How to choose between being a Tenant Rep vs. a Leasing Rep
Hey there, this may be a dumb question but I am going to be making the jump into commercial RE brokerage and I am wondering how to distinguish the pros and cons of becoming a tenant rep vs an owners rep (leasing). Does one make more money than the other? Can you do both? Make more money doing both? Is this even something I should be worried about? Any information you can provide is much appreciated.
[{"id": "cowahja", "text": "I'm an intern. The brokers I work with do both, so it's definitely possible. I think they do make more money that way ", "replies": [], "depth": 1}, {"id": "cowfczp", "text": "I loathe Tenant Rep and turn down most prospects. \n\nFor me, even if I think I've qualified a Tenant to the hills, about 80% of Tenant Rep assignments are time wasters.\n\n\"We're going to hold off for one more year. Maybe by then we will find the perfect property\"\n\n\"Hey we have like 13 decisions makers on staff (I'm looking at you non-profits) so it's going to take 10 months for us to all finally come to a meeting of the minds on every tiny detail. But in meantime were going to have you work your ass off\"\n\n\"We conveniently didn't tell you that we were also looking in another market. Thanks for showing us property for the past 2 months but we're going to proceed with the other location in Fuckyouville.\"\n\n\"tenant rep agreement?!? I don't officially hire people, shouldn't you be working for free like the other 2 brokers I've called today?\"\n\n\"There's nothing that fits our need currently on the market. Can you find us something off market? All you have to do is research and call a bunch of landlords and hope they pay you because we certainly won't!\" \n\n\"We're a startup and would like to rent a space on [insert busiest corridor in the city], we've budgeted about $800 a month and would like to sign a 1 year lease with 1000 options.\" \n\n\nTenants and buyers both will bird dog you all day every day if you let them. This is crucial advice I wish I heard from day 1. Take their name, number, and some notes about what they're looking for and tell them you'll call if you have any prospective listings in the future. \n\nTake that time you just saved on refusing Tenant Rep assignments and use it to secure more listings. Remember the 80/20 rule. \n\nReal life...I took a small volume Tenant rep assignment thinking it would be a quick paycheck. It had all the green flags of an easy assignment. It took 15 months and easily 200 hours to get that lease signed with a wimpy $2k check at the end of it. ", "replies": [{"id": "cowhepa", "text": "Why didn't you get exclusives?", "replies": [{"id": "cownxd2", "text": "I always get exclusives but it's not a guarantee you'll get paid and doesn't prevent the Tenant from wasting your time ", "replies": [], "depth": 3}, {"id": "cowrtf4", "text": "it implies a higher service level and obligation.  I might be perfectly willing to take them through a building I think is a perfect match, if they want it great, if not they can go back to working with 8 other guys......  \n\nI think there can be money to be made working non exclusives (and lots lost through exclusives sometimes).  Just depends I guess.  I see his points though.", "replies": [{"id": "coxeeuu", "text": "I'll work non-exclusives if the risk is worth it. Usually the big dogs are more reluctant to sign exclusives. \n\nJust did a deal with goodwill, they wouldn't sign an exclusive but would look at stuff I presented. I found them a site and they were cool with me representing them with that specific site. ", "replies": [], "depth": 4}], "depth": 3}, {"id": "cowsrq5", "text": "Sorry, just to clarify, does \"getting exclusives\" mean making an agreement with a prospective tenant that you will be their sole broker?", "replies": [{"id": "cowsu4d", "text": "yes that is exactly what it means.", "replies": [], "depth": 4}, {"id": "cowv08l", "text": "Yes, thats the term I use.  Typically when I bring it up I find out pretty quick if they are real or not.  ", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "cowqu6b", "text": "Depending on your market, you can't always do both. I'm in a major US market and, if you want to compete, you have to do one or the other.\n\nI'm 100% tenant rep and, while your gripes are certainly accurate (especially start ups and their budget), the benefits outweigh the downsides.\n\nTenant Rep is a grind and a half, primarily because it is highly competitive. The amount of money you can make is limitless really. But, unless you are willing to put in the hours and have extremely thick skin, its not easy. As a matter of fact, its very very difficult (especially when you are starting out).\n\nLL rep is consistent when you have some good clients and product, but once you lease up a building, there is nothing left. Also, LL rep fees are typically significantly less than Tenant Rep fees.\n\nI've had deals that take 3 years to complete, so its never \"easy money,\" but when you get a big hit, its a BIG hit and can float you for a while. A.l about getting that first big hit.\n\nSpeaking of which, I should get back to the phones...", "replies": [{"id": "cowsv81", "text": "Thanks for the reply, if LL rep fees are significantly less, and most people on here are saying don't waste your time with tenants, I am wondering what it is thats keeping you 100% tenant rep? Because the money you can make is limitless really on both sides.  So is there any one thing in particular keeping you on the tenant rep side?", "replies": [{"id": "cowy5w0", "text": "I've got a good personal relationship network, which, in my estimation, is invaluable for tenant rep work.\n\nSure, plenty of users are just kicking tires, but you have to factor that into your pipeline.\n\nI (optimistically) think of it like this...150 cold calls leads to 10 conversations.10 conversations lead to 4 meetings. 4 meetings leads to 1 client. If you do three big (15,000 + sf) deals with 5+ year terms in a year, you are going to have a good year. Not a crazy good year, but you won't be eating ramen.\n", "replies": [], "depth": 4}], "depth": 3}, {"id": "cowx69v", "text": "I'm in a tertiary market so if I relied solely on Tenant Rep id prob starve to death. \n\nHow is the fee structure set up where you are? Here the LL pays the fee so it's generally split between the LL and tenant rep. Do your tenants pay your fee? \n\n", "replies": [{"id": "cowy7w4", "text": "LL pays fee ($2.00/sf/year) and it is split between LL and Tenant Rep. Tenant Rep gets $1.25/sf/year and LL rep usually gets $0.75/sf/year depending on their agreement with ownership.", "replies": [{"id": "coxdq4d", "text": "That's actually pretty cool, sounds more profitable than here in NC. \n\nWe get 6% of lease volume. Both tenant and landlord reps get 3% each. \n\nMy split is 50% with the house so I really only take home around 1.5% of the lease volume \n\n", "replies": [{"id": "coxsh1x", "text": "Right. We give 50% to the house, then divide it among my team as well. ", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "cowrq9e", "text": "this is spot on.  Get listings.  I don't even want exclusive tenant rep stuff anymore.  It always just winds up being tons of work then something happens that makes it not happen that I have no control over, or they are dodgy as fuck about everything and I feel like I'm begging for business.  \n\nI do what you said now.  I take their info, what they are looking for, and if I run into it great, i'll make that call.  Work with 5 agents or 50, I don't give a shit.  This way the only time I'm out if is I'm working on an actual deal and it doesn't go through.  None of this work 6 months and get 'our expansion plans have changed, or we decided to renegotiate our current lease, thanks for your help!'.\n\nPlus listings get listings.  I'd rather people see my signs all over and when they google me see a bunch of properties I'm selling. \n\nI assume this varies by market, but here generally most brokerages and people/teams do both.  There are a few exceptions and they all seem to be in retail where someone can rep say Hobby Lobby and handle all their RE in the area and its not a one off thing.  \n\n&gt; \"We're a startup and would like to rent a space on [insert busiest corridor in the city], we've budgeted about $800 a month and would like to sign a 1 year lease with 1000 options.\"\n\nGod I hate startups.  I actually really like them from a personal perspective, they are usually doing something interesting, they are ambitious, generally excited etc, but holy god did you not hit the nail on the head.  I've heard this line from both my tenant rep clients and tenants when I'm on the LL side and I still just get a migraine when people say it and don't really know how to respond \"Oh well we are doing a new thing.  We think we are going to be really successful but if this doesn't work out we don't want to be on the hook for much.  We do want to have a bunch of options though so we can stay here a long time and we need some help on TI since the budget is tight\".  Particularly gets me on the landlord side.  So you are telling me you want my client to do a short term initial term because you aren't very confident this will work out and need to be able to walk away and you want them to dump money into it?  ok I can do that but I don't have high hopes for this one closing..... :)  \n\n", "replies": [{"id": "cowsppo", "text": "Thanks for the perspective. I can see you what you mean about start-ups being frustrating. I guess you just have to take their name, number, some notes and give em a call if you find something.", "replies": [], "depth": 3}], "depth": 2}, {"id": "cowslq9", "text": "Thanks for the reply. I was thinking thats what tenant rep would sound like, especially since they will be working with a bunch of different brokers. Note taken; take their name, number and some notes, and call them later. ", "replies": [{"id": "cowt0sl", "text": "Don't do this on a 100k SF space.  It probably won't even come up, but if it does you do want that rep probably.  A couple of those deals can make your year.\n\nIts also a situation where as a buyer rep you will have a lot to do to earn that commission.  You are probably getting into city incentive deals etc, maybe naming rights, *shrug*.  Don't expect that to be a shoot them some listings then do a few walk throughs and send a LOI type thing.  100k SF is a good chunk of space  ", "replies": [{"id": "cowt8mq", "text": "ok, so the getting their number, name etc. and calling later is better served for tenants looking for smaller spaces, say retail and what not? ", "replies": [{"id": "cowue5s", "text": "yeah, or smaller office.  Its just a value thing.\n\nLets say I have a 1MM SF office building listed at oh $15 /ft.  I get two calls.  \n\nCall 1 says:  \n\nHey NumNum, we are calling about taking a few floors.  We need 100k SF.  Do you have that or do you have anything else in that size range we can talk about?  I'd be thinking \"how is the best way to get a meeting with these people for general rep if they don't want this space\".   Say thats oh 10 years thats a 15 million dollar lease.  If they want demographic analysis, tax credit analysis/solicitations, etc do it.  \n\nNow say someone calls you and says \"hey NumNum We want 2500 SF, we need exactly 4 executive offices, a kitchen, 2 conferences rooms, and a kitchen.  We want to minimize TI.  The entire space must have 5/1000 parking on site, and we want them to voucher our clients and employees.  We want this to be close to restaurants and some recreation since many of your employees are active and would like parks etc.  We are hoping for a 3 year lease.     Oh and just to let you know we are working with several other brokers, but we will go with whoever sends us the right property first!\"\n\nFuck that shit.  I don't want to rep them at all, exclusive or not. Thats like a $112k lease I'm going to get paid like 1500-3k for that bullshit after I figure out that long list of stuff (and that assumes I even close).  If I see a space that absolutely matches that though, I don't mind letting them know, taking a look at it, and closing it for them though.  I just want shit else to do with the responsibility to find them a property.  \n\nEdit-  I'm going to note now that I generally am an investment full service broker.  My typical client hires me to lease, sell, manage (sometimes) and represent them to buy properties.  By far the money comes from sales, but I'm not going to tell my client to go find another broker to do their leasing, so I do it, even if its small.  Our typical lease deal is 1-10k SF.  I've never done a 100k SF lease deal, but if I had the chance to do one yep I'd be all over that ;)  Take the good with the bad kinda thing, but I understand how smaller size lease deals suck.  That probably wasn't your intended question though.\n\n\n", "replies": [{"id": "coxx2ji", "text": "That gives me a really good idea of how it works. This is exactly what I was wondering, the thought process of a broker based on the size of the deal. If I find a good mentor then, would it be common practice to put me (the bitch) in charge of the second scenario and hope I close it and then we split the commission. Or do you know anything in particular about how a mentor-new broker relationship works?", "replies": [{"id": "coxz7be", "text": "Depends on the mentor I guess.  When I started my mentor generally had me do a lot of the property tours on our listings because he didn't like doing them.  Plus minor correspondence with clients, maintaining deal files, pulling listings, scheduling tours, pulling comps, handling mass market efforts (Ever stamp like 1k envelopes?  I have, it sucks), putting together marketing packs for properties, securing access for contractors etc.  \n\nHe was more charge of finding new listings, getting us listing presentations, doing valuations, handling big stuff that came up for closings etc.  I was involved in all that too, but more in a role where he was teaching me how to do it and involving me, but he was more responsible for it.  \n\nEveryone team is different I'm sure, but those are the kinds of things you may be doing.  We have a smaller office too.  If you go to like CBRE or some of those types they have support staff that does a lot of the things I just listed for you.  We are more of a \"here is your split, here are your logins for our subscription services, do whatever the hell you want and send us checks when you close deals\" type.", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "cows7g4", "text": "You'd be wise to clarify what type of property you are talking about too OP.  If you are discussing the difference in handling leasing for a 20k SF strip (particularly if you also are going to get to sell it) vs repping the 1-2500 SF retail tenants that are going on it, that is far far far different than say repping the landlord of a sky scraper or the tenant on a 100,000 SF office lease.", "replies": [{"id": "cowsnyl", "text": "Sorry about that, I'm thinking repping landlords of sky scrapers and tenants on 100,000 SF office leases. Go big or go home right!", "replies": [{"id": "cowsrzl", "text": "oh yeah ignore my other post.  Makes no difference what side you are on as far as I can tell.  You aren't doing a 100kSF office lease or listing by yourself probably, particularly as a rookie.  \n\nGo with whatever gives you the best opportunity inside your brokerage (IE which people you want to work with that are closing the most stuff)  ", "replies": [{"id": "cowsxma", "text": "ok makes sense. I was looking for more of long term strategy anyways. In the beginning I will take whatever I can get. Beggars cant be choosers! thanks for the reply.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]