Many people have asked me the same question, “how do I break into commercial real estate?” Usually it goes more like this, “so Greg, I’m thinking about either working for a startup, getting into digital marketing, or getting into commercial real estate. If I do go into real estate, where should I start and how do I break in?”
It makes me laugh when people think they can just passively succeed in this business. And many of the people I speak to about real estate are highly motivated, smart, and have been successful in life up to this point. I would never be satisfied just doing the minimum required to get by and earn a paycheck. To me, if you’re going to do something, you should kick ass and be great at what you do. Anyway, moving on. Two questions come to my mind each time I have this conversation. The first is “does this person have the skills and the toughness to succeed in this business?” If I believe this person does have what it takes I then ask myself, “in what capacity would this person succeed?”
It’s interesting, that despite being an $17 trillion dollar industry, very little is known about how the business operates, who the players are, and what types of roles and skills are commonly required. People tend to know that a lot of wealth has been acquired and built through commercial real estate, but that’s generally about it. It is, however, known that it is a fairly exclusive group of people and companies that invest in and own commercial real estate. Very few people know what entry-level positions are like in commercial real estate. A variety of roles exist in this business and if you can’t find something you like, then you are probably a pretty boring person. These are the skills that separate those who are great from those that either get by or never make it.
First off, you need to be determined and persistent. I won’t expound upon it much here – because it is fairly self explanatory – but you need to have it. The business is tough. The egos are big. The hours are long. Your feelings will get hurt if you let them. You will experience failure. People in this business lie, cheat, and steal. You will make bad decisions and have regrets. It’s part of the business. The fact that the business is tough, makes it more fun and lucrative. Think about it, if anyone could do this, the rewards wouldn’t be nearly as great.
Fortunately, commercial real estate has not been commoditized. It is going in that direction, as are most industries, but for a variety of reasons, there is still a lot of opportunity to be creative and add value. Each property is unique, each location is unique, each market is unique, and each tenant is unique. For these reasons, one cannot successful run a real estate company by using a standardized process and procedure or one size fits all approach. One must be able to discover facts, understand trends, and make smart predictions about the future. This is difficult to do. Since real estate is a very illiquid asset type, and because most real estate decisions are made with a 10 or 20 year projection in mind, decision makers must be able to evaluate a host of factors in order to make wise decisions. Many smart people have entered the real estate business, and many of them reached a career plateau because they just don’t have that ability to use common business sense in order to solve problems and make wise decisions. It’s something that you can develop over a career, but some people just don’t have it. If you are a natural problem solver; however, there will always be a place for you in this business.
One must be able to communicate in this business. Different roles will require more or less of this skill, but regardless of the position, you will need to be able to connect with people and persuade others to agree with you. Even if you plan to be a financial analyst, you will have to be able to interpret the results of your work and articulate it clearly to the higher-ups that are making decisions based on your analysis. Many roles in commercial real estate are extremely relationship driven. Brokers must understand people better than they understand buildings. Property managers, asset managers, and portfolio managers, must be able to communicate with tenants, brokers, and team members. Since real estate transactions are very subjective, a great deal of negotiation takes place, which requires great interpersonal skills and salesmanship. In short, learn how to talk, learn how to sell yourself and your ideas, and be able to get along with the people you work with. The work itself is stressful enough, don’t add to that by being difficult to get along with.
Gone are the days when real estate decisions were made based off intuition or instinct. All real estate transactions are predicated upon the numbers showing a strong return. Whether that is the purchase or sale of a property, a ground-up development, a lease transaction, or a value-added amenity to an apartment complex. The ability for one to analyze transactions from a financial perspective is a must for the commercial real estate entrepreneur. Excel is the primary tool used by industry professionals and the one I would recommend learning and understanding. Argus, is a real estate specific tool used by real estate financial analysts. If your goal is to be a financial analyst, then learning Argus would be helpful. Otherwise, learn basic financial concepts and how to use basic pro formas. REFM and Adventures in CRE are two great teaching platforms to help you develop these skills.
Regardless of the position you seek, if you are going to be a player in this game, you will need to develop these four skills. My suggestion is that you seek to exploit those skills and abilities that come naturally, or that you have already developed. If you have great interpersonal skills and judgement, then brokerage or asset management might be a good fit for you. If you are highly analytical, detail oriented, and introverted, you might look into getting into financial analysis. If you are an entrepreneur who is very well rounded and comfortable with risk, then development might be a good avenue to pursue.