Sometimes, the direct approach is not necessarily the best approach.
Sometimes, the indirect path to your goal can be the better (and maybe even faster) path to it.
The truth is, no matter where you are in life, or what career you’re currently in, it’s never too late to get started in commercial real estate.
There are many avenues that you can travel in the vast city of commercial real estate. You don’t have to be an investor to break in, nor do you need a background in the industry.
Lawyers, accountants, doctors, athletes, plumbers, and people from many other walks of life have pivoted into CRE.
I’ll give you one warning: commercial real estate has a high barrier of entry compared to residential real estate — there are far fewer commercial properties out there.
Fewer commercial properties = fewer opportunities. It’s simply the law of supply and demand.
But, since there are fewer commercial properties, rental rates and prices of commercial real estate tend to be higher; this translates into higher-margin opportunities, whether you’re an investor or you have a career in commercial real estate.
With that in mind, I wanted to make a quick list of possible entry points for those of you out there looking to break into this game.
This list is certainly not complete, but it is comprised of the most common careers in the commercial real estate field. Let’s dive in…
This might be the most popular of the choices in this list.
To become a commercial real estate broker, you need to go get your license, and then join a firm!
The brokerage path is a great way to learn the business from the ground up: from sourcing tenants to structuring deals. As a broker, you’ll also become very familiar with your particular market and the pricing that occurs within it.
This job is typically better oriented toward very outgoing people, people who are not afraid to network, cold call, and meet with others.
How about the money? It’s usually a commissions based gig, with between 3% and 6% commissions on sales, and some kind of pre-negotiated split with the firm you’re licensed with.
And as far as the firm you work for goes, you’ve got many choices. It could be an independent shop, or a larger firm, or you could work internally for a company. Each has its advantages and drawbacks, but it’s really up to you and your personality, and how you like to work.
Lastly, there are 3 basic types of commercial real estate brokers: Sales, Leasing, and Investments.
Sales brokers work with owners looking to buy and sell their property, while leasing representation brokers negotiate leases on behalf of the landlord or tenant. As I’m sure you guessed, investment brokers help investors place capital in commercial properties.
Commercial brokerage is one of the more popular fields in commercial real estate for a reason: you have a lot of freedom.
Brokers typically determine how much they are paid and how hard they work based on how many listings they acquire or how many tenants they chose to represent at a given time.
A commercial real estate appraiser assigns values to commercial properties.
To enter into this job, you’ll need to learn how to value properties, which if you have no experience, will mean on the job training.
Value is determined on commercial properties based on sales comparisons of similar properties, the replacement cost, and the income or potential income that a property produces.
A great commercial real estate appraiser will expertly research, compare, and contrast different real estate opportunities, and learn how banks and investors look at deals.
Like asset management, being a commercial appraiser requires a keen sense of the real estate market.
An appraiser must also be able to analyze market trends as well as understand improvements that cause commercial properties to appreciate.
You may need to acquire a license, and you will certainly need training (sometimes certification, based on your location), but appraisal can also be a very good salaried way to learn the commercial real estate business.
Yes — you can actually wholesale commercial properties, but the process and details are a bit different.
This is not an extremely popular career in commercial real estate, but it’s definitely an interesting possibility. Frankly, I don’t know why more don’t do it, especially in the beginning.
The wholesaler works how to find deals that are “off-market,” and pitch them to other investors.
Essentially, you’re the middleman here, and it’s excellent training for finding your own deals in the future.
It’s also a great (and low/no overhead) way to grab some big pops in cash, as some of the assignment fees related to the deal can reach the six-figure range, if you perform them correctly.
All of this, and you don’t even need a real estate license or “formal” training in order to put up your wholesaling shingle.
What’s not to like?
The biggest paydays in commercial real estate are found on the development side.
That said, commercial real estate development is also the riskiest option of everything on this list, but the upside is you get to completely determine the future of a site, which means control and potentially legacy.
A developer builds property on vacant land or demolishes property for new construction; the margins for developers are high because construction costs of commercial real estate are generally cheaper than investing in an existing property.
Don’t start researching Lamborghini dealerships too soon, commercial real estate development is extremely risky! It takes a ton of expertise to buy land at the right price and factor in construction costs, building permits, architecture fees, etc., and still bring home a margin for yourself.
But, if you have the expertise, creativity, and know your market well, commercial development can be one of the most profitable and dynamic roads to travel.
You’ll likely need a lot of cash (or investment partners) to get started as a developer, since the core principle behind this career is the acquisition of properties, then building them yourself.
And there are really two separate paths within development, you can work as a third-party fee developer for other developers, or you can develop your own projects, with fees ranging in size based on the size and complexity of each deal.
A consultancy can also be a very profitable and high-profile career in commercial real estate. There are a number of options here (Engineer, Architect, Environmental, Surveyor), but let me just focus on two, to give you the idea.
The engineer gives a developer a complete picture of their new space, for better or worse. They review inspections, and dig into and come to a complete understanding of the building and site. An incredibly important part of the commercial real estate team, Engineers can be the linchpin in deciding whether or not to move forward with a deal.
Architect / Space Planner
In a new build or intensive remodel, the architect is usually considered the overall “boss” of the construction process. They design the building, but not only for aesthetic beauty and usable function, their plans are responsible for the ultimate integrity and safety of the build.
There are many other options to choose from on the consultancy side, but know that — like an architect — many of them require intensive training or schooling, as well as specific certifications.
If you’re willing to become an expert at that level, commercial real estate consultants can do very well financially in this business!
This career track might offer the most for people, in terms of different jobs and opportunities.
Unless you come with previous experience, it will take some time to reach certain levels on the lender side of the coin, but it can be very rewarding and very interesting.
If the idea of being a “banker” appeals to you, I’d definitely recommend you look into the lending track of careers.
This can include jobs in traditional banks, but also can include debt funds and hard money organizations. The apprentice lender will want to spend a lot of time researching how banks look at lending and underwriting.
The banker/lending partner touches a deal many times throughout the purchase process, and ultimately are the ones that will go to bat for the developer with the loan committee.
Talk about power!
Many budding commercial real estate moguls don’t have the capital they need to do the deals they are looking at.
They need money, and one of the best ways to get that money is from third-party investors.
Being a commercial real estate investor can take on many forms, from simply being the friend or family of the person running the deal, to being part of a commercial real estate syndication, to being part of a private equity fund.
If this interests you, I recommend you invest in other people’s projects first, in order to more safely see and see how it’s done, before diving in on your own.
Becoming a commercial real estate investor is a great way to make truly passive income, and take advantage of incredible tax benefits.
And, you can get started with (sometimes) as little as $25K to $50K, depending on the terms the deal sponsor has written.
If you’d like to dip your toe into the world of commercial real estate investing, without all the work, give us a call, we’d love to talk with you about your goals.
You likely already know this, but becoming a commercial real estate attorney is more difficult than most of the careers on this list, since you’ll need to go to, you know, law school.
That said, it’s a great way to learn how to structure deals and even build a creative career on the legal side of the industry.
The legal aspect is obviously incredibly important to every aspect of deals and the commercial real estate industry as a whole.
Not only do commercial real estate attorneys review and negotiate purchase and sale agreements on your behalf, they also check to make sure that the property doesn’t have any zoning restrictions, land-use issues, environmental issues, and they can also help deal sponsors negotiate their loan agreements.
I know many successful real estate investors that started off as attorneys, got to know developers very well, and started investing with them. And, due to the nature of their work, they can often find value in opportunities in other ways (back to that creative opportunity).
So, it’ll take a bit to get there, but this can be an extremely rewarding career in commercial real estate.
9. General Contractor
It’s inevitable… just about every property in every deal is going to need some sort of work done, in some capacity.
This career is perfect for the person who is an experienced builder, with a great network of subcontractors at the ready. The general contractor needs to be able to run major projects (project management) and learn / know how to build everything from rental properties from the ground up, to the finest of renovations.
A general contractor should also be able to help the deal sponsor navigate the commercial real estate labyrinth of permitting, building and/or renovation, timelines, subcontractors, and more.
If there are questions about anything from flooring to that old well in the back of the property, the general contractor should be able to provide an answer, or find one.
This is one job that never gets boring or routine!
10. Investor Relations / Capital Raising
This job is something like that of a quarterback.
Just about every commercial real estate deal requires the acquisition of capital, and unless the principle has found an infinite source of money somewhere (call me!), he or she will need to raise capital from investors.
And this where the investor relations expert comes in. To stay with the metaphor, they will quarterback the finding of that capital, and help the principle through the sometimes confusing maze of lending and investors.
How does one become great at investor relations and/or raising capital?
Simply put, you’ll need to know how to find money, structure deals, and maintain all of the relationships within the search for capital. If you can do those three things, you’re likely to have a great career ahead of you.
11. Property Management
An amazing property manager makes all the difference to commercial real estate investors. I believe this so strongly that I highly recommend investors keep a property management fee in their underwriting, regardless of whether or not they intend to hire a management company.
Hell, I’m so bullish on property management that I started my own property management company!
OK, back to the point…
A good property manager needs to learn how to operate commercial real estate deals, deal with tenants, deal with subcontractors, and basically deal with the day-to-day ins and outs of, well, managing a property.
Property managers will be able to walk through and assist investors during their due diligence just like a general contractor would. They can help, along with the broker, point out the pros and cons for tenants and any issues that may arise during the acquisition of the property.
Property managers are some of the busiest people in the commercial real estate world.
They take on the responsibility of ensuring that tenants do not have issues with their space, and if they do, they are the tenants’ first call to get the problem rectified.
As a property manager, you will deal with a multitude of businesses, personalities, and problems on a daily basis.
You should expect to deal with contractors, painters, cleaning crews, and other businesses that are needed for tenants to comfortably operate out their business in the property.
If you enjoy problem-solving and are proactive, this is the career for you!
12. Asset Management
Simply put, the asset manager is the manager of the property manager.
These professionals make all of the high-level decisions that will determine the future of any given asset (as well as, hopefully, its value).
An asset manager handles the day to day operations of a property.
They are tasked with maximizing the return on investment by implementing strategies to reduce costs and increase the revenue of a property or portfolio.
They are responsible for renegotiating loan terms, determining the tenant / leasing strategy along with the property manager, and confirming redevelopment plans, among many other things.
Managing the asset means that they oversee the property managers, renovations, leasing, sale, and repositioning of a property, if necessary.
If you’re looking for a role that places you in the captain’s chair, acting as the owner and being a “manager of managers”, then asset management is for you.
However, you must also be skilled in analyzing data, understanding your market(s), and knowledgeable of trends that influence these markets.
13. Analyst / Underwriter
A commercial real estate analyst (also known as the underwriter) is the person who analyzes and reviews the efficacy of a given deal.
It’s a rite of passage for almost every career in commercial real estate to become an analyst at some point.
This is another powerful position within the industry, and one of the most common jobs used to “get a foot in the door” to another career in commercial real estate.
As you might have guessed, an analyst is charged with researching important real estate data, which could be:
- Researching possible acquisitions and dispositions
- Analyzing whether a company needs to reposition, sell, or lease
- Any other research that would be needed for a company to make real estate decisions
Though the work can be tedious, you’ll learn a lot about commercial real estate due to the amount of research you have to do.
This career is best suited for individuals who want to work remotely or with minimal interaction with others.
What Kind Of Commercial Real Estate Path Are You Looking For?
As you can see, there are many paths to your ultimate goals in this business.
Commercial real estate is one of the most exciting career opportunities in any market, for many reasons, not the least of which being the pure diversity of possibilities.
I hope you found this article informative and inspiring. If you’re looking to break into CRE, you’ve got a lot of good and rewarding days to look forward to.
And if you’re looking into the investing side of the business, give us a ring over at Hamilton, we’d love to discuss what you’re working on, and how we might be able to partner with you!