How did you transition from rentals or residential sales to commercial?
By accident? Choice? By yourself or with the help of a mentor? If math is not your strength, how did you address that area? What other people did you go to for assistance? Banks? Mortgage lenders? Developers? What made you make the jump from rentals/residential sales to commercial? Did it become easier to do your 2nd deal, 3rd deal? Any good book to introduce one to the do's and dont's? Anything else crucial to ask/address before taking the plunge? Thanks everyone.
[{"id": "d3g7l59", "text": "I just realized my original question and the follow up question should probably two different posts so will post 2nd quest separately.  \nEdit. Posted separately the follow up quest and restated this one.", "replies": [], "depth": 1}, {"id": "d3g9p23", "text": "So many question marks. I'll just answer the original question. A family friend is a very well known residential agent, when I got my license I spoke with him and asked him for advice. He told me the biggest regret he had was not doing commercial. He then introduced me to a commercial broker who gave me an internship. I studied finance and have always been good with numbers. ", "replies": [], "depth": 1}, {"id": "d3gaxiu", "text": "The great bridge that gaps commercial and residential is.... Multifamily. If you're in residential, you'll be able to leverage your knowledge into multifam home sales, you just need to shift your focus to look at these as investment properties. Find an investor or group of investors and bring them a deal! Obviously I'm over simplifying, but that's the best way to start. Good luck!", "replies": [], "depth": 1}, {"id": "d3gtfwu", "text": "EDIT: I just realized you are asking about sales, not investing. However, I will leave the below up for others' reference. Addressing your sales question, commercial brokerage isn't hard, getting the listing is. Residential is much more work once you have the listing. As a poster recommended, I'd go into multifamily. I think it's actually more interesting than Office/Industrial/Retail.\n\nWhat separates residential from commercial is money. You need to be able to put at least 20% down. Secondly, you need to be able to withstand long vacancies by continuing to service your debt. Third, commercial tenants will often seek terms such as improvement money contributed by landlord, rent abatements, etc. Again you need money to play this game. \n\nIn residential, the mortgage is insured and backed by the government, and vacancies are generally going to be a lot shorter. Hence, freer lending. \n\nAs you can see, it all comes down to money, these properties aren't rocket science, it's not a skill issue. \n\nStay away from big-box retail and bank branches. I'd avoid Walgreens and CVS as well personally. Stick to small food spaces that can be used for quick-service / fast food tenants. Industrial outside of urban core I don't like either. ", "replies": [{"id": "d3hb1bg", "text": "Why not banks? Just curious. Don't know much harm about commercial myself. Just would assume banks would have the money. ", "replies": [{"id": "d3hboyb", "text": "Many retail bank branches will be closed. In person banking is becoming rarer as everything moves online. I'm talking a 15+ year horizon though. ", "replies": [{"id": "d5cwadu", "text": "And then their properties will sit vacant?", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "d3hk1uw", "text": "Great answer. Thank you for the response.", "replies": [], "depth": 2}], "depth": 1}, {"id": "d3j9ikc", "text": "the math in commercial is not particularly hard.  The concepts to understand what is happening are much more important.  \n\nI'd suggest like /u/glockspieser looking into multi family.  Just speaking for myself, I had multiple years of management experience on large apartment complexes.  When I went into commercial brokerage many people found that very attractive.  When I deal with other commercial brokers with much more experience and knowledge than me, I still seem to understand how properties work at an operating level better than them and clients (particularly that self manage) connect very well with me because of it.", "replies": [{"id": "d3juvjw", "text": "Thank you NumNum :)", "replies": [], "depth": 2}, {"id": "d3kgwrt", "text": "I think the difficulty of the math can vary quite a bit depending on the product type. Something like a single tenant net leased asset will be very easy, but in a large mixed use building that is being looked at for redevelopment it can quickly get complex. There are redevelopment tax credits, construction costs, permitting, lease up costs, carrying costs, construction financing/bridge loans, estimating future rental revenue and tax rates. There are renewal options, annual escalations, rental abatement, capital improvement funds, maintenance, etc. There is software that can help with a lot of this, but many niches of CRE require quite a bit more math than you would see in single family residential.", "replies": [{"id": "d3ki8w0", "text": "I agree with all that,  but this is more or less what I was saying.  \n\nThe actual math on that is not hard, it is mainly addition/subtraction and knowing how to discount cash flow, all of which can be taught or learned fairly quickly.  \n\nThe concepts parts (ie figuring out what all those numbers should be and how to look at your results) yeah you are spending a significant amount of time (probably a career) to be great at that.  \n\nThe actual math part of this industry you would learn at a good high school.  Something like Calc 1 or some basic stats knowledge would have you firmly set, and even then you are probably using grade school math most of the time.  I'd consider argus/excel/general modeling skills more important that advanced math as far as just looking at the quantitative side.  That is all I meant.  If they are nervous because they aren't great at math, thats not hard to fix imo as its not that hard.  Though you are correct in that there are tons of things they will need to know to know what numbers to add and subtract etc ;) ", "replies": [{"id": "d3kmjst", "text": "You are right the math itself isn't that difficult, there's just more of it. I've just seen a lot of former residential agents that couldn't handle the complexity of commercial transactions.  My advice would be to just go into it with eyes open that there is a lot more you will need to know and the transactions tend to be much less \"cookie-cutter\" than in single family residential. Even modeling something in excel is more than most residential brokers have experience with and it will take some adjustment to get used to. I'd recommend work closely with a seasoned broker since they can help get you up to speed much faster than trying to do it on your own.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]