is there any big picture advise that can help with mindset when things get tough in this industry? 

Sorry for the long post, I just want to be able to get as much out of this post as possible so that I can figure out if I'm making the right decision or not. All replies are greatly appreciated and will be duly noted. Thank you!!

I want this post to help inform people that are in a similar position as myself (some RE experience but unsatisfied with their current career choice and/or trying to see what else is out there). But I'd also like for this post to be something that people can refer to for starting fresh in the industry with little to no CRE background and/or education. 

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Comments (9)

  • Analyst 1 in RE - Comm
Jan 9, 2021 - 12:49am

Is your degree a bachelors or associates degree?

Jan 9, 2021 - 2:59pm

First, great post, lots of detail (maybe too much for reading time, but your situation makes sense). 

Overall, I would advise you consider what you really like to do/want to do. Mainly, do you really want to be in the real estate business (principal firm, aka "buy-side"), real estate services (brokerage/appraisal/etc., aka "sell-side"), or lending/debt (technically "buy-side", but originations/CMBS world is kinda hybrid and worth its own category). No right answer, just mix of desires/abilities/etc., you can make good money in all three (just as a note, this forum is very "buy-side" centric, but institutional brokerage and lending gets plenty of love, but often from the "how to use for exit to buy-side" perspective). 

Talk to a lot of people, alum in the business, people you can find on linkedin, etc. You might wish to stay or transition into the "private commercial" side and stay out of institutional (getting a BS degree is probably a minimum entry ticket, or can be). If you wanted to work for a commercial brokerage handling what's considered "private client" (aka mom and pop) transactions (sales and leases), you could probably find a firm today that would take you. If you want to go institutional in any format, you should think of that as a full force career jump/transition, the residential background will not count as "experience" for those roles in general. You can still do this of course, you are actually still very young and can totally do it, but getting more education is likely first step. 

Here is my bottom line advice, decide if you need/want to be in the institutional world, then you can focus all effort around that. If not, then your plan of keeping working in residential and transitioning at some point in the future is not crazy (but out of my area to speak intelligently). If you you do want to make the big jump (WSO threads can help explain it), then every year spent in your current role is a waste (unless you do it to make money while in school or as side hustle). You could do UNLV's real estate undergrad, don't know much about it personally, but you are there! Either way, if you are serious about this jump, you need to commit to a path and start! 

Jan 9, 2021 - 8:03pm

First, I'd like to thank you for responding to my post. I appreciate your feedback as well as your advice. I've been deeply considering going back to school to get a bachelor's degree but was hesitant because I hadn't known what career path I wanted to pursue. Now that I am more confident in what I see myself doing long-term, I think getting a BS degree would help my case. I'd like to think I'm on the right path with my plans of working residential as a side hustle, referring any commercial leads to seasoned commercial agents to shadow them throughout the transaction, and also as you mentioned, just talking to the alum that's already in the business to gain knowledge then maybe eventually meeting someone that wouldn't mind taking me under their wing so that I can learn from them. I will definitely be taking your advice by sticking with a plan to commit to. Thank you!!

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Jan 10, 2021 - 1:21pm

I totally agree! Overall, your advice really does hit home to help lessen my internal-debate. I'll be sure to interact more with the WSO community as much as possible. Thank you for your time! 

Jan 11, 2021 - 11:14pm

To piggy back off one of redever 's points, most people in this forum leans towards buyside and especially institutional. Talking to all different types of brokers, you can make as much money (if not possibly more depending how good you are/which market you're in) with private clients aka 'middle market'. Meaning, you can work on selling a couple million dollar building with a higher commission percentage and doing multiple per year vs. selling one hundreds of millions of dollars building with a much smaller commission percentages. Also I know middle market focused shops that prefer Bachelor's degrees but it's not required. Of course this varies, but I find brokers in the middle market are more 'hustler type' but still very sharp and if you want to eventually invest in MF yourself/syndicate I think it will be better aligned with your goals.

Apr 30, 2021 - 1:13pm

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