Wholesaling Commercial Real Estate?

20 Replies

Hi, I'm new and I was wondering  if  anyone could give me some advice. I am interested in becoming a wholesaler  and  had some questions:

1) what is the best course to wholesale commercial properties? I know the analysis process is different for commercial real estate, so I would love a program that takes this into account. Is Than's wholesale program good for commercial wholesaling?

2) How feasible is  it to do this part time?  I'm a college student

3). How do I protect myself legally to make sure I follow all the pegal guidelines? 

4)  What percent fee do I charge?

5) do i determine where  my local real estate market is in the cycle, and how do es te real estste cycle affect wholesalers?

Sorry, I hope I'm not being too redundant, I have read other threads but a lot of them were  old and outdated. I really appreciate any answers I get  here  :) 

bump

Hi Jessica,

Uncovering good deals take a lot of knowledge.  I have been in the business of buying and selling apartments and commercial properties for 19 years.  I have never completed a transaction using a wholesaler. 

Has anyone else here used one?

Somebody please correct me if I am wrong but a wholesaler is basically sniffing out the deals, right?  Isn't this the same thing that an agent does?  I guess you might put a great deal under contract first and then shop it around.

The special knowledge that you would need would be the knowledge that the investors and agents would need.  Learn how to evaluate properties and then work in the trenches for a while.

Also, wholesaling has a different definition in the commercial world.  A wholesaler brings money partners to syndicators.  They are specialists in raising large amounts of money.

Originally posted by Account Closed:

Hi, I'm new and I was wondering  if  anyone could give me some advice. I am interested in becoming a wholesaler  and  had some questions:

1) what is the best course to wholesale commercial properties? I know the analysis process is different for commercial real estate, so I would love a program that takes this into account. Is Than's wholesale program good for commercial wholesaling?

2) How feasible is  it to do this part time?  I'm a college student

3). How do I protect myself legally to make sure I follow all the pegal guidelines? 

4)  What percent fee do I charge?

5) do i determine where  my local real estate market is in the cycle, and how do es te real estste cycle affect wholesalers?

Sorry, I hope I'm not being too redundant, I have read other threads but a lot of them were  old and outdated. I really appreciate any answers I get  here  :) 

Generally newbies to the business start out with residential because its much less complex than commercial. However, if you are talking commercial as in a 6 unit apartment building  or 2 apartments over top of a store-front, that might be doable to wholesale as a noob. 

Here are some links to study and become familiar with: 

http://www.biggerpockets.com/renewsblog/2010/10/4/commercial-real-estate-vocabulary-101-%E2%80%93-commercial-deal-analysis/

http://www.biggerpockets.com/renewsblog/2013/04/09/how-to-buy-a-small-multifamily-property/

Kudos,

Mary

wow, thank you both for the responses ( sorry, I'm not sure how to tag you both yet lol)! I will probably get my agent license, although I might have to wait for a bit because I really  don't  hvave a lot of money right now :/  

Originally posted by @Steve Olafson :

Thank you so much for your response, how does the wholesaling. By bringing buyers work? I actually have  a large network of  affluent  people who have plenty of capital, but  how would I benefit  by bringing them to another syndicator? Tbh couldn't I just syndicate the deals myself? 

Originally posted by @Account Closed :

Thank you so much for your response, how does the wholesaling. By bringing buyers work? I actually have  a large network of  affluent  people who have plenty of capital, but  how would I benefit  by bringing them to another syndicator? Tbh couldn't I just syndicate the deals myself? 

 It is all just terminology.  I was confused by the title for a while.  The REIT's and large deal sponsors have quite the large machine in place.  The people that bring in the investors are simply called wholesalers as a title.  I only mentioned this because calling yourself a wholesaler in the commercial world will mean something different to some people.

You could syndicate the deals yourself.  The questions would become "why would I put my investment dollars into one of your deals when these other groups have a track record?".  Commercial investing may sound easy but many people lose money.  I have lost money on deals.  That is part of the education.

Oh okay, sorry for the confusion! Even though I  am interested in syndication in the future, I thought wholesaling would be a good place to start so I can build a track record :)

Hey Jessica,

To be completely honest with you I am not sure if you would want to start wholesaling commercial properties as @Mary B.  said it would be easier to start in residential. Especially since you are in college and you have a limited amount of time, Commercial deals tend to be more complicated and can take more than a year to close.  Personally I would start in residential and when you gain a little more experience you can make the jump. I hate to be discouraging to anyone because I know anything is possible, just want to be honest with you about commercial deals.  

Jessica,

I'm going to agree with the other posts here. While I think wholesaling commercial real estate can be done, it is much more complicated and risky than residential. I'm a commercial appraiser and I can tell you that no property is the same. In most markets, finding comparables is relatively difficult, even when you have access to all of the necessary data sources. Also, commercial deals are often much more expensive than residential real estate. As such, it will be difficult to find a cash buyer. Lastly, marketing the deal takes much longer. Residential is the way to go because it is much easier to determine ARV and likely marketing time. Just my two cents.

Originally posted by @Pierce Buchinger :

Jessica,

I'm going to agree with the other posts here. While I think wholesaling commercial real estate can be done, it is much more complicated and risky than residential. I'm a commercial appraiser and I can tell you that no property is the same. In most markets, finding comparables is relatively difficult, even when you have access to all of the necessary data sources. Also, commercial deals are often much more expensive than residential real estate. As such, it will be difficult to find a cash buyer. Lastly, marketing the deal takes much longer. Residential is the way to go because it is much easier to determine ARV and likely marketing time. Just my two cents.

Thanks for the reply. How long did it take you to become an appraiser, and how much did it cost to get your license? Would you say it provides decent income for someone just getting started in real estate?

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@Account Closed ,

Commercial real estate has a wide range, how much are we talking about here? 1m+ or 20m+ deals? With deal these size, find the decision makers and convince them to sell the building to you is challenging, not mention with a discount.

@Account Closed

I've been appraising around five years now. I first started as a residential appraiser and realized very quickly that commercial appraisal work is the key to success in this industry. Most financial institutions have started using AVMs in an attempt to automate the residential appraisal process. As a result, residential appraisers are slowly being phased out. Commercial appraisals are too complicated to be automated, which is why there will always be job security for commercial appraisers.

Each state has their own set of requirements for general certification, so you will need to check with your state to see what they are looking for. Most states require a minimum of 300 credit hours of industry-specific course work, at least 3,000 hours of work experience as an appraiser trainee, and a bachelor's degree. The thing you might have the most trouble with is getting a general appraiser to mentor you as a trainee. A lot of appraisers won't risk taking you on, as they feel they are just training their future competition. And given the way the industry works, it is nearly impossible to uphold a non-compete agreement.

Most appraisers I know operate on a fee-split basis where they get a percentage of the appraisal fee charged. Fee splits typically range from 30% to 60% depending on your level of experience and credentials. It's not unrealistic to make over six figures consistently.

While the earning potential is definitely a plus, a career as a commercial appraiser allows you the flexibility to set your own hours and spend time outside of the office conducting property inspections. Personally, I've found the biggest benefit to becoming a commercial appraiser is that it helped me to develop the skill-set necessary to properly analyze any and all deals. And after having worked in the industry for a number of years, I have built up a solid database of information. I now have a significant competitive advantage over other investors in my market as I have "inside" access to industry data including cap rates, lease rates, construction costs, etc, that would otherwise be confidential.

If you are seriously considering a career as a commercial appraiser, I would recommend you start taking courses on your own so you have a leg up on others interested in the field. A great place to start is the Appraisal Institute (www.appraisalinstitute.org). Also, if your school has a real estate program, look into it. Sometimes the college courses will count toward the state credit requirements.

Hope this helps to answer your questions. Just let me know if there is anything else you are curious about and I will do my best to help.

Originally posted by @Pierce Buchinger :

Jessica W.

I've been appraising around five years now. I first started as a residential appraiser and realized very quickly that commercial appraisal work is the key to success in this industry. Most financial institutions have started using AVMs in an attempt to automate the residential appraisal process. As a result, residential appraisers are slowly being phased out. Commercial appraisals are too complicated to be automated, which is why there will always be job security for commercial appraisers.

Each state has their own set of requirements for general certification, so you will need to check with your state to see what they are looking for. Most states require a minimum of 300 credit hours of industry-specific course work, at least 3,000 hours of work experience as an appraiser trainee, and a bachelor's degree. The thing you might have the most trouble with is getting a general appraiser to mentor you as a trainee. A lot of appraisers won't risk taking you on, as they feel they are just training their future competition. And given the way the industry works, it is nearly impossible to uphold a non-compete agreement.

Most appraisers I know operate on a fee-split basis where they get a percentage of the appraisal fee charged. Fee splits typically range from 30% to 60% depending on your level of experience and credentials. It's not unrealistic to make over six figures consistently.

While the earning potential is definitely a plus, a career as a commercial appraiser allows you the flexibility to set your own hours and spend time outside of the office conducting property inspections. Personally, I've found the biggest benefit to becoming a commercial appraiser is that it helped me to develop the skill-set necessary to properly analyze any and all deals. And after having worked in the industry for a number of years, I have built up a solid database of information. I now have a significant competitive advantage over other investors in my market as I have "inside" access to industry data including cap rates, lease rates, construction costs, etc, that would otherwise be confidential.

If you are seriously considering a career as a commercial appraiser, I would recommend you start taking courses on your own so you have a leg up on others interested in the field. A great place to start is the Appraisal Institute (www.appraisalinstitute.org). Also, if your school has a real estate program, look into it. Sometimes the college courses will count toward the state credit requirements.

Hope this helps to answer your questions. Just let me know if there is anything else you are curious about and I will do my best to help.

Wow, excellent information. This is so helpful, I had no idea it was possible to make a six-figure income as an appraiser. You've given me a great place to start! How  does one become a commercial appraiser, specifically?

@Account Closed

Glad I could help and you found the information useful.

In order to become an appraiser you need to follow the steps I outlined. Go to the Appraisal Institute website (www.appraisalinstitute.com) and start poking around. Register for their trainee package, which includes courses such as Basic Appraisal Principles, Basic Appraisal Procedures, and 15-Hour USPAP. Once you have a few courses under your belt, start calling on local appraisers in your market to gauge their interest about taking you on as a trainee. You can find these appraisers on the Appraisal Institute website. Look for appraisers who have the "MAI" designation, as they are the best in the business and will be able to provide you with the best guidance and training.

While there are many benefits to becoming an appraiser, there are also many struggles. There is a rather large learning curve at first, which can be difficult for a lot of people. Also, the credentialing process takes around 2-3 years before you will have the courses and experience necessary to get approved by your state. So, just be prepared to commit and prepare yourself for the long haul and you will do great.

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Hi There,

I have been wholesaling residential property for quite some time. My cash buyers list has really developed within this time. I have several cash buyers/investor wanting to spend millions to purchase commercial property. I am very skilled with marketing and finding the lead and I plan to work on this with a realtor. But can anyone refer me to the right place where I can get the correct contracts to purchase then assign the commercial Property over to my cash buyer. Once I get this document I will have an attorney look it over and make modifications.

Lawonna

I dont know about everyone else but the more I hear how hard commercial real estate would be the more I want to do it.  

I bring together buyers/buyer reps

with sellers/seller reps for properties not on public lists.

I focus mostly but not exclusively in the NYC Metro area both buy & sell

Near $1MM to $50MM, and selectively some larger commercial properties

in CA, GA, FL, CT and NY tri-state.

Mostly Multi-fam, Mixed use, land, some SingleFam and various commercial properties & hotels.

Let's discuss.

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