I remember the moment when the idea of becoming a commercial real estate agent first entered my mind. I was working in the fitness industry doing marketing and sales for multiple gyms. An owner I was working with was telling me about how he was making $500k a year as a commercial real estate agent when he was only 21. Obviously, the wheels started turning. Fast forward about 6 months and I was working as the tarketing director at a gym that one of my friends just purchased. Things were going well there so we started looking for location to open a second gym. During the process we worked with a commercial real estate agent that was acting as our tenant rep. Working with him made me think “I’m pretty sure I could do this” so the wheels started turning even more. A couple of months later I began to realize that I was pretty much capping out at what I was ever going to make in the fitness industry. I finally decided to act on the recurring thought of becoming a filthy rich commercial real estate agent. I had no idea where to start, or if any brokers would even consider giving me a chance.
I ended up reaching out to the same agent that I had worked with earlier when we were looking for a gym location. I just happened to reach out when they were increasing their recruiting efforts to grow the brokerage. I met with him and the broker, and tuned them out when they talked about all of the hard work, the long stretches between commissions and the fierce competition. I was just thinking about whether I was going to buy a Rolls Royce or a Bentley. I left that meeting and immediately signed up for an online pre-licensing course for my real estate salesperson license. I was well on my way to making more money than I would ever know what to do with.
As optimistic as I was about my new real estate career, I was also wanting to play it a little safe since my first daughter was just born a few months prior. I kept working in the gym part time to keep at least some steady income coming in every other week while I waiting to close on my first skyscraper. My first week in real estate I spent most of my time riding along with one of the more experienced agents, going on showings, and touring some of the other agents’ inventory. Just as I got through my first week, I was sitting at my desk googling “how to sell commercial real estate” when the front desk called me to let me know there was somebody waiting to speak with an agent. Assuming it was a mistake that the call came to me, I stepped out to find somebody that knew what they were doing to go help whoever was waiting. As it turned out, nobody else was available. I was up, my time to shine. After introducing myself to the prospective client they let me know that they were looking for some office space to lease, and needed to choose something that same day. At that point I was familiar with one office building that had the size space they needed. It was listed with our brokerage so I grabbed a key out of the key box and went out on my first showing. We found a space they liked, I wrote up the LOI, and got the deal done. A $2,000 commission my first week. Everything I thought about commercial real estate was right. The next day I quit my other job and went full time into real estate. At $2,000 week I didn’t have much to lose. I’m pretty sure it was about 4 or 5 months before I closed my second deal, and it was for a whopping $400.
I’m sure most people get into commercial real estate for the same reason I did, huge commission checks. Residential agents do the math on what the commission is on all of the large commercial deals, and everybody else has a glorious image in their head of a successful commercial agent making a few phone calls to put a deal together then spend the rest of the day on the golf course. The truth is, if it were that easy not only would everybody be doing it, but there wouldn’t be so much turnover in the commercial real estate industry and so many starving agents. The average income for a commercial real estate agent is around $85,000 per year. However, I don’t think very many agents earn $85,000 per year. I would be more willing to bet that most earn less than $50,000, and the others make over $250,000/ year. It’s the type of business where you either do very well, or barely get by.
If you’re going to make the leap and become a commercial real estate agent, only do so if you plan on being one of the agents making over $250,000. Otherwise, it won’t be worth it. Despite what I thought when I entered the commercial world, it takes a lot of hard work, rejection, hours of glamourless work every week, and monetary investments to market yourself and your listings. The agents that are willing to put in that work, make the phone calls, and the money on a consistent basis are the ones that end up making $250,000, $500,000 or even $1,000,000+ each year.
Commercial real estate requires a different level of knowledge, depending on what types of properties you’re going to work with, since different properties have different uses. Unlike residential real estate where most properties have the same use, for somebody to live in, commercial real estate has sever different types of uses across multiple property types. The transaction process in commercial real estate is usually quite different than that of a residential deal. Lending processes are different, and lenders have different requirements before providing a loan. The due diligence, or inspection period, is often a quite different process. It can involve thorough financial analysis, reviews and approvals from local government officials, and often expensive improvements to make the property fit the buyers’ use.
Commercial real estate can be an extremely exciting and rewarding career. As a commercial agent you often are the first to learn about new developments in your area and what’s happening with local businesses. It also allows for opportunity to earn an income higher than almost any other profession. Competition in commercial real estate can be fierce. To stand out among the crowd and earn large commission checks you will have to do what most other commercial agents wont, the things that aren’t fun. One study shows that the top 5% of commercial agents earn $1,000,000 or more per year. If you want to earn $1,000,000 or more a year, more than 95% of all other commercial agents, you have to do what 95% of the other agents won’t do. Make one more phone call every day than 95% of agents do, set one more appointment, and learn one more thing.