Really Not Sure What To Do

Real Estate Agent

Really Not Sure What To Do

Real Estate Investor · Novi, MI · Member since 2012 · 437 posts · 132 votes

Hey everyone,

So I find myself in a situation right now and I'm not sure what I should do.

Let me first say that my passion for the most part in RE is commercial (specifically multifamily and self storage.) Because of this I'm really looking for the best ways to continue to learn in the field and get to the point where I can begin investing for myself.

I applied and interviewed today for an assistant commercial broker position at a local commercial office. I felt that the interview went very well and the brokers I met with seemed like great people. The issue however came down to the actual nature of the job compared to where I am and what I am really looking for.

Of course it's a agent position so it's 100% commission based. The head broker in the firm told me that he estimates it would take me approximately 5 months before I made any money and about 3 years before I made good money.

I'm feeling torn because my passion in commercial RE is not at all on the sales but rather the actual investing side. I could very quickly see the stark differences between how brokers and investors think as I went through the interview. The entire focus for them (which is understandable) was getting commissions, commissions, commissions....I however feel like I'm on the other side of the table thinking of everything from an investor standpoint.

My goal is to be able to get a job where I can actually rely on the income and be able to build up some cash reserves so that it would greatly help me in starting my own investing business. I don't want to build an elaborate career because I know it isn't my future.

I'm so torn because my passion in RE isn't the sales side and I know that if I were to take the agent position, I would work months and not make any money and the only way for me to be successful would be for me to stick with it and build my network which would take years. I don't want a career which will take me years to make anything out of it because my goal is to replace my income with cashflow from properties as quickly as possible.

I also feel though that it would be a great opportunity to learn the business of commercial RE from the inside and meet the big players in my area. I hate the thought of turning that down which is what is leading to my dilemma.

Sorry for being so long and any advice on what I should do would be GREATLY APPRECIATED! :)

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Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes

I'm 100% sure people often confuse real estate jobs (wholesaling, rehabbing, property management, brokering, developing, etc) with investing. Investing is putting your money into some vehicle that you expect to produce a return. Buying stocks, bonds, bank CDs and rental properties is investing. If you have a huge pot of money, like a mutual fund manager or Warren Buffet, investing can become a job. For most of us, though, investing is a pretty small time consumer. Doesn't take long to be "fully invested" and not have any more cash to pump into investments.

The goal for many people is to have enough money invested in whatever they (or their financial planners or brokers) think are good investments so you can live off the returns. That's retirement and is a goal for many folks.

I can fully understand not wanting to be a broker. That's a job, and a commissioned sales job at that. That's not my thing.

When you say "my passion for the most part in RE is commercial (specifically multifamily and self storage.)", if you mean you want to own some mini-storage and apartment buildings and live off the income, then your focus should be on earning the money you need to seed those investments. For most of us, that means a job. My day job has nothing to do with real estate at all. It pays the bills, though, and generates cash I can invest in real estate (among other things.) And its something that I'm good at and, for the most part, enjoy.

I'll ask you what you mean by your passion is for mini-storage and multifamily? You want to own them? Build them? Manage them? Something else? If your goal is to own enough of them to live off the cash, especially if you're paying others to actually run them, then you need to figure out a way to generate the cash to invest. If its something else, find a job doing that.

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Steve Babiak
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
13y
Read this next link for some ideas:

http://www.biggerpockets.com/forums/21/topics/87021-attn-commercial-brokers-rolling-commissions

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Karen MargraveBusiness Member
Moderator
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
13y
Nick K. Here's what I get from your post .. you don't want to be a commercial real estate agent. Therefore; you won't make any money doing it! To make money you have to have a true passion for the business. You have to work it aggressively in order to make good money. You have to get out and hustle to find listings and buyers, you can't just sit at a desk and have them beating down your door, and without the passion, you won't do it.

Professional real estate agents, that are successful, have invested a lot of their time and money into learning all they need to know in order to best represent their clients in selling or buying properties. That commitment is evident to their clients. Out of all the agents you run across, most settle for mediocre. The ones I consider professionals stand out. If you don't want to be a stand out agent, then don't do it. You will never make the money you are looking for.
Find something that you are passionate about, learn all you can about it, and be the best at it!

@Joel Owens (didn't highlight so you can message him) is a commercial agent, ask him for his advice to your situation.

2 Reply
Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
13y
I'm 100% sure people often confuse real estate jobs (wholesaling, rehabbing, property management, brokering, developing, etc) with investing. Investing is putting your money into some vehicle that you expect to produce a return. Buying stocks, bonds, bank CDs and rental properties is investing. If you have a huge pot of money, like a mutual fund manager or Warren Buffet, investing can become a job. For most of us, though, investing is a pretty small time consumer. Doesn't take long to be "fully invested" and not have any more cash to pump into investments.

The goal for many people is to have enough money invested in whatever they (or their financial planners or brokers) think are good investments so you can live off the returns. That's retirement and is a goal for many folks.

I can fully understand not wanting to be a broker. That's a job, and a commissioned sales job at that. That's not my thing.

When you say "my passion for the most part in RE is commercial (specifically multifamily and self storage.)", if you mean you want to own some mini-storage and apartment buildings and live off the income, then your focus should be on earning the money you need to seed those investments. For most of us, that means a job. My day job has nothing to do with real estate at all. It pays the bills, though, and generates cash I can invest in real estate (among other things.) And its something that I'm good at and, for the most part, enjoy.

I'll ask you what you mean by your passion is for mini-storage and multifamily? You want to own them? Build them? Manage them? Something else? If your goal is to own enough of them to live off the cash, especially if you're paying others to actually run them, then you need to figure out a way to generate the cash to invest. If its something else, find a job doing that.
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Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
13y
I agree with Karen Margrave and Jon Holdman. Don't do something you hate, ESPECIALLY if it's a commission-only job. As much as I hate steady paycheck jobs, if you can find one you like better, do that and build your company, all the while having that W-2 income to hopefully let you qualify for mortgages. Even if you don't want to get into residential investments, it never hurts to have a steady paycheck and work history when applying for any kind of loans. Try to think of something way more interesting or bearable for your full-time job while you pursue the investing side (which is significantly different than working in related fields, as Jon says).

Super cool about self-storages... I'm pursuing some of those right now!
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Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
13y

To be truly earning $100K a year in passive income in this sort of properties, that person has a bare minimum of $500K invested. More likely its a million or two. Do you have a million bucks to invest in that building?

If not, the first step is to get that million bucks. There is no shortcut. Investing in anything is a return on investment game. With rentals, if you make 10% cash on cash, you're doing well. If you're really at the top of your game, you may do somewhat better. The idea that you can invest very little and make $100K a year is pure bull.

So, first step is to get a job that can make money. Step two, and this is the much harder step, is to spend less than you make. If you can make $100K and spend $50K you will be much better off than the guy who makes $200K and spends $250K. You do need to find something that will make you a good wage. If you're flipping burgers for $10 an hour, $21,000 a year if you're working full time, its a long, hard road to get to having a million bucks to invest in that property. 30 years at that wage only generates $600,000 total. And you'll need a roof and some chow during those 30 years. So, I don't know if being a broker is the job for you. But I do know that if you want to buy this sort of property, you must get a job that pays you enough to live on and at the same time accumulate the sort of capital you need to make these investments.

I actually do have an investment in a mini-storage. Me and about 20 others. Between all of us we have about a million bucks sunk into this deal. Guess how much it returns? Zippo. Hasn't in the last six years we've owned it. At this point, we will do good to get out of it sometime in the next few years and get half or less of our million bucks back. That's the downside to this business.
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Michael Wagner
Specialist · Victor, NY · Member since 2013 · 823 posts · 844 votes
13y
Jon Holdman, I'm far from guru when it comes to storage but I do have some experience in turning around struggling facilities. Feel free to PM me if you'd like. Would be happy to provide some humble insight into how you might improve the operations at your facility to increase return/minimize loss.

Nick K., It sounds like you've gotten a lot of good advise on this thread. My two cents would be to not "chase the dollar". You've got to tie your efforts to a greater "why".....Why do you want 100K passively? Truth is everyone wants 100K in passive/residual income but few get there. The ones that get there have a BIG WHY motivating them. Is it so your kids (assuming you have some either now or in the future) can have a stay at home Mom. Or is it bc you want to be the rarified "stay at home couple" where neither of you work a regular JOB? Perhaps its to be able to support the parents who raised you for your first 18 years during their final 18 years? These might sound like cliche ideas but in my experience, answering the "WHY" is the single most important thing you can do.

ANSWER IT!

Good points have been made in this thread about the stark differences between a "job" and "investing". They are very different and become complex when you try to find the balance between the two. If I were you I would look for opportunities that allow you to do both (that's how I left my 75K per yr job behind once and for all).....Storage is a great way to do just that (in my humble opinion-and it can be done in many other forms of REI). Here's how it could play out:

1) Find a facility within 90 miles of your house (contact the owners of ALL of them)
2) Identify the ones that would consider selling
3) Execute a Master Lease with an option to buy. For example lets say the facility is 75% full and worth 300K. The owners want to retire but bc theyve owned storage for a long time the do pretty well and dont really need all the money right now. You can offer them a "option payment" of X-dollars plus X dollars per month for 36 months. Then you take over operations, rent the facility up to 90% making payments to them PLUS covering operating expenses which lets them continue to earn passive income. Everything left over is your JOB income for now and the increased equity in the property is your first return on "invested" time and money.
4) When the facility can support it, delegate the day to day operations to a manger whom you pay a fair $10 salary so that you can still have Passive (better called "Residual") income each month and a lot more free time to rinse and repeat.

Admittedly it is not nearly as easy as it sounds but entirely doable. And while you search for the first deal, get a JOB that will at least cover your living expenses in the interim.

Lastly, Heed Jon's advice about SPENDING MORE THAN YOU MAKE. We've all heard it but few do it. We are all conditioned to see the guy with a Mercedes and immediately think that he is Rich. The truth is, he may be rich but all we really know about him is that he SPENDS a lot of money on cars. If you want to succeed in business/investing you have to abandon the need to Keep up with the Joneses and learn to DELAY GRATIFICATION!

Hope some of that is helpful!
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Karen MargraveBusiness Member
Moderator
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
13y
Nick K. What is your experience? What are you qualified to do right now, to earn a living? The facts are, whenever we work a job, we are doing it for the money! Hopefully we can do something we enjoy, but sometimes, we just have to suck it up and do what we need to do in order to get to where we are going.

I look at Donald Bren and think WOW, how cool that would be to be him. I don't let the fact that Donald Bren is the biggest developer in America influence what I do everyday, anymore than you should be thinking "why should I sell commercial real estate when the person buying the property is making so much money?" It makes no sense, one thing has NOTHING at all to do with the other.

What you should be thinking is this broker is going to give me, an inexperienced agent, with no proven track record an opportunity to learn this business. I'll learn how to write contracts, open and follow escrows, learn about the chain of title, learn about financing, get to really know and understand the values of real estate in the local market, and pick the brains of successful agents. That's a pretty solid foundation on which to build. Plus... if you learn all those things, you can earn more in commissions than you probably can with any other type of entry level job. (though maybe not, you may be the next Mark Zuckerberg, or have won the lottery, I don't know your background)

The point is, you have to look at where YOU are going, and plot a strategy on how to get there. Real estate investors aren't born, they usually get into the business through some other route, and it takes a lot of work and dedication to be successful in it.
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Kurt K.
Investor · in, MI · Member since 2013 · 226 posts · 102 votes
13y
The average over night success is 10+ years in the making. It sounds like essentially you have a lack of funding problem. If you can't fund your desired investments with the money you have now, you either have to do something else to create that money or find capital partners to go in with you (people that will give you the money for part of the profit). Otherwise, I don't know of any other way. I think many of us at BP have "day jobs" and we're building our real estate business on the side until it can stand on it's own.
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Mark Podolsky
Investor · Scottsdale, AZ · Member since 2008 · 281 posts · 113 votes
13y
My advice... Don't follow your passion. Get really good at something first. Whether it be commercial real estate sales, or something else that has potential to be lucrative. Everyone else had excellent advice, but to even think about playing in real estate, you need to have capital or access to capital. If you are the "best" at whatever it is you choose to do, the money will follow.

I know it seems counterintuitive, but we don't like anything we aren't already good at. This is why "follow your passion" is such bad advice. Watch the documentary, Jiro Dreams of Sushi. He's 86 years old now and is the best in the world at taking sticky rice, and smashing together raw fish. Seems simple? But people pay a minimum of $350 for one of his meals! He's the best in the world at it and he hated it at first! Now he loves it and loathes holidays because he has to take off of work. This is an extreme example, but my point is, acquire the skills to become invaluable and then watch your passion for it grow as your skills, confidence and respect from your colleagues grows.

Then and only then, once you are so good at what you do, that people are lined up around the block to work with you, will you be able to start investing for passive income. At that point, it's just details. I started my own investing business in land 12 years ago only after I saved enough money from my investment banking job. I hated that job, but it was lucrative, and I was really great at it. I don't regret one day of working those 60-80 hour weeks to get really good at something so I could then control my own destiny.

Watch the documentary so you are clear on what it really takes to become great. I hope this helps and best of luck.

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Kurt K.
Investor · in, MI · Member since 2013 · 226 posts · 102 votes
13y
Mark Podolsky the examples aren't entirely congruent. The sushi example, your advice is essentially find a niche, become the best at it and watch your passion for it grow. If this is the case, why even transfer to real estate at all? Why not just grow in whatever business you have developed that you are proficient in? (which may be your advice to Nick?)

Your personal example was more pertinent, where you did a job that you hated for good money, to do what you love. Unfortunately for Nick, most "day jobs" don't pay near as much as an investment banker, along with the education required. You were able to stay sane due to the fact that you weren't going to have to grind it out for long. For the average person to "grind it out" to try to get to a point to do what you love isn't good advice in my opinion. Your quality of life will be much better if you can be happy with yourself when you go to bed a night and get up in the morning. If the thought of work makes you miserable, you're aren't in the right job, career, etc. Life is too short to compromise time on something you hate. There will be enough "bad days" doing something you love already.

So if your passion is real estate investing, but it just isn't economically feasible at the moment, do something that you still enjoy doing. Your health and relationships will stay in much better standing that way.

As a caution... your "passion" may be deceiving. Meaning that whatever makes you think you're passionate about something you've never tried, may not turn out to be so. If you "grind it out" for the purpose of real estate only to find you really don't like all of the troubles that do come along with the business... you've really wasted a lot of time and effort. (sort of a "grass is always greener" warning)

I typed this fast, without looking it over, so I hope it is coherent!
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
13y
I am wired differently than many. I enjoy being a commercial broker and like the sales side of it. I choose to not focus on property management as I can't stand it and it's a very low per hour return and sucks away all of your time.

Being commissioned on sales always keeps you at the top of your craft to earn the business. I enjoy learning everyday so it is natural for me. Commission is a steady income you just have to build it up as you are running a business. The difference with being an agent is you work for that brokerage and they are taking a cut to train you and help you get traction.

Nobody starts out on top and you have to earn your stripes in any field. Once you start closing deals you will build up reserves. Even though you can have years and years and years of reserves built up you always need to be closing deals as costs continually rise. The goal is to have income and investments outpace the costs of inflation so you keep getting ahead.

Lessons learned from early investing is I would rather buy no property than get stuck with a bad investment that takes time to get out of.

Nick you have to answer what kind of job could you get now?? Sales is one of the highest paying fields in the world. If your cost of living is 2,000 a month and you have a job paying 30,000 a year it will take you forever to get ahead.

If you could set up mailers spending 1,000 a month and close your first sale in 6 months the check might be 50,000 and with broker split 25,000 to you. A 6,000 investment to make 19,000 is pretty good plus the cumulative mailers will start snowballing and bring you in more business. I don't want a regular job because it limits my creativity and my income I can make. If I choose I can make 100,000 a year in commission or 1 million. It's my choice as to how much I want to work and how much I want to take off. Commercial real estate is similar to an investor as you are constantly analyzing numbers and looking at deals. At least with me being an investor as well that is part of the services I offer to my clients.

One main difference in commercial is the number of investors that use brokers versus the residential side where many would attempt to do on their own. Someone with only 40,000 cash might look at doing everything on their own to build up money. High net worth individuals on the other hand value TIME. How much do they have to work or get involved for the anticipated return??

If someone makes hundreds of thousands a year or more in income or has many businesses to run etc. they are looking for a professional to help guide them in making commercial investments. The time is the most important thing for people with high net worths and not squeezing out a few extra percent doing it themselves for a massive headache. At least from every client I have this seems to be a common theme.
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Mark Podolsky
Investor · Scottsdale, AZ · Member since 2008 · 281 posts · 113 votes
13y
Kurt K. I want to clarify my advice to Nick K.. The reason Nick K. should eventually do Real Estate is for the passive income not necessarily because it's his passion. He needs to make money first, save that money to invest in real estate and then build his portfolio for retirement and passive income.

If I asked most people what their true "passion" was in life, most people couldn't give me an answer. For example, my oldest son loves basketball, but not before he became more skilled at it. When he first started learning the fundamentals he was the worst player on his team. After much coaching and hard work, he's now, 4 years later the captain of his team. He's hitting game winning shots and bursting with confidence and passion to get better. Will he make the NBA? No.

However, that's how you develop a passion is by developing a marketable skill, becoming great at it, and then watch your passion for that marketable skill grow. Hence, watch the Documentary Jiro Dreams of Sushi. I'm sure Jiro has other investments outside of his Sushi restaurant considering all the money he's making from being the best in the world.

Anyways, once Nick K. is great at his marketable skill, then and only then, should he think about leveraging that skill into other less labor intensive pursuits like real estate which can be done on the side.

I hope that clarifies my advice.
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Peter M.
Rental Property Investor · DFW, TX · Member since 2013 · 953 posts · 910 votes
13y
I agree with Karen Margrave in the idea that working with that broker will give you the connections and know how to do these large deals you want to be doing eventually. Why don't you do that as your day job and get a part time job at night to pay the bills? It won't be fun working so many hours but once you get going making commissions on deals, you can stop doing the part time gig. Bartend, valet cars, do something-its not gunna pay much and won't be easy but who said making millions was easy?

As for your first property, look into FHA financing for a 3 or 4 plex you can live in for free and rent the other units. That's one less expense you have to worry about and it builds equity and gives you experience dealing with tenants.

You will have to make sacrifices if you truly are passionate about it but it will be worth it. Good luck
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Kurt K.
Investor · in, MI · Member since 2013 · 226 posts · 102 votes
13y
Mark Podolsky that clears it up! Thanks, I think I misunderstood your first post.
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Morris Lucas
Rental Property Investor · Atlanta, GA · Member since 2012 · 256 posts · 64 votes
13y
I would be cautious about thinking Commercial is your "passion", especially if you have never even done a commercial deal yet. Suppose you wind up hating it once you do get enough money to hold a property, and find out you hate dealing with extensive complicated contracts, off the wall zoning permits, multiple tenants, taxes, etc?? I am doing online cars now with a partner because I thought it was a great business and i absolutely despise this business! 15 grand later, i found this out...

You are looking at the job like "man, work for free and then take 3 years to just make commission when i could be getting 100k passive".....
However that guy buying the property may have taken 10 years to get to the point where he has enough knowledge, savvy and capital to even close on such a property...the commission job could get you there even faster...or not, but don't be scared just by the time and lack of income initially....
i would not even look at that opportunity as a "job" but almost like FREE SCHOOL on how to generate hundreds of thousands to millions selling real estate and building knowledge of contracts, deals, market analysis, yada yada. Just think, a doctor may spend thousands in school loans and 10+ years of training to get to a doctor's salary...all making NO MONEY...(i think)
3 years to 100k+ sounds like a sweet deal considering...but even if you are really into investing....it will still take loads of time AND YOUR MONEY to learn and develop it
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Mark Brian
Involved In Real Estate · Anderson, SC · Member since 2008 · 350 posts · 70 votes
13y
Originally posted by Karen Margrave:

Find something that you are passionate about, learn all you can about it, and be the best at it!

Very very true.

In real estate there can be niches for agents. Some agents work only residential, some commercial, some are buyers agents, some only list, some do REOs, etc etc.

Find what works for you that you are passionate about. I wish you much luck, success and happiness with whatever you decide is best for you.
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