Happy Holidays everyone!
Could I ask the commercial pro’s here for your opinions and advice on something? I have my real estate license in California but my long term plans are to invest in commercial real estate (buildings,multi-family) However, I do not feel I am in a position (yet) to buy commercial property but would like to work at a company where I could gain knowledge on how to invest in commercial real estate for the future. So the idea hit me that I should work in the commercial real estate field until I can do investing full time.
The question, however, is would it be more beneficial to work on the sales side or the financing side? A big office or a small shop?
My initial thoughts are that a commercial mortgage broker with many relationships would give me the most knowledge since I ultimately want to buy commercial properties anywhere in the world where it makes sense and not be restricted to just my area (San Francisco) whereas if I worked for a bank or a sales office, I would only learn knowledge specific to my area.
Any feedback greatly appreciated!
Thanks in advance!
Your question has been asked many times on these types of forums in slightly different ways. I actually became a commercial appraiser as opposed to a real estate or mortgage broker. Knowing how to value real estate is half the battle because you must know if a property is overpriced or a good deal. I am able to value an office building in my own backyard or a car wash in a totally different county and market. These are the skills you learn as an appraiser. To appraise, you have to find a mentor and work 2 1/2 years before you can become licensed. There are experience and education requirements, so it is a big commitment.
Of course, the other two choices are very big commitments as well. Your success is far from guaranteed as a broker. You have to be careful not to constantly have the investor thoughts going through your head, because they can be distracting and keep you from being successful as a broker. Get as financially stable as possible before you start trying to buy properties. I would forget about investing completely until you have a good 3 - 5 years of experience. There are good deals today and there will be good deals later. You will have to focus all of your energies on your work to make it. I would personally chose to be a real estate broker if you want to invest. Just find a good mortage broker and that end is covered.
Just know that many investors have been successful without working as a broker. You can learn a great deal from other investors. Investors have to think outside the box and will have creative solutions that brokers won’t have.
Thank you very much for your answer Artyman. I really appreciate it.
I did see a few other posts with similar questions but couldn’t find any comparing sales to lending so I figured I’d post it. However, thank you again for reminding me that one does not need to be a broker in order to be a good investor. Do you have any recommendations on how to hook up with a commercial investor who can mentor? What can I as a newbie offer to an investor to bring value to them so that they would want to take me onboard. I just interviewed with a sales/lending commercial office today but don’t want to start working with them if I can learn how to become a good investor using another direct route. I’ll look into the appraising side of things as well.
Thanks again!
I would probably recommend to most anybody to get a job in the commercial real estate industry to learn the ropes and establish contacts. There is so much to learn. Additionally, think of all the data, experience, and knowledge you’ll have access to if you are working for a brokerage company. You will get all the help you need from those you work with. How helpful do you think they will they be if you just call them out of the blue looking for all kinds of free advice? There are definitely no shortcuts on the commercial side.
I would say get a job as a broker or as an appraiser. After a few years start thinking about investing. If you’re interested in appraising I highly recommend taking courses from the Appraisal Institute, and also visit www.appraisersforum.com
Why not just buy a small property, something that you can manage yourself that won’t take up much time and provide yourself with some on the job training. Now is a good time to be buying, if you can get the mortgage. You’re cheating yourself by waiting a few years while you learn. Just an idea, some people learn differently, but I don’t think anyone will argue that on the job training is the best.
I think you should look at how much you currently know about commercial real estate and what kind of knowledge and experience you have access to (who you can get advice from and how much advice will be given). Just know that simple mistakes can set you back more than a few years. If you’re totally clueless I don’t recommend buying anything commercial.
Thanks for the feedback Artyman/JB!
Artyman, I appreciate the comments on experience. I do agree with you that there are bound to be tidbits of info here and there that are readily available to one who works in an industry.
JB - I also agree with you too that I don’t necessarily want to wait a few years either and on the job training is always helpful. If a good deal comes around, I wanna jump on it. However, I sort of want to get in on a good commercial deal right away as opposed to say, a small 4 plex, right now.
I remember the first time I read Carlton Sheet’s info about a decade ago, getting really excited about seller financing and all these creative ideas. Only problem was, I live in the San Francisco Bay Area and the market was just about to heat up. Long story short, I couldn’t find anybody and never, ever met anybody (in any of the residential offices I worked in) about to pull off one of those deals. So now, after doing a lot of research, and reading these forums, I feel that a commercial investmet, in the right market (job growth, income, population trends) is the best investment. And i want to pour all my energy into learning that as opposed to buying a small duplex or 4 plex.
Keep in mind that when I talk about commercial real estate I’m talking about office, retail, industrial, and multi purpose properties. Not apartments larger than five units. People only refer to large apartment buildings as ‘commercial’ because you get commercial loans to finance them. Apartments are very different from other forms of actual commercial real estate where you have businesses as tenants. If you want a multi family empire then start small and just start buying till you can get the larger properties…
Read propertymanager’s daily blog too…really interesting. Gives you an idea of the effort it takes to manage tenants.