New College Grad- Commercial or Residential??

Question

Greetings BPers!

Looking for some feedback from you seasoned veterans out there...

I'm at a crossroads in my life right now. Just completed my degree in Business/Entrepreneurship from San Jose State and passed the real estate exam last week.

Now, I'm looking to maximize my  productivity as either a commercial or residential agent. I could never slave away at a 9-5, so sales is the path for me, no doubt. The question is, would residential or commercial sales be the most prudent decision? I do have quite a bit of experience coming out of college. Started private lending biz with a couple partners, completed a couple dozen deals, mostly discounted notes and investment properties in PA and OH. Small deals for the most part, usually less than 25k each. But I think this still gives me an edge coming out of college, when compared with most other recent grads.

My goal is to have 5k passive income from rental units before I turn 30, giving me a 6 year time frame. So, would the career path of a commercial or residential broker be best suited to help me in my pursuit of acquiring a sizable rental portfolio over the next 6 years?

Thanks!

Joel Owens · Answer

Commercial all the way. Normal life and normal hours and buying decisions are for the most part based on numbers and data on NOT emotion.

Look at different types of commercial brokerages and find out what niche you want to focus on (apartments,hotels,gas stations,retail,office,industrial,land development,commercial leasing,triple net and on and on).

Then find a top commercial brokerage who specializes in that field.Work with them a few years to learn the ropes and then go out on your own in your local market once experienced.

Do not tell them your plans for going out on your own or leaving.If they know they are just a stepping stone they will not want to put that much time into you.

You will be on a low split while you are learning.

John Evan Miller · Answer

I would have to agree with Jeremy M.

I worked in commercial real estate for quite a few years and though commercial properties can sell for a higher price per square foot and cash flow well, they are generally slow properties to move.  It is an area that takes patience, persistence and a good client base... and lots of advertising dollars.

Good luck! All the best.

Jeremy M. · Answer

Different area different numbers, but I'd think there are 10 times more deals in residential properties than commercial. I dnt have any clue in the commercial industry but that's what I would guess.

Joey Budka · Answer

I've made the decision to go into commercial. Thanks for all the advice guys!!!

John Evan Miller · Answer

Another way to edge into the commercial real estate field is to get into property management. Try to locate a real estate agency that does both commercial sales and property management. Many of these have excellent working relationships with investment companies.  It can open the door to many opportunities -  I know because it worked for me.

Joey Budka · Answer

Joel,

You're right, I'm sure it'll take many years to partner with the big boys on a syndicated multifamily deal or something like that.

Just curious, but how did you make it early on in your career? Did you start out with a national/multinational firm hitting the phones hours per day, and networking as much as you could? Also, what do you think would be the most effective means of building my book of business as novice commercial agent?

Thanks again!

Joel Owens · Answer

Joey,

Most of the big firms have contracted and some have bought out others.

They tend to have very high carrying costs.If they pay you a stipend which they do not hardly of anymore they tend to take 70 to 80% of the commission.

So you are better off not doing it and being at 50/50 or higher and learning.

"so eventually I can offer them syndications and possibly partner with them"

You have to build years and years of  a track record  to do what you are talking about.Some of the property owners have decades and decades of loyalty with some firms.

That being said there is plenty of business to go around for everyone.If you do not know what you want to do yet you might be better off with a big commercial brokerage.You can try a few different niches and then dig deeper into the ones you find most interesting.

Dale Osborn · Answer

Joey:

You might want to start out with the residential side first and take classes on the side to give you more to offer a commercial brokerage. Many really do not want green recruits and do not have training set up for you. Some have the attitude when you join them of: "There's your desk and phone - sit down and start making me some money". Also the commercial agents are not very open in helping train a competitor in their market.

In the end it will be your decision to make, but had to put in my bit.

Joey Budka · Answer

Thanks for the reply Joel.

My first inclination is to go into multifamily and office sales, with the main goal of establishing relationships with wealthy landlords and holding companies, so eventually I can offer them syndications and possibly partner with them. The problem would be, at least initially, waiting on the big commission checks to come in while I prospect, list, market and sell.

Another route would be to go the leasing route. Main goal here would be, again, to establish solid relationships with property owners by successfully leasing theirs spaces, and one day, go in on some big deals together. Perk to this route would be that commission checks from leasing would be more frequent, I presume?

Do many firms provide a small stipend for new agents? Or is it usually straight commission?

Also, would you recommend going into a boutique firm first? Or a big firm like CBRE first?

New College Grad- Commercial or Residential??

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