The Top 5 Patterns Among Successful Real Estate Entrepreneurs

If there’s one thing I’ve learned since starting Break Into CRE Academy, it’s that a very high percentage of people that get into the real estate industry have aspirations to go out on their own, and any jobs they take before then are taken with the primary goal to prepare them for that process.

And over my 10+ years in commercial real estate, I’ve seen some very common patterns among my peers in the industry who have gone the entrepreneurship route, and those who have been successful in making that transition.

If your long-term goal is to go out on your own and build a commercial real estate portfolio, this article walks through 5 common patterns I’ve seen among the most successful real estate entrepreneurs I know, and what you can take away from each.

If video is more your thing, you can watch the video version of this article here:

They Don’t “Burn The Boats”

The first thing worth noting is that the vast majority of these people did not “burn the boats” and go all-in on their venture immediately, but started their businesses on the side of their full-time jobs.

Usually, this came after getting their first promoted interest check, saving enough money to cover several months of overhead, or even negotiating a part-time consulting agreement to partially replace their previous salary.

Since generating fee income is often the primary way that new real estate firms keep the lights on, having an existing income stream when getting started often prevented these people from stretching too far on deals just to cover their overhead (or even personal living expenses). This also stopped them from making short-sighted acquisition or sale decisions that would hurt relationships with investors over the long term.

Having your back against the wall does give you a certain amount of motivation to make things happen, but in the investment world, discipline and patience tend to be the characteristics that help build sustainable companies.

They Have Institutional Experience

Many of the most successful real estate entrepreneurs I know cut their teeth by working directly for private equity firms or major institutions before going out on their own.

These brand names on their resumes allowed them to build trust with high net worth individuals, family offices, and even their own family members to fund their first several deals.

Some people also used a former employer as their main capital source starting out, using the reputation they built on the job to leverage an investor base.

This is also one of the main reasons why I recommend working for an existing company before going out on your own, since you’re not only getting paid to learn, but you’re also building relationships with potential capital partners.

This can often be a much quicker and more efficient way to raise capital than going after $25,000 checks from high income earners or high net worth individuals, and can also help you build trust with other institutions that you may want to partner with in the future.

They’re Flexible With The Path

Although almost all of these people developed a very clear vision for where they wanted to go before starting their companies, they were also flexible with how they got there and the path they ultimately pursued.

I’ve seen people start out with the goal to build development or investment firms ultimately transition to fee-based work as an asset manager or consultant, when acquiring properties and/or developing raw land became a lengthier and more capital-intensive business than they had initially anticipated.

I’ve also seen people switch asset classes, starting out with the goal to buy one type of property across multiple different geographic markets, only to realize they had a competitive advantage locally in a completely different product type.

Entrepreneurship is fluid, and even though you should have a concrete direction and strategy for your company, being flexible and responding to the demands of the market is a key part of building a competitive advantage and succeeding over the long term.

They’re Not Too Early & Not Too Late

Most people I’ve seen go this route started their companies between the ages of 28 and 40, at a time when they had enough experience and relationships that they could confidently achieve their goals, but they also weren’t too comfortable in their jobs to the point where they couldn’t bear the thought of starting over.

Most of these people made the leap once they hit a Senior Associate, Manager, or VP title, usually having about 7-15 years of experience in the business at that time.

Once you start to take on a significant amount of responsibility at work, it can start to feel burdensome to be doing so many things yourself, while only taking home a very small piece of the pie.

And when you start to see the fee and promoted interest amounts being generated by the company and realize you’re the one doing the majority of the heavy lifting, this is often the breaking point when people feel ready to go out on their own.

They Set Out To Build a Business

Contrary to what a lot of people on the internet will tell you, real estate is very much an active business, especially when you’re raising capital to fund the deals you do.

In the early days, you personally (or you and a few partners) are going to be responsible for every part of the business, meaning that you might trade in your full-time, salaried job for an even lower-paying job doing three times the work.

Treating your new venture like a business also involves spending money to run your operations, including things like paying for access to industry databases like CoStar or Yardi Matrix, paying for investor management software like Juniper Square, and incurring costs associated with traveling to potential acquisitions and development sites.

If you want “passive” real estate income, investing in deals as a limited partner is a great way to do that, but starting your own investment firm and raising capital from equity partners is not going to immediately lead to a calm, peaceful retirement.

How To Break Into Commercial Real Estate

If you want to take the first step in this process and land a job in the commercial real estate industry, learning from experienced industry professionals before striking out on your own, 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. This exam 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.

As always, thanks so much for reading, and make sure to check out the Break Into CRE YouTube channel for more content that can help you take the next step in your real estate career.

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