Want To Move From Residential To Commercial Real Estate? Here’s How.

If you’re working in residential real estate right now, you probably already know that the skills you’ll need to transition onto the commercial side of the business are very different, especially if you want to work on big deals with institutional clients.

And while a background in residential sales can give you really valuable experience when it comes to the transaction process, there are a few key things that are likely missing from your skill set that are really important to address when trying to make this move.

So to make sure you’re focused on the right things to make this transition as seamless as possible, this post breaks down four of my biggest pieces of advice for people moving from residential real estate to commercial real estate.

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#1: Learn Commercial Real Estate Finance and Excel

If you’re looking to transition into a role at a commercial real estate investment, development, brokerage, or lending firm, the first thing I’d recommend focusing on is learning about commercial real estate finance and financial modeling in Excel, ideally in a way that you could include on your resume.

While residential real estate tends to focus on things like comparable sales and general supply and demand dynamics to value properties, valuing commercial real estate has a lot more moving pieces that you’ll need to understand. These include things like:

• The impacts of commercial real estate debt terms on an investment
• The effects of commercial real estate lease structures on a property’s cash flows
• The key drivers of capital markets activity in the industry

Since the entry point into this part of the business is typically at the analyst level, you’ll also usually need to be very comfortable in Excel to be considered for a position.

Companies generally look for analyst candidates who can understand and work in a pre-built pro forma model, make customizations to existing company model templates, and even build out entire acquisition and development models from scratch in some cases. And because of this, the stronger you can build your technical skills, the more traction you’re likely to see when submitting applications.

#2: Quantify Your Success in Residential

The next thing I’d recommend doing is directly related to the way you showcase your current skills and experience on your resume, and this is quantifying your achievements in the residential sector as much as possible.

This could involve highlighting:

• The number of closed transactions you’ve worked on throughout your career
• The aggregate dollar amount of closed transactions you’ve worked on throughout your career
• A few notable, high-profile deals you were involved with

If you’re working in a major gateway market like New York or Los Angeles, even if you’re only working on residential sales, your average deal size could be $1,000,000 or more. And when you add up the value of the properties you’ve listed or the properties you helped clients purchase over time, that total dollar amount can start to add up quickly.

The same thing is true not only for your achievements, but also for the actions you’ve taken on a day-to-day basis that can demonstrate your work ethic. For example, instead of just saying you made cold calls or conducted market research for clients, you could talk through how many cold calls you made on a daily or weekly basis, how many appointments you set up through these, and any specific metrics or trends you tracked when analyzing a real estate market.

In addition to these things, you may also want to highlight any experience you have:

• Working with high-net-worth or institutional clients
• Managing complex negotiations on behalf of sellers or buyers
• Handling multiple transactions at the same time

Investment Property Experience

If possible, I would also highly recommend highlighting any experience you have working with investment properties of any size. Even if these are just 2-4-unit multifamily buildings or small commercial office condos, this will give you space to talk through the types of analyses you ran on these deals and what you focused on when advising your clients.

Any information you can add that provides more context on the outcomes of your activities, the geographic markets you know well, your ability to build relationships, and your ability to manage the transaction process can all put you ahead of other candidates when applying for analyst roles.

#3: Get Exposure to Commercial Deals

The third thing I’d recommend when making this career transition is trying to get some exposure to the commercial side of the business, ideally before you start to apply for jobs.

As a residential broker or investor, you have a lot of valuable knowledge to bring to the table. And if you can work with a local developer to help plan out a mixed-use project with a residential component, or just act as a consultant to determine the value of a residential component of a property, these things can help you get exposure to the industry without having to go all-in on a career change.

Look Within Your Office

In a lot of residential sales offices, there are also agents who work on very small commercial deals on the side, so offering to help out with tours or any administrative tasks that need to be done on these projects can also give you something to add to your resume and talk through during interviews.

Hands-on experience with commercial deals will give you a much clearer sense of how investors think through different opportunities, how commercial leases and property financing structures can affect the economics of a deal, and how commercial properties are ultimately valued in the market.

#4: Be Prepared to Take a Step Back

The final thing I want to mention here is something that realistically needs to be considered when making this transition, and this is that you may need to take a step back career-wise to move into commercial real estate.

If you’re making multiple six figures selling houses, you’ll usually need to be willing to take a pay cut to make this career move, and you’ll also need to be willing to shift back into more of an in-office role when you first make this switch.

However, if having a steady salary feels refreshing and you want to make sure you understand the numbers behind commercial real estate before making investments of your own, the long-term rewards of starting over can be very worthwhile in a few different ways.

First, because commercial property values tend to be so much higher than single-family home values, the earning potential in commercial real estate tends to be much higher across the board. If you’re trying to move away from commission-based roles, there are a lot of options within the commercial sector, some of which can pay well into the mid-six figures as you progress throughout your career.

Second, commercial real estate also tends to offer a lot more variation in what you’ll be involved with on a day-to-day basis, which can make your work feel a lot more interesting on a day-to-day basis. And if you plan to make your own investments in commercial real estate in the future, working in this part of the industry can help you analyze investment opportunities, manage properties in your portfolio, and build the relationships you’ll need to get deals done.

Build The Skills You’ll Need To Make The Transition

If you’re looking to transition into commercial real estate and want to make sure you have the technical skills you’ll need to land interviews and pass an Excel modeling exam that might be given to you during the 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.