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Hello everybody thank you for coming.
Robert Rico here California Realty Training.
So glad you made it to our video blog this week and we're hope you're enjoying them;
learning something from this real estate world you may be getting into.
Today we are going to talk about joining a commercial real estate career or getting involved
with a residential real estate career.
Now with the license, with the real estate license, you have the ability to do both if
you like.
You can do commercial sales or you can do residential sales, however they're both quite
different.
For example, commercial sales.
When it comes to commercial sales you can make tons of money in that because commercial
sales are huge commercial properties that you will be selling, you will be presenting.
For example, just today I went online and looked up businesses for sale.
There was this one business I caught, they were selling it for a "mere," now watch this,
a "mere", this is Los Angeles now, a "mere" 11 million dollars.
Now a typical commission is, we'll say it's 3% per side.
3% for the buyer's agent and 3% the seller's agent.
So let's assume you're representing the buyer in this.
Now 3% of 11 million dollars is a lot of money if you do the math.
It's $330,000 for one deal.
That's fantastic, however when it comes to a commercial career you may not hit your first
deal or close your first transaction until several, several months, possibly more than
a year, two years, maybe three years.
It's a lot of incubating when it comes to commercial sales because these are huge, huge
transactions.
Selling apartment buildings, selling a shopping center, selling a hill, selling a hospital,
all these kinds of things are what you'll be dealing with when it comes to commercial
sales.
And when it comes to residential sales it's a little easier, a little more soft.
Somebody gets their license, they join a brokerage, they get involved in a residential career,
they represent a seller of a home, they represent a buyer who wants to purchase a home.
Commercial sales you get paid huge.
You get paid massive.
You have a great time doing it, however it's far and few between.
Residential sales, hey you get your license and you could probably, probably close a transaction
within the first few months.
Particularly if you tell you sphere influence as to what you're doing in this real estate
career that you got involved in, that you're ready to make it happen.
Now let's talk about the qualities required for a commercial real estate agent.
A lot of these commercial agents are more of a corporate environment.
The environment is very, very corporate like, which is very, very serious.
They're up in a huge office, everyone's on those phones, doing all their cold calling,
doing all their research on the property, on the apartment complexes, strip malls, all
that kind of stuff.
And they expect you, they expect the commercial agent to know a little bit more than the typical
residential agent.
For example, they expect you to know a little bit about internal rates, about the capitalization
rates, which is also know as cap rates.
Gross rent multipliers and whole bunch of other analytics.
Let me give you an example.
I had a good friend of mine, his name was Paul.
Paul, to me, was one of the great commercial real estate agents that I knew.
And one day he was walking by my office and I had never done commercial real estate.
I've always been committed to residential sales because, to me, it's rather simple,
cut and dry, I find somebody, put them in a house, close the transaction.
Or I represent a seller, sell their home, close the escrow, not a big deal.
But anyway, one day Paul was walking by, I say, "Hey Paul stop for a minute.
Come on into my office."
He came into my office.
I said Paul, "I'm interested in knowing just a little bit about commercial real estate.
Would you mind explaining to me how it works, selling a piece of commercial property."
He said, "Rico it's very, very simple."
And he went to my little white board and he started explaining to me gross rent multipliers.
He started explaining to me the cap rate.
I said, "Paul.
Stop.
I don't want to hear nothing more."
It just sounded so confusing.
It's a complete different terminology.
Complete different language, if you ask me.
That I just knew, that it would be so challenging for me that it would not be a good fit for
my type of career.
Now when it comes to commercial real estate, please pay attention to this.
They expect the commercial real estate agent to be patient, there's a lot of incubation
there with your client.
They expect the real estate agent to be confident.
You must be confident.
Hey, I think when it comes to residential sales you need to be confident.
You must be social.
And you must be persistent.
You must be persistent.
Now these qualities will definitely get you to where you want to be, particularly if you
are persistent and you don't give up when it comes to this commercial or residential
sales.
Ladies and gentlemen if you think you are cut out for a commercial real estate career,
now you know a little bit about it.
Is it challenging?
Yes.
Is it rewarding?
Absolutely.
But only you can make that determination.
Thank you for coming to our video blog.
We hope to see you next week.
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Have a great day.