If you’ve weighed the pros and cons of working in and investing in residential vs. commercial real estate and have decided that commercial real estate is for you, there are a number of steps you can take to become successful.
A commercial real estate agent or investor is someone who deals mainly in commercial properties, such as office spaces, retail spaces or multifamily residential spaces, among others. Getting into commercial real estate isn’t always easy, but the steps on how to get into commercial real estate below will certainly help.
Get Your Real Estate License
“First and foremost, you have to get your real estate license,” said Mike Tingus, President and Managing Principal at Lee and Associates Commercial Real Estate Services.
The first step to becoming a real estate agent, whether commercial or residential, is to obtain your real estate license from the state in which you plan to practice. A real estate license allows you to represent buyers, sellers, lessors, and lessees in property transactions, and will also help you learn about real estate as a whole if you’re interested in getting into commercial real estate investing.
To get a real estate license, first you need to learn your state’s eligibility requirements. While there are some common requirements, like a background check, high school diploma, and minimum age, each state might have slightly different terms and conditions. Some states also have a reciprocal licensing agreement, which allows you to practice in other states as well.
Once you’ve learned the requirements, you can take the prelicensure class. Again, the classes vary depending on the state in terms of both hours and content. The New York real estate prelicensure class requires 75 hours of coursework, for instance, but other states might require as many as 180 hours. Classes usually cover real estate laws in the nation and state and cost between $150 to $500, depending on your location and whether you take an in-person or online course.
Once you’ve completed the course, you can take the state real estate exam, which includes between 75 to 150 multiple-choice questions. The exam has a pass rate of around 50-60%. If you pass, you’ll have your real estate license within a week or two.
Partner with a Broker
The next step is to partner with a broker who specializes in commercial real estate. This partnership will allow you to learn more about commercial real estate and the real estate cycle and help you gain the necessary experience.
Some brokers work in both commercial and residential real estate, while others specialize exclusively in commercial. New agents sometimes like to work with brokers who have experience in both because it guarantees more of a steady income if you’re also working with residential properties. Sourcing commercial deals takes time and is harder to do when you don’t have any real estate experience, so working with a broker who does both types of real estate will provide an opportunity to learn and build a client list.
However, in the scenario where you work on both residential and commercial deals, there’s also the risk that you’ll be stuck working with more residential properties and not get adequate exposure to commercial real estate. If that’s a concern of yours, then it might be best to find a broker who works exclusively in commercial real estate.
Some commercial real estate brokers also offer a one-year salaried training program for new agents, allowing you to focus entirely on commercial real estate and gain experience in that field. However, those programs can be competitive to get into. If you’re flexible in terms of money, a commercial real estate internship is another option.
That said, many people just starting out in commercial real estate may see a good chunk of time where they aren’t making much money.
“Most new hires will get between $0 to $1,000 a month for the first 12 months — maybe as high as $3,000 a month, while they’re learning the business,” said Tingus.
Network with Other Investors
To become successful in the commercial real estate market, it’s essential to network with other investors and professionals in the commercial real estate industry. These professionals could include attorneys, architects, developers, brokers, engineers and contractors.
“Business is all about relationships,” said Tingus. “If you try to make money without building relationships, you’re going to flame out quickly, so networking is critical.”
Tingus’s top networking tips, at the most basic level, include being a good person and getting involved in your community. This way, you can build genuine relationships that will help you down the line.
Tingus’s company has built relationships and partnerships with attorneys, accountants, construction companies, flooring companies, air conditioning companies and more. These relationships, said Tingus, are “the backbone of my success.”
Some commercial real estate firms also require their agents to join professional real estate associations for the purposes of networking and continuing education. If your agency does not require this, it’s still a good idea to seek out some of these associations on your own. Having a network of other investors and agents will no doubt open the door to more opportunities in the future.
Once you’ve gotten some footing in the commercial real estate market, you can also consider specializing. Specializing in one facet of commercial real estate will allow you to narrow your focus and become an expert in a specific area. You can build closer relationships with clients and build up your reputation in your specialized area.
Tingus actually recommends researching specific areas of commercial real estate right at the start of your career so that you have an idea of what actually interests you.
“In certain areas where you’ve got very low populations and suburban markets, you can generalize,” said Tingus. “But when you start your career, you need to specialize in one thing, and you need to become the best you can be at that.”
Some examples of commercial real estate specialties include office spaces, retail properties, industrial properties, or residential buildings.
If You Want to Get Into Commercial Real Estate, Make Sure to Do Your Research
Ultimately, for both agents and investors, networking and doing all the necessary research about your area of commercial real estate is the key to success. Take real estate classes and obtain your license, form relationships with others in your field and learn everything you can about the area of commercial real estate you’re most interested in.