Residential vs Commercial and/or Investment Sales as a profession

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Residential vs Commercial and/or Investment Sales as a profession

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Member since 2023 · 25 posts · 7 votes

I thought for a while to consider look into being a wholesaler, but to be honest, after calculating the potential costs, the time you need to put into the deals, the people you have to deal with (including title companies, potentially lawyers, dealing with inspections, dealing with appraisals, doing the comps of the deals and more), I decided that wholesaling seemed to be a long strech idea, as it is a position where you make much less than people think (all the social media gurus are pathological liars), and would rather do something more realistic.

I am debating on what would be a good profession instead. Should I look at let's say Residential Sales or Commercial/Investment Sales. One idea I was thinking is to work at a New Western Acquistions style company. Do such companies require you to go to properties randomly at different hours? Do you have to take people to properties like you would with a residential real estate agent who sell homes to families and couples for primary residences? Because I am good at looking for distressed properties and organically generate leads. I can also be able to build contacts with investment companies (specifically investment companies that have cash up front in their pockets)!

What about working at a Commercial Company like Marcus and Millichap? Is it a position where also you have to drive people and show them properties face to face? Because I feel like I can build skills that can enable me to be able to prospect for off market properties and refer the properties to people who already have cash to buy the properties. (I believe cash is king because dealing with lending and financing makes issues more complicated). 

I think Residential Sales seems to be appealing, but honestly, I don't feel like I would like to work at these super random hours, drive people around and add a lot of wear and tear to my car.

Tell me how a work environment for an Investment Sales firm (like New Western), Commercial firm (Marcus + Millichap) and a Residential firm (Remax, Coldwell, etc.) would be exactly like and let me know which one is preferrable for someone with a set of preferences like mine.

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  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    2y

    Quick thoughts although I have many:

    You have almost all the same contacts people dealings as a residential or commercial broker, so nothing changes much, except size of the deal and perhaps timing.  My thought is wholesaling is quicker, residential a bit longer, commercial typically much longer.  I've always been surprised when people tell me they are quitting becoming a realtor to be a mortgage broker or the other way around.  In many ways, basically same business.  Still need to prospect, still dealing with all the same issues.  Maybe in mortgage business you do less driving and more office work.

    I got the impression you have not wholesaled yet, so please tell me how you are a great lead generator?  Finding distressed properties is really not that hard, so while it is a skill set, I don't think it is a unique skill set.  Plenty of lists for example for $30-$40 a month that give you lists of distressed properties...foreclosures, preforeclosures, probates, vacant homes, etc.   Getting the listing is the skill set.

    With all these choices you set the hours....You can work M-F 9-5 or you can work all hours of the day or night 24/7 365....while I'm thinking commercial could be a little more office focused and a little more business hours focused.  Tell me if the commercial seller is in Hong Kong, that you won't work a call at 2am in the morning, or if they fly in and want to walk a property in the evening or at night to verify maintenance issues like lighting, tenant type, occupancy, parking, etc that you won't meet them there to do that.

    Timeframes...no stats to my thoughts, but I'm thinking wholesale deals, when you get a fish on the hook they wanted to sell 30-300 days ago, if they're motivated enough to sell at a 30-50% discount to market, then they should be super motivated.   Your turn times should be fairly short...30-60 days.  Residential I would extend those out...90-180 days...although many of my buyer and seller clients today have much long lead times.  One seller I just closed I've been talking to for 10 or more years.  I would say pretty common now people call saying they want to sell in 1-2 years and want to know what they need to do to prepare for that.  Buyers often 2-3 years now...waiting for interest rate drops, getting credit in order, saving for down payment, in a long lease, etc.  Commercial I would say 6-8 months and up to 20 years to close a deal.  Think about multifamily where many owners pitch 5-7 year hold times...so meet someone today that you really connect with that just bought...you need to keep in frequent contact with them for the next 5-7 years before you get the listing and earn a commission.   Heard a nice talk from a commercial broker in Austin that took 20 years to close a giant deal there.  Lots of expenses for the past 20 years out of his pocket to do that deal.  Deal of a lifetime there, but that's a long time to wait and have $100K+ probably in expenses and probably a lot more than that, waiting for that lifetime payout when the customer could also call you to say thanks for all your hard work, but Nashville just offered us better incentives, we're going there.   Think about all the brokers chasing that Amazon HDQ2 deal from all over the country, or car plants, or chip plants.

    Not sure it is true, but I expect the washout rates for both residential and commercial realtors is just slightly lower than for wholesalers.  Some people used to say, only about 1/2 the people who start working on their license, actually take and pass the exam.  Only maybe 1/2 of those will active their license and hang it with a broker. 90% of those will wash out year 1, 90% of the ones left wash out year 2.

    Still market ups and downs with all these groups.  Apt sales in 2023 I'm hearing were down 80%.  So are you willing to give up 80% of your commissions and still go to work, making all the same contacts and maybe expenses go up..waiting for cycle to change?  That's what we do as realtors.

    So you have to be super motivated to get in this industry and making a living and survive....wherever you start...wholesaling, residential, investment sales, commercial sales.

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  • Account Closed
    OP
    Member since 2023 · 25 posts · 7 votes
    2y
    Quote from @Bruce Lynn:

    Quick thoughts although I have many:

    You have almost all the same contacts people dealings as a residential or commercial broker, so nothing changes much, except size of the deal and perhaps timing.  My thought is wholesaling is quicker, residential a bit longer, commercial typically much longer.  I've always been surprised when people tell me they are quitting becoming a realtor to be a mortgage broker or the other way around.  In many ways, basically same business.  Still need to prospect, still dealing with all the same issues.  Maybe in mortgage business you do less driving and more office work.

    I got the impression you have not wholesaled yet, so please tell me how you are a great lead generator?  Finding distressed properties is really not that hard, so while it is a skill set, I don't think it is a unique skill set.  Plenty of lists for example for $30-$40 a month that give you lists of distressed properties...foreclosures, preforeclosures, probates, vacant homes, etc.   Getting the listing is the skill set.

    With all these choices you set the hours....You can work M-F 9-5 or you can work all hours of the day or night 24/7 365....while I'm thinking commercial could be a little more office focused and a little more business hours focused.  Tell me if the commercial seller is in Hong Kong, that you won't work a call at 2am in the morning, or if they fly in and want to walk a property in the evening or at night to verify maintenance issues like lighting, tenant type, occupancy, parking, etc that you won't meet them there to do that.

    Timeframes...no stats to my thoughts, but I'm thinking wholesale deals, when you get a fish on the hook they wanted to sell 30-300 days ago, if they're motivated enough to sell at a 30-50% discount to market, then they should be super motivated.   Your turn times should be fairly short...30-60 days.  Residential I would extend those out...90-180 days...although many of my buyer and seller clients today have much long lead times.  One seller I just closed I've been talking to for 10 or more years.  I would say pretty common now people call saying they want to sell in 1-2 years and want to know what they need to do to prepare for that.  Buyers often 2-3 years now...waiting for interest rate drops, getting credit in order, saving for down payment, in a long lease, etc.  Commercial I would say 6-8 months and up to 20 years to close a deal.  Think about multifamily where many owners pitch 5-7 year hold times...so meet someone today that you really connect with that just bought...you need to keep in frequent contact with them for the next 5-7 years before you get the listing and earn a commission.   Heard a nice talk from a commercial broker in Austin that took 20 years to close a giant deal there.  Lots of expenses for the past 20 years out of his pocket to do that deal.  Deal of a lifetime there, but that's a long time to wait and have $100K+ probably in expenses and probably a lot more than that, waiting for that lifetime payout when the customer could also call you to say thanks for all your hard work, but Nashville just offered us better incentives, we're going there.   Think about all the brokers chasing that Amazon HDQ2 deal from all over the country, or car plants, or chip plants.

    Not sure it is true, but I expect the washout rates for both residential and commercial realtors is just slightly lower than for wholesalers.  Some people used to say, only about 1/2 the people who start working on their license, actually take and pass the exam.  Only maybe 1/2 of those will active their license and hang it with a broker. 90% of those will wash out year 1, 90% of the ones left wash out year 2.

    Still market ups and downs with all these groups.  Apt sales in 2023 I'm hearing were down 80%.  So are you willing to give up 80% of your commissions and still go to work, making all the same contacts and maybe expenses go up..waiting for cycle to change?  That's what we do as realtors.

    So you have to be super motivated to get in this industry and making a living and survive....wherever you start...wholesaling, residential, investment sales, commercial sales.


     Thanks for the response Bruce, the reason I wanted to do wholesaling originally because you have the opportunity to let's say get into investing with less capital but at the moment, I am going to graduate College (I am residing in Texas like you are and will be hopefully graduating A&M this Spring) and I want to do something that gives me the proper exposure to the real estate industry. Don't make fun of me when I say this, but I am currently at the moment not up to dealing with wearing many hats, like dealing with title companies and attorneys to make sure that all contracts are compliant, hiring inspectors to check if there are any hidden issues with the property, making earnest money deposits, getting appraisals, dealing with people who back out of contracts, and sometimes having trouble braking even.

    If I were to work in a sales agency dealing with fixer uppers, I can have an on-staff transaction coordinator, a little less of the unseen details to deal with, and something that is more straightforward to deal with. I know Commercial Deals take super duper long to put together, but I think the investment sales of SFRs seem more simple to deal with.

    So SFR flip agency sales can be a best bet if I decide to get into RE post graduation.

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  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    2y

    Whatever you decide if you commit and work at it 24/7 for 5-10 years or so you'll have massive success! The real estate industry requires much more commitment/ time and effort than many other industries but the rewards can be huge.

    Be ready to work and never pass up an opportunity and you'll be good! 

    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
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  • Account Closed
    OP
    Member since 2023 · 25 posts · 7 votes
    2y
    Quote from @Jordan Moorhead:

    Whatever you decide if you commit and work at it 24/7 for 5-10 years or so you'll have massive success! The real estate industry requires much more commitment/ time and effort than many other industries but the rewards can be huge.

    Be ready to work and never pass up an opportunity and you'll be good! 


     Thanks for the shout of Jordan, I appreciate it!

    1Reply
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