Have you had a successful career as a broker? Do you spend all day, every day analyzing and evaluating commercial property? Do you have some cash to invest over-and-above stocks and bonds?
Then perhaps it is time to put your money where your brain is. Perhaps you should become a property owner instead of a fee-earner.
Many of the most successful owners I know were once power brokers.
Maybe they grew weary of waking up with zero income every Jan 1. Maybe they got tired of the owners they served taking home the biggest paychecks. For one reason or another, those brokers decided that they wanted to transition from service-providers to service-users.
Many of the most successful owners and acquisition minds in our business started off that way and I am going to project my thoughts on them a little here. I have never lived through that transition, but I have had a few business partners that have and I noticed a common theme.
I noticed that some of these lifetime brokers had trouble adjusting to the owner side of the table because of one key difference between the broker and owner mindset.
Brokers focus on can. Owners focus on should.
I had a partner of mine tell me that his main focus as a broker was on finding motivated sellers. Brokers can’t waste their time on low-probability deals or they will miss opportunities on the more likely transactions. Makes sense to me, but what if you’re a buyer and you run across a highly motivated seller of a building you don’t want to own?
Can you buy her building?
Can vs. Should. A broker spends his entire career figuring out which deals he CAN close and earn a commission on. I can see how it would be difficult to turn off that analysis . . . but you have to. As an owner, your analysis and vision need to start at a higher level.
As an owner, what deals SHOULD you buy right now?
Have your list? Great. Now start finding sellers and their intermediaries that fit into that box.
Find a motivated seller? Great. Do the returns look attractive? No, then look elsewhere. You COULD buy her property, but you SHOULDn’t.
I know this all sounds very obvious, but I find that very few of the brokers I have worked with do the true return analysis of a potential seller. They research market comps and get an idea of market value, but they don’t usually run through what the returns would be for the prospective buyer. Again, they are focusing on WHERE it will transact not WHY it should transact there for the buyer.
So I know this idea is very academic and may sound condescending to brokers, but I don’t mean it to. I just want an aspiring young owner to realize that the transition from broker to owner is a very meaningful one and that you should be prepared to shift your thinking. A deal that you can close isn’t necessarily a good deal and the chasm between COULD and SHOULD is the difference between mediocre and exceptional.
Has anyone else experienced this transition? Did you find it hard to shift your mindset? Let us know in the comments.