5 Things To Know Before Getting Into Commercial Real Estate

There are a lot of things that I wish I had known before starting my career in commercial real estate.

However, there are a few things that really stand out that, if I had known earlier, would have saved me a lot of time, money, and frustration overall.

If you’re just starting out in the industry, knowing these things up front can help you make significantly better career decisions, help you make significantly faster progress, and can also allow you to hit the ground running immediately in whatever part of the business you ultimately choose to pursue.

So in this post, I want to share five things that really stand out to me as some of the most helpful things to know for anyone starting a commercial real estate career, and also some pitfalls to avoid (if you can) early on.

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#1: Almost All Commercial Real Estate Firms Use Excel for Windows

The first thing I want to bring up (that’s extremely important if you’re targeting analytical roles) is that virtually all commercial real estate firms use Excel for Windows.

A lot of our students and Break Into CRE Academy members come into the program working on a MacBook, and while Excel for Mac can do most of the things Excel for Windows can do, the keyboard shortcuts, the Excel ribbon, and the Excel interface itself can all look a little bit different between the two operating systems.

If you’re trying to improve your Excel skills, especially if you’re trying to prepare for a timed Excel modeling exam that you might be given during the interview process, making sure you’re familiar with how these things function in Excel for Windows is definitely something worth prioritizing.

The Free Workaround for Mac Users

Fortunately, if you’re working on a Mac, this doesn’t mean that you need to immediately go out and drop hundreds of dollars on a new computer. There’s a really good free workaround for this, which is a software called Boot Camp.

Boot Camp allows you to download the Windows 10 operating system on a Mac for free, and also allows you to toggle back and forth between the two operating systems every time you restart your computer.

This makes sure that you don’t have to give up your Mac interface altogether if you want to continue using this for your own personal projects, but you’ll also be able to work in and get familiar with the Excel for Windows interface.

While this isn’t a perfect solution, since you’ll still need a Microsoft 365 license and your keyboard will still be designed for Mac (which can cause some differences when it comes to keyboard shortcuts), this can be a significantly more cost-effective way to familiarize yourself with the Excel for Windows interface.

#2: It’s Easy to Get Pigeonholed

The next thing I want to point out is related to the career path that you choose to start out on, and this is that in commercial real estate, it can be very easy to get pigeonholed in a specific part of the industry relatively quickly.

What I mean by this is that in commercial real estate, you can very quickly be labeled as a “debt professional”, or an “acquisitions professional”, or a “broker” early on in your career, and this can make it difficult to move into different parts of the industry in the future if you decide you want to make a change.

This usually isn’t a big problem in the first few years of your career, as you’re just getting your bearings and deciding where you want to focus long-term. However, if you’re planning to take a job (or you’re currently in a job) that’s essentially a means to an end, in most cases, you probably don’t want to spend more than about 2-3 years in this part of the industry before making a change.

#3: Brokers Can Make (Significantly) More Money Than Their Principal-Side Counterparts Early On

The next thing to know is really important if you’re looking to maximize your income as quickly as possible, and this is that for high performers in the industry, brokers can often make a lot more money than their principal-side counterparts early on in their careers.

If you’re working as an investment sales analyst or debt & equity placement analyst for a major brokerage firm in a major gateway market, assuming the team you’re working on is doing a relatively high amount of volume, it’s very likely that you’ll be outearning your peers in acquisitions or asset management (by a pretty wide margin).

And as you gain more experience and you start to move into roles that are more heavily focused on production, that gap in earnings can start to become even more substantial. And while acquisitions professionals can make very good money, their peers in brokerage are often making significantly more money, with even more flexibility in their schedules on a day-to-day basis.

#4: Brokerage and Acquisitions Come with High Volatility

Speaking of brokerage and acquisitions, the next thing you’ll want to know before starting your career is that, while these tend to be the most popular and highest-paying career paths in the industry, they also come with a lot of volatility.

If transaction activity dries up, so will the incomes of brokers relying on commissions for either all or most of their pay, and acquisitions professionals that rely heavily on performance-based bonuses will also often see their paychecks dwindle during this time.

Acquisitions professionals also tend to be some of the first people to be laid off when deal flow slows, so while brokers might see their incomes cut by 50% or 75% during down cycles in the market, an experienced VP of Acquisitions might find themselves out of a job completely for an extended period of time.

#5: Commercial Real Estate Is a Very Small Industry

The last thing I want to highlight in this post is really important to know when you’re just getting started, and this is that commercial real estate is a very small industry, and you need to act accordingly.

When you start your career in a city like New York, Los Angeles, or Chicago, it might feel like the world of commercial real estate is huge. But once you actually start working in this industry for a few years, you’ll start to realize how many people in this business know each other, and just how tightly this industry is connected.

Why Reputation Matters So Much

This is why you’ll often hear experienced real estate investors talking about leaving some “meat on the bone” during a negotiation. This makes both parties feel like they won a little, and also makes it much more likely that they’ll do more deals together in the future.

This is also why companies will often do everything in their power to close a transaction once a deal is put under contract. Developing a reputation as someone who constantly asks for re-trades or falls out of contract altogether makes it much less likely that brokers will come to you with deals in the first place, or that sellers will select you out of a pool of bidders.

This is also why you never want to negotiate a job offer in bad faith or lead a company on too long during the interview process (when you know you plan to take another opportunity), since these things can also get back to other companies that might be considering hiring you in the future.

Ideally, you want to develop a reputation as someone who follows through on their word and is reliable, professional, and honest. If you can do that, this reputation will follow you throughout the industry over time, regardless of the career path within commercial real estate you ultimately choose to pursue.

How To Build The Skills You’ll Need To Break In

If you’re looking to break into commercial real estate right now, and you want to make sure you have the technical skills you’ll need to land a job or pass an Excel modeling exam that might be given to you during the interview process, make sure to check out our all-in-one membership training platform, Break Into CRE Academy.

A membership to the Academy will give you instant access to over 120 hours of video training on real estate financial modeling and analysis, you’ll get access to hundreds of practice Excel interview exam questions, sample acquisition case studies, and you’ll also get access to the Break Into CRE Analyst Certification Exam, which covers topics like real estate pro forma and development modeling, commercial real estate lease modeling, equity waterfall modeling, and many other real estate financial analysis concepts that will help you prove to employers that you have what it takes to tackle the responsibilities of an analyst or associate at a top real estate firm.