Commercial V.S Residential

[Jonetta Tejada]

Hey Everyone,

I have more and more clients looking to convert to the commercial market from primarily focusing on single-family investments. As an investor agent myself, broadening my spectrum is essential. 

My questions are directed to the larger commercial deals.

What are some crucial systems you all have put in place to educate clients throughout the deal process in the commercial realm?

When sourcing commercial deals what are some major things that make are break the deal in the commercial realm?

Thank you for you expertise in advance!

[Jaysen Medhurst]

@Jonetta Tejada, I'm assuming you mean commercial multi-family and not office/retail/industrial RE.

In many ways they are completely different worlds with very little overlap. 

1. In CRE there is no MLS. Brokers shop deals first amongst favorite clients, then other brokers. An "on market" deal may never hit a data base of any kind. If you're not plugged in, a deal could come on market, be shopped around, and sold without you ever knowing about it.
2. Valuations are completely different. Comps don't really matter. It's all about NOI and Cap Rate.
3. You have to know your numbers. As an investor agent, you are probably on top of this part already. Most residential agents don't know CapEx from Cap Rate.
4. Financing is different. Lots of differences between residential and commercial mortgages, as you probably know. Once you're talking about very large properties there are agency lenders, bridge loans, mezzanine debt and a whole bunch of sophisticated financial instruments at play. 
5. Different set of relationships.