New commercial brokers can make money in all markets, including even the toughest markets like this one. But you have to be willing to do some homework and market research. If you aren't so inclined, don't read any further. If you're willing to put in some serious time and effort, here are some suggestions to get started:
1. Many, if not most, experienced brokers will tell you it can't be done in this market. Ignore them. They know all the reasons it can't be done, but since you're new, you won't know those reasons, and you'll be more likely to pull it off.
2. Buy and carefully read through at least two of the books on this list at Amazon.com that talk about how to run a successful commercial brokerage:
Make sure you understand the sections that explain investment analysis. It's not rocket science, but you have to understand what a Cap Rate is, why it determines the value of investment real estate. You must also appreciate the difference between projected income and actual income, the true cost of operating property including transaction costs, operating costs, capital improvements and Tenant Improvements.
3. After reading through the investment analysis sections of the two books, identify some brokers in your area who are currently active in the market of interest to you. The best thing is to get a referral to them through a third party. For example, getting a property owner, banker, accountant or other professional you know to refer you to them. If you don't know any such people, then contact them either by phone, Email or in person with some specific questions about the market, or some properties them might be advertising. After introducing yourself, be open about your intentions - that is, tell them why you're asking those questions. Many of them might not have time for you, but if you call enough people, some of them will be willing to take a moment to answer questions and share some ideas.
4. Make the opening question(s) specific; don't start out by asking a very general question like what you need to do to be successful in commercial real estate. Ask them what kind of response they're getting to one of their ads, signs or listing in LoopNet. Ask them what has worked best for them in their efforts to market property. If you get the sense they're not interested in talking with you, move on and contact the next broker on your list. But when you get one that seems they're ok with the conversation thus far, ask them to tell you what they would do in this market right now if they were a new broker starting out. Then listen carefully to what they say. You might hear a different answer from each broker you talk to. But after you've talked with a number of them, review your notes and see which of any of those answers appeals to you, then figure out how you can do it yourself.
There are many other things you can do to make it in commercial real estate, and there is of course no "right" way to do it. Talk to as many active and successful brokers as you can, and figure out what's right for you.
Oct 24, 2008