Careers in CRE: Know Yourself (Part I)
I mentioned a couple days ago that there is serious lack (in my experience) of writing on careers in commercial real estate.
I should mention that I like The Real Estate Game by James Poorvu. Check it out on APJ Recommends.
Like tREG, most CRE books focus on the idea of “how I did it” or “how the landscape is changing with green-building.” That isn’t really what I am looking for. I want a comprehensive guide on the industry, how to get started, where to focus, how to build a skill set, how to become the best in your field, etc.
So, here is my shot at it.
Let’s start with where you should start if you are considering a career in commercial real estate.
Fundamental Success Principal 1: If you are going to excel in the field of commercial real estate, you have to know yourself.
When I say “know yourself,” I don’t mean that you should know your height, weight, and eye color. I am talking more about your core motivations, goals, and fulfillment.
I want you to think about what excites you most about business. What is the most exciting thing you could think of to get you out of bed at 6 am?
Is it money? If it is, that’s ok because you can make plenty of that in CRE. But allow me to offer an opinion.
If you make $100 million tomorrow, you will have plenty of money right? Then what? Then do you buy a house on Bora Bora and live on the beach? Ok. I bet you go 6 months MAX before you are bored out of your mind and need to find something fulfilling to do with your time.
That’s why I ask about your motivation. You need to figure out what type of business venture will be most fulfilling to you.
Extreme competitors can often end up in brokerage in our business because they love the rush of the deal and the challenge of competing against rivals for listings, sales, leases, etc. These “deal junkies” find fulfillment in the rush of the deal process and like closing as many deals as possible as often as possible.
The down side to this part of our business is painfully evident right now. Brokerage is the ultimate “eat what you kill” compensation plan, and if closings are light and deal flow is a mere trickle, you may be hungry for a couple years.
Some people feed off of that tension. They NEED that sense of urgency every morning to get them up before dawn. Sometimes the idea of your family going hungry if you don’t bust your butt today is the greatest motivation anyone could ask for.
Other people prefer to have a steady income every month and a predictable schedule. They want to know they will be home for dinner with their family every night and that they will have steady income for years to come.
These types off people tend toward lending and asset management roles.
Lenders are a unique breed and tend to be fairly conservative. They always try and find ways to mitigate risk on the loans they originate but also tend to like doing deals. They too enjoy the rush of the deal, but don’t need the compensation as much as the broker. Lending is a good career for anyone looking for (relatively) stable income, average compensation, no deal risk, and a predictable schedule.
Asset managers are similar, but tend to be more “contract-deal” personalities. That is, asset managers are always handling deals and portfolios of deals. They handle the issues and help guide the owners toward to best solutions for their property. Since deal lives are finite, every asset manager is essentially working herself out of a job. But, like bankers, they have no deal risk, have a relatively steady flow of income, and tend to have a fairly predictable schedule.
The most risk tolerant among us tend toward ownership and development. Owners and developers tend to be good problem-solvers and risk managers. They are always going to have hurdles to overcome, fires to put out, and risk to deal with. They need to be skilled in acting on imperfect information and need to have solid leadership to guide a team through each transaction. These men and women are putting their own money on the line and need to be able to deal with the personal risk involved in each transaction.
I will touch on service-providers (appraisers, engineers, etc) later and I consider architecture and construction to be separate fields from CRE.
So, for now, let’s just assume that CRE pros include brokers, owners/investors, developers, and lenders. Given those four main categories, I say that the only person who can tell you where you best fit in is YOU.
If you are a deal-junkie extrovert, brokerage may be your best move.
If you are a gambler and salesman, I’d recommend ownership or development.
If you highly value your schedule and a steady paycheck, asset management or banking is probably right for you.
Whatever the punchline is, you have to know what your core motivations are. If you do not know who you are, what you like, and what priorities you have, how can you expect to have any direction in your career?
So, back to my advice.
Before you have a single networking meeting or start a single deal, sit down and figure out what type of person you are and what your core motivations are.
We’ll go from there.