When I first got into commercial real estate I was told to specialize in a specific asset class. Typically, most companies frowned upon and many forbid agents to conduct business outside of the class they selected.
Back then, understanding other markets was a lot harder because we did not have the tools that we currently have at our fingertips. Instead we cold called all the owners and tenants or walked and canvassed the communities we wanted to build up business in.
The steps I am about to give you are time tested and proven over the years by many successful commercial real estate agents.
These steps are a great way for you to build your business. These steps are worthless if you don’t create a structure that allows you to execute these steps on a regular basis. Find a quality CRM, put your head down and get to work.
1) Cold Calls - I recommend 100 calls per morning to a targeted group- either to an area or to a specific asset class, with every call you need to bring value…tell them something about the market in their area or a specific asset they may have interest in hearing about. Do not call and just leave a voicemail to call you back. If you don’t have their emails be sure to ask for them and immediately but them into your CRM to add to your email list;
2) Social Networks - Most commercial agents frown on this, however, it’s a critical part to your branding. Create posts twice per week that have critical information about your market (create value for yourself). Don’t just post about business though, also mix in some personal posts. After all, people like to do business with people they know and like;
3) Sphere of influence - You need to reach out to friends, family, past coworkers and clients on a regular basis, there is no worse feeling than sitting next to a friend and having them say “we just relocated our office too………” your first question to them is, “who represented you?” and they respond ah man, I forgot you were in the business…. Email your sphere of influence at least once monthly, add something personal and as always something that brings value.
4) Reviews - In this day and age, most people immediately google what they are looking for, or who they are working with. Make sure you ask your clients to write reviews on Google and Facebook for you, it will make it easier for potential clients to find you and gain their trust that much quicker.
5) Email Blasts - I would recommend doing an email blast (in the beginning every two weeks) that is personalized and (again) brings value to everyone in your market (clients, potential clients, and networking contacts).
6) Block Program (Also called Canvassing) - Every two weeks walk a specific community (best utilized for office or retail) and get to know the people working in the stores or the offices, they will begin to trust you over time and you will learn a lot about the area. Once per month you should also call the ownership of these properties and keep them informed as to what is happening in the area; do not gossip... just real data about who is moving out of or into the area and on what is happening in the communities their properties are located. By doing this you become the “go-to” expert in this area for commercial real estate.
In the end it all comes down to being the professional to go to in the community, find ways to create value for yourself, and the last (but not the least) tip to be successful in this business… Treat this like a business, show up, do the work, out work and out perform your competition and you will soon reap the rewards.
Many first time investors have the idea that their first investment should be a single family home due to the cost of entry and ease of management, however, this may not always be the best path to go down. One of the main issues that you have to consider is the fact that if the single family homes goes vacant you will have to cover the entire mortgage until you find a new renter, now if you have a duplex, triplex or fourplex that mortgage will be spread out across more units giving you some cash flow to help with the mortgage.
Another reason the first time investors tend to like the single family homes is that you can put a lot less down then you can on a commercial loan and the residential loan can be amortized out over the life of the loan. Residential loans can be on properties that have 4 units or less and can be acquired with as little 5% down, however, commercial loans are on 5 units or more will require at least 25% down and you will need to show a business plan plus as well as management experience and cash flow. When shopping for a commercial loan, be prepared to answer a lot of background questions regarding the property. Some of these questions include:
Who pays the utilities?
What types of maintenance are required?
Numerous questions regarding cash flow will also be asked. Commercial mortgage borrowers should be prepared to provide proof of business revenue and profits as well as a detailed plan for how the commercial property will generate enough income.
Where an investment in a residential property can be attractive is in the maintenance costs, you will have only one tenant in stead of multiple so it makes sense that your costs should be less providing you have a good tenant; however, multifamily properties typically afford synergies of scale (one yard, roof, etc…) so your overall cost per unit vs. rent will be lower.
When deciding on which direction to go with your first investment really look at your appetite for risk as having a home go vacant for a few months and having to cover all the expenses on your investment can be a big drain on your savings.
Experts weigh in on best practices for finding, training and retaining the skilled maintenance techs that every multifamily property needs.
In the current tight labor market, finding and retaining good multifamily maintenance technicians is often challenging. Emerging operators, in particular, are well advised to look for someone who can do it all.
“If you have a smaller property and you’re a new property manager or a new landlord, you want to have somebody who can really handle almost everything on the property—and those people are worth their weight in gold,” said Joe Killinger, co-founder of Los Angeles-based Pono Asset Management.
