This is a question for commercial agents who came from the residential side that I am contemplating a lot and hope to get some insights. I have been an investor much longer than I have been a (residential) agent; my main reason to get licensed in the first place was to submerge myself more in the real estate market and gain additional insights and connections. I am pushing a good amount of business, but have noticed two things in the last months - my learning curve has started to flatten a lot and the connections I make are mostly with young investors. I absolutley enjoy mentoring, but I fall short on being mentored.
I have been speaking with the two biggest commercial brokerages in my metro area and of course they have an interesting story to tell; however I am somewhat sceptical if that is the right move for me.
How does lead generation work for commercial agents? Is it true that a lot of it is the old boy's club and about the connections you have made 20 years ago? How does one break into that? I don't mind a good challange and hard work, but with the lack of a plattform like MLS it seems there is a lot of insider business being done.
I come from a corporate background and like the idea of working in a commercial setting. Residential real estate sometimes brings out the worst in people and it's a lot of nights and weekends with anxious clients - often times managing the emotional state of my clients is a bigger job than the actual deal, which is quite simple.
Keller Williams Commercial does not exist in MKE and I thought about spear heading it, but it seems to be crazy to take on that task if I could just join one of the market leaders and learn from someone who knows how to do things.
This is all part of a much larger question - where am I going to take my professional career? I have been a little bit all over the place in the last years: aside of managing our own portfolio and working as an agent I have also taken on some high end rehab jobs as a GC and I am currently cutting my teeth on new construction. The big question I am trying to answer for me is what's next and how do I bring focus back to what I do?
I’ve recently made this transition. I’m not a huge fan of residential, I feel that there’s no loyalty and too many emotional buyers/sellers. Commercial real estate has sooooo many things you can specialize in but it takes forever to get paid.
Leads are a tough if your not partnered with a big commercial brokerage. I work with a company that primarily focuses on residential, in fact I'm the only commercial rep in the office. To generate leads I cold call, send letters, and advertising. I'm not sure about the old boys club thought, just be a person and go out and make relationships. There is an MLS for commercial, it's called CoStar. It's expensive, contractual and they own the market.
You and I struggle from the same problem, we are all over the place. I recently have found some success in identifying off market multi families and representing tenants. Both of which I have a great understanding of. It also helps fill the gaps while waiting for flips.
Somebody told me once that you can only do three things very well, four is too many. I try and follow that lately. I’m building our rental portfolio, working as a tenant rep and identifying off market multi family homes.
Hope this helps
"the connections I make are mostly with young investors"
and then later on
"Is it true that a lot of it is the old boy's club and about the connections you have made 20 years ago? How does one break into that? "
Maybe you could take a step back and look at the connections you've made and what appealed to you about those people when you did not yet know them. Essentially you're reversing the role now, you have to appeal to someone else, and I would say you come with the advantage of experience in different sections of realestate.
Without a commercial MLS is a challenge, but I'm not even a player in the game and have heard of mismanaged commercial properties from the management of the building and identified other properties in decent neighborhoods that look like they have tired owners. With your experience and existing relationships I have no doubt you could build a list of potential clients and listings without too much extra effort than phone calls.
I know you didn't want to hear from me, a young investor, however I have enjoyed success in other non real estate areas with no knowlege and a lot of naivete haha one foot in front of the other and no matter what you don't know, there usually is a simple obvious next step,even if it's small
Good luck Marcus
@Matt Honeyford thanks for sharing your perspective!
Without changing brokerage I would be in the same position as you - be the only commercial guy in my firm. Of course there are two sides to that - KW is very collaberative in culture, which makes me the go-to for any commercial leads. On the other hand I run into limitations with E&O insurance and I'd have to re-invent the wheel as I have no path to follow. Where do you get your education and guidance from?
Education would be the driving force for me to change; money and flexibility are great in residential; learning is the primary objective and I can't get that in my firm. As a second issue perhaps having more time to spend with my wife on evenings and weekends would be nice.
Do you ever feel you are up against a glass ceiling in commercial - meaning, do you have a shot at serious projects or is that left to the commercial firms?
It's a challenge, that's for sure. I have been feeling lately that perhaps I'd be better off with a large commercial brokerage. I say that because I've been learning everything thru books and websites. I've been hunting for deals without really knowing what I'm looking for and feel that there is so much more to commercial real estate than just leasing and listing space. Perhaps I'm wrong but my gut tells me that large commercial companies have people contacting them to lease and list space.
Hope that helps.
@Marcus Auerbach - I used to work at Berkshire Hathaway HomeServices in Princeton and one guy, Rocco D’Armiento was “the commercial specialist” and got almost all the leads (office rental/Land sale/Commercial multifamily/office) from every other agent in that office even though he sold houses too. He actually affiliated with two offices, one in NJ and one in PA and the managing brokers told other agents to contact him instead of doing these themselves. Some of the other satellite offices referred to him too. I don’t remember him having a big team, maybe 1 admin and 1-2 showing agents. Being the trusted resource allowed him to tap into the network of all the other agents without leaving and being one of several agents at the local commercial brokerages like Marcus and Millichap or CBRE. However he’s not likely to get the contract to sell a 200,000sf office building in the area. Just my two cents.
@Matt Honeyford I believe you are correct - from what I can see the big brokers in town have all only one phone number on all the signs and advertising to capture leads. I assume these leads get internally internally. I am spoiled from KW's interdependent business model, where we run our own biz under our own name and number. If we work hard for leads we don't have to share them with twiddle-your-thumbs agents in the office.
I would love to get a take from someone on the commercial side and tell me where they see the difference between a residential and commercial borkerage.
@Natalie Schanne nice to hear from a KW agent! What you describe is an interesting scanrio - it makes you the commercial fish in the residential pond. It's an interesting lead gen model too. And it would work within KW, under the KW commercial umbrella. The culture at KW is so much more collaberative and I am used to cooperating and helping - if I see how agents are backstabing each other in some firms its crazy! Anyway. I would not mind to not be the guy for the office tower, that is not what interests me. What I am after is the insights that commercial agents have. Some of the larger brokerages in town I have spoken with have in an house development firm, PM firms for appartments, facility management services, architects. So it is a very different environment and they are a full service provider to commercial customers. I am intrigued by that and all the things there are to learn - in the end to make me a better investor and help me continue to learn and grow. At least that's the idea. That was the intend when I became a residential agent and I am not sure if it worked; I have spent so much more time helping others and so much less working on my own portfolio. Don't get me wrong, I very much enjoy giving back and halping new guys to start out and do it so much better than I did without anyone to help me.
It depends on what you will put into it. There is more upside in commercial. I am from the Twin Cities and had little to no trouble breaking into commercial real estate because I was extremely passionate about it and spent a lot of time and money educating myself. I stopped taking on any residential business to maintain focus. Before I put any client money into a deal, I used my own as a learning experience. While still relatively new to RE in general, I am radically transparent with everyone that I meet about where I am at in my career which people are receptive towards.
I found a better mentor than I ever could have hoped for early on (who actually turned me onto the commercial world) and have seen on the investment side that residential can't really compete. We are able to consistently create 20% cash on cash returns through value add with giant deltas between acquisition price and market value. I was able to do this just by picking up the phone, being personable and following through with what I said I was going to do.
There is still plenty I don't know, but know that I will have lots of opportunity as a principal and as a brokerage to get that knowledge while helping others get to their goals. If you want it, it's there, you just need to act decisively.