A Guide To Finding And Working With A Commercial Real Estate Agent
Most commercial property sales are handled by a commercial real estate agent. So, if you hope to be successful investing in apartment properties, logic tells us you will have to cultivate relationships with these professionals.
Now, this may seem intimidating to you if you have little or no experience in commercial real estate. Let's face it, nobody wants to look like they don't know what they are doing! My recommendation to you is to educate yourself thoroughly before speaking to agents. If your focus is going to be apartment complexes, then educate yourself in all aspects of multi-family apartment investing. At the very least you want to know some of the "lingo" and know how to analyze a property based on its financials. Remember, the good commercial agents (ie. the ones you want to work with) are very busy people. They are not going to waste their time with you if they think you are an uninformed "tire kicker".
Now, on the flip-side of that, don't try and come across as an expert if you're not! Be honest about your experience up front. The bottom line is that you are going to have to convince them that you are for real, and that you are a serious real estate investor. In other words, they have to believe that their relationship with you, and the time they spend dealing with you, is going to pay off down the road.
|Aside: Personally, I like to know as much as I can about every step of the process of buying, managing and selling real estate. Many people may advise you to just hire people to do the things that you don't know how to. Is this bad advice? Yes and no. I always hire experts to help me with my deals. Real estate lawyers, accountants, property managers, environmental consultants, commercial real estate agents, mortgage brokers, contractors etc. But that does not mean that I don't know a tremendous amount about all the areas of expertise that these folks help me with. I suggest you try and educate yourself in these areas as well. |
Once you have completed your first deal the game changes. Your name gets around in the industry and new doors are opened up. You start getting
real estate investment opportunities
coming across your desk that you would never have seen if you weren't "in the game" so to speak. Until that time however, you are going to have to work hard at building and maintaining relationships with several commercial real estate agents. While you are doing this I suggest you start reading some books and/or courses on investing in commercial real estate and apartment buildings. Here is
a good course on how to buy our first apartment complex
Now, of all the commercial properties that I have purchased over the past 14 years, most were listed with a commercial real estate agent. Ironically however, my very first commercial real estate purchase was a "For Sale By Owner", and that deal eventually earned me a profit of over $2 million dollars.
What's the lesson here?
You will likely find most of your deals through realtors, but don't ignore the FSBO's in commercial property!
On the selling side of the equation, I have always hired a commercial real estate agent to represent me (or my entity and/or partnership) in the sale of my real estate assets. Actually, there was one slight exception. About five years ago I decided to sell one of my apartment buildings. (Actually, I had put together a limited partnership to purchase the property and I was acting as the general partner. So to be accurate, it was the limited partners and I that made the decision to sell.) Before hiring a commercial agent I thought I would test the waters myself and placed an ad to sell the property in a commercial real estate paper that I knew would reach my target audience. If I recall correctly, I don't think I had any response, at least nothing serious. My next step was to hire a professional real estate agent, which I did. Within days he had several interested parties and the property sold quickly.
Unlike residential real estate, there is no MLS for commercial real estate. If you are selling a commercial property through a commercial broker, it is his/her ability to market the property effectively and hence get it in front of as many potential buyers as possible. This is really what you are paying for. An experienced commercial real estate agent will/should have many potential buyers lined up even before they formally market the property. Buyers for larger apartment buildings can come from anywhere, even different countries. So it is imperative that the agent you choose is "plugged-in" to a very large network.
|If there is one thing I recommend that you should do/accomplish before you contact a commercial real estate agent it's educate yourself about commercial real estate investing. The more that you know, the more likely it is that the agent will take you seriously and be willing to work with you, and bring you choice deals. On that note, here is a good e-course (written by a 31 year veteran of the business) that I recommend called "The Commercial Real Estate Cash Flow Funding System".|
I know that when I sold two of my properties about a year and a half ago, I was very discerning when it came to choosing the commercial real estate agent that I wanted to represent me. I knew that I wanted someone that worked for at least a national real estate company, but preferably a company with an international presence. Ultimately I choose to work with CB Richard Ellis, one of the premier global real estate companies. And the commercial real estate agent who was handling my deal had over 20 years experience selling commercial real estate. I hired the best, and let him do his job.
Whether buying or selling apartment buildings, you will eventually be dealing with commercial real estate agents and brokers. Not only are they a great source of deals, but they can be invaluable when it comes time to sell.
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