Hello BP members,
I'm 25 years old and I live in Charlotte, North Carolina. I currently make around $12/hr at a grocery store. My goal is to invest in commercial multifamily, but my main problem is I don't have much capital to invest. So, my dilemma is this: should I seek to raise capital, or should I seek to become a commercial real estate broker?
Let me know if you have any other questions, and I'll answer them to the best of my ability. Thanks.
I am a commercial broker. A good place to start would be to take some classes to get your real estate license. You might want to contact a commercial brokerage to see if they have any open positions that do not require a license, and that you are in the process of getting yours.
Thanks for the reply Ed. This is a good suggestion if I did want to go down the path of being a broker. But, do you think that's the path I should take to learn the business from the ground up? Or, should I cut away the stepping stones, and start trying to raise money for my first deal. If I went this route, I could acquire my first investment property sooner.
If you have no track record, no experience, and limited money working in a grocery store then how would you convince investors to give you capital?
Most commercial brokers/agent make under 100k a year. I do very,very well but I am a principal broker 14 years in the business. You have to work your way up. If you are just starting out likely you will be working on a 3 person team. Half usually goes to the brokerage. Then the rest is split 3 ways with the new agent learning getting the crumbs. Example 100k commission 50k to brokerage then 25k to senior broker, 17k to middle broker, 8k to junior agent etc.
Having said that it doesn't take much to beat 12 bucks an hour. You might not close anything for awhile and transactions take longer than residential.
Ben, first of all, congrats for having a job. Not only will you learn invaluable life and job skills but having a W2 also opens up important loan opportunities. I would recommend you prepare for making your first multifamily acquisition, by: 1) check your credit and improve your scores if necessary, and 2) start talking to banks to find out what sorts of lending products they offer. Some will lend against the property and not your own ability to pay. That's what you want. Avoid the large banks; they are a hassle to work with. Find your smaller, locally headquartered banks that love small businesses. And 3) save, save, save whatever you can from your income. Squirrel away enough for a downpayment on a smaller property. 4) Have you considered a house hack? Check out Bigger Pockets for information on that. But in brief, if you buy an 2, 3 or 4 unit multifamily and live in one unit at least initially, you can qualify for a FHA loan and only 3% down. That is a lot less money to save.
You don't need to be a commercial broker to do any of this, and in fact you may want the advice of such a broker.
You might also consider cheaper markets outside Charlotte like the Triad or Spartanburg. Multifamilies in the latter are going to better cash flow.
You have no money, little income, no track record and at age 25 probably a very small network of potential investors. The only thing you can offer is relentless hustle! Find someone at the top of their game and offer to work for FREE. Impress the hell out of them and the rewards will follow. As others have mentioned, get your RE license to prove your passion and work ethic. Spend ALL of your free time educating yourself, erase the social media apps from your phone and live on BP, podcasts etc. I have personally seen this type of hustle lead to enormous success.
Your main problem isn't just that you "don't have much capital to invest".
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