Aspiring CRE agent and broker seeking advice

[Umair Khan]

First off, Happy New Years!! I'm interested in a career in commercial real estate long term. I'm seeking advice on what resources to utilize and educate myself with while I wait to take the licensing test. I know it's a different ball game than residential but I'm 20 years old and hungry for success so I can afford to take risks. CRE seems long term and not cheap to "dabble into". I already know of some multifamily buyers and hotel buyers. I'm looking to expand my network, grow, educate myself and take massive action this year. Appreciate the advice in advance!!!

[Joel Owens]

Umair,

Let me give you some real world perspective. Unlike residential there are not (let's make a deal brokerages to hang your license with).

Commercial is complex and dollar amounts at stake are high. Firms for new agents the split is very low.

Think if 100k commission half goes to brokerage then 3 people on the team the remaining 50k the senior person might get 25k, middle person 16k, junior 9k.

Now that is before your business cost and taxes. A 100k commission deal from listing it, to getting offers, to accepting an LOI, to moving to purchase and sale, to closing the property and getting paid might be 6 months depending on various factors. Could be shorter or could be longer.

Now split might be better if you are selling in a more weak suburban to rural area where one brokerages does residential, land, and commercial because it is more small property hometown type business. You go strong suburban to urban core and you have more specialized firms dealing with particular asset classes only. Instead of 1 million properties you now may be working on 5,10,20 million or higher dollar properties and buyers and sellers want specialists and not generalists to help them buy and sell because so much is at stake.

You need to look at how much money you can live on today and survive and how many deals you would need a year for cost of living in your area.

If you put in your time eventually you could move up into higher positions at companies with better splits or start your own company after so many years and getting qualified as a principal broker.

I have been doing this about 17 years in the business. It's my company so I keep it all. I can do 10 deals a year at 100k each and make 1 million. Those brokers and agents working for someone might have to do 4 to 10 deals to my one based on their splits so they have to run really hard on those hamster wheels and do volume with transactions to make a good amount of money.

I have friends that have large teams and they make close to what I do each year but our approach is way, way different. I like working with my clients and my investments owning my company and keeping life simple. They have to do volume, have constant meetings with staff and agents, etc. to generate the same income.

It's all really about what you want in life and where you want to go. At 20 years old you might not think of time as much. When you get into 40's, 50's in age or higher you tend to think about time left and how to spend it versus more money. Once you get so much money time becomes more valuable.

Good luck. It's hard for new agents because they are desperate for a sale and their split is so low. Many will tell a buyer almost anything to purchase a property. As the years go by the agent or broker often has great wealth so they do not have pressure of selling people on marginal to trash properties. Instead being financially secure they can wait to find the right property for their clients in the time the client has to buy. Sometimes a 1031 buyer you have to find the best property you can in the time and price point they have and can't wait.