Are you thinking about becoming active in the commercial real estate industry? Maybe you’ve considered residential real estate but think you’d be a better fit on the commercial, or CRE, side of things. In residential real estate, it’s often easier to get started, and you’ll always have clients and potential transactions.
But commercial real estate also offers substantial potential clients, because CRE properties can offer investors steadier returns and improved cash flow when compared to residential properties. It’s also a better money-maker for CRE agents. In fact, around the nation, CRE agents have an average annual salary of $90,914–residential agents skew more towards $50,897.
So, if this sounds like a career you’re interested in, we’ve put together some information about what it takes to make it in the CRE industry and more.
Becoming a Commercial Real Estate Professional
The best way to earn success in any industry is to understand the field and know your product. Commercial real estate properties generate income for their owners. Think of places like hotels, apartment buildings, and other places of business. Investors often choose this type of property for the ongoing income it provides through tenant rents.
The steps to becoming a professional in the commercial real estate industry include:
1) Get your real estate license.
Whether you’re dealing in commercial or residential property sales, you must obtain a real estate license in the state in which you plan to operate. This gives you the right to represent both sellers and buyers, and also lessors or lessees involved in transactions. Your state’s real estate license is the same whether you go into commercial or residential properties. To get your real estate license, you have to:
- Meet your state’s eligibility requirements: Every state has licensing requirements of its own and regulatory offices. Some of the most common state-to-state requirements include having reached a certain age, a clean criminal record, and at least a high school diploma. Your state may have reciprocal licensing agreements (like this example for Connecticut residents) with surrounding states, meaning you can conduct real estate business in that state as well as your own.
- Take approved real estate classes: Each state’s courses, their content, and hour requirements differ. For instance, New York individuals must take 75 hours of approved courses; Texas requires its residents to take 180 hours. The classes have a difficulty level of college freshmen courses and normally cost around $150 up to $500. The cost also depends on the state and the format you attend–in-person or online.
- Pass the real estate exam: Your exam will most likely be administered by a state agency and consists of 75 to 150 multiple-choice questions. Real estate exam passing rates are only around 55%, so it’s suggested you take advantage of any study guides or pre-exam programs you find. You’ll get your test result about seven days later and, if you pass, expect your license 14 days from the date you took your exam.
2) Find a firm that specializes in commercial real estate.
After you get your license, it’s time to find a brokerage that is:
- Looking for new agents
- Offering the opportunity to obtain market experience
- Already working in the commercial real estate industry
Any experience gained is better than none, but if you’re not at all interested in residential real estate transactions, it’s best to find a firm that exclusively works in CRE. A committed commercial brokerage normally has training programs for new agents, and these programs may even include a salary while you learn. The typical CRE coaching or training program lasts about a year and lets you focus on just commercial properties so you don’t need to close residential deals to make an income while you’re learning.
That said, it’s much more difficult to get into these kinds of firms strictly due to the overwhelming competition. In the event you’re able to score a brokerage with a training program for new CRE recruits, you can expect an average annual salary of $35,000 before you to begin make your first commercial transaction. In some cases, the agency may not offer salaried training. In that case, you’d need to close some residential sales as you learn the ropes of CRE.
3) Join an association.
A lot of the top commercial real estate brokerages stipulate that their brokers must join a professional association, either at the national or state level. Some of the most respected associations include NAR and REBNY. And don’t think of these requirements as a headache — joining a professional real estate association is actually important for your success. These organizations offer education, networking, and even discounts on items you’ll need in your career, such as software or manuals. You can even become a Realtor when you join NAR, the National Association of Realtors. The NAR is the United States’ largest trade association. It has over a million real estate professional members. Joining NAR adds a level of credibility to your title.
4) Take a look at related career options.
Commercial real estate agents aren’t limited to just CRE property sales. You can also venture into development or commercial property management. In development, you can buy land, build on it, arrange financing, negotiate leases, and supervise the entire process. Property managers handle everyday operations of commercial properties, such as repairs and maintenance.
Considerations in the Commercial Real Estate Industry
Before diving headfirst into a career in the CRE arena, there are things that outsiders don’t know about this industry. You should consider various aspects of a career in CRE before making the jump.
To be successful in CRE, you have to find leads and convert them into clients. In other words, how are your sales skills? Are you proactive? Persistent? If you enjoy a bit of friendly competition, you’re ambitious, and you have an uncanny knack to pitch things convincingly, you’d make a great commercial real estate broker. An outgoing nature and a no-fear attitude towards cold calling and talking to strangers also helps. Finally, as technology continues encroaching, albeit welcomed, a degree of tech-savviness is also necessary.
Is a Career in CRE Right for You?
If you’re already a real estate agent, you’ve got a leg up on others who’ve yet to make that career move. There are still many things to think about before totally diving into the complexities of commercial real estate. The CRE industry does offer its agents large commissions and several specialty career directions. It’s also got its own set of unique challenges. If you’re prepared to obtain the higher education needed (some states require a college degree); you’re fine with waiting longer for deals to close; and you don’t mind that you won’t close quite as many sales per year as your residential counterparts, a career as a commercial real estate agent could be right for you.
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