6 Reasons Why You Won’t Make It In Commercial Real Estate

Tom Bilyeu, co-founder of Quest Nutrition only asks 1 question every time he starts a new venture. “Tell me why I’m going to fail”. Which is what I’m going to do.

Reason #1: You Are Impatient

They say that millennials are entitled and want everything right now. They call it the “microwave society”. If that is true, it’s not our fault. Our environment taught us to think this way. We are a by product of pop culture conditioning. We’re entitled because we’re constantly told that “anything is possible”. And we want things right now because we grew up in an age of iPhones, high-speed internet connections, Amazon two-day deliveries, and Postmates. According to the movie the social network we can be a billionaire by the time we’re out of college. And nowadays there’s 8-year olds making $10M a year from YouTube. So we’re all behind! But the point is that most millennials are impatient. (Including myself) If you’re looking for a get-quick-rich scheme then Commercial Real Estate is not for you. I can’t tell you how many times I’ve told a new hire “It will take on average about a year before you close your first deal”, and they respond “yeah I’ll do it in 4months”. Then when they don’t close a deal in 4 months, they quit. Yes, be ambitious and be optimistic… but also manage your expectations. But more importantly, be patient with the process. You have to remember that the agents that have established themselves in the business are 10–20-year veterans. That’s who you’re competing with. That’s who’s lunch you’re trying to eat. Do you really think it’s going to be that easy?

Reason #2: Your Friends Will Talk You Out of It

I sincerely hope that you don’t care what people think about you. Because if your self-esteem is based on what others think, you won’t make it. I can’t tell you how many times I had this conversation when I first started:

Friend: So how’s that Real Estate thing going? Have you sold any houses?

Me: It’s going ok. I haven’t closed anything yet and I don’t sell houses, I sell apartments.

Friend: Yeah same thing. But dang you haven’t yet? Why not?

Me: I don’t know it just takes a while.

Friend: My friend Gilbert already sold a house and he got started 3 weeks ago!

Me: I don’t sell houses dude.

Friend: And you’re not getting a salary?

Me: No it’s all-commission

Friend: Maybe Real Estate isn’t for you

Me: hmmm…

Friend: Bro they’re hiring at my company right now. I made $190k last year. $60k base pay plus commission.

Me: I’m good man but thanks

Friend: Really? You’re going to say no to money?

Yeah. THAT conversation. Sometimes it’s difficult to explain your decisions to people that don’t have a long-term vision.

Reason #3: It Isn’t Sexy

Commercial real estate is very mundane. This is what our daily routine looks like.

We cold-call. We meet clients. We draw up contracts. We underwrite.

Rinse and repeat. With cold calling being 70% of your activity. It’s boring! It isn’t sexy! It doesn’t look anything like the Wolf of Wall Street movie where we close someone over the phone and immediately commission $54,000. And it doesn’t sound cool to brag about an 8-unit property you sold in South LA. It sounds way better to talk about a $7,000,000 house you sold in Hollywood Hills. Even the marketing looks better. If you’re one of those types of people that cares about swagger and cool new trends, this probably isn’t for you. Why do you think they haven’t made a reality TV show about commercial real estate yet?

Reason #4: Finances

Lower your overhead and get on a frugal budget because it’s going to a bumpy ride. It’s hard to weather the initial storms if you don’t have any savings to keep you afloat. It also makes your job a lot more difficult when you’re worrying about where your next paycheck is going to come from. Save up at least a years worth of expenses to get you by. But remember, I said a year is the average it takes to close a deal. Meaning it can take longer…

Reason #5: You Take Rejection Personally

It’s a grind… and if you take rejection personally then its going to be a tough road ahead. You’re going to have those days when you do all the rights things, say all the right things, put in the right effort… and yet you still get rejected again and again. You’re going to put in 700+ calls in a week, and zero meetings. You’ve been coming into the office everyday @7am for a month and no results. You get a listing and you lose it. Look I get it… it’s tough. And it doesn’t make our job easier to know that we cold-call every day and it never stops. Here’s what the average numbers look like when you first start out. On average it takes about 12 calls to get a hold of 1 person. It takes about 60 phone conversations, to book one meeting. It takes about 2.5 meetings, to get 1 underwriting analysis. And it takes about two underwriting analysis, to get one listing. Then depending on the listing. You’ll probably have a 50% close ratio. So by those standards, it means that it takes approximately 7,200 phone calls to close a deal. Not to mention the sales cycle and time it actually takes. The tough part isn’t making 7,200 calls. The tough part is the 599 rejections you have to go through to find the 1 person that will be your first client. Think you have what it takes?

Reason #6: You Think You Are Smarter Than Everyone And Keep Looking For Shortcuts

I know this one from experience. Now the industry veterans will tell you to specialize and to focus on building relationships with clients. The new agents just starting out will sound something like this:

New Agent: That sounds good but theres gotta be a faster way.

Mentor: Good things take time.

New Agent: What if we build a website and do digital marketing and build a sales funnel campaign??

Mentor: I’m not sure how that works.

New Agent: Or what if we open a cold-calling center in Thailand to make calls for us?

Mentor: I mean…

New Agent: Or maybe… just maybe I mean hear me out. Text message blasting every 4 weeks! With links for people who are interested in an evaluation?

Mentor: We have a proven method that works.

New Agent: We should be focusing on all the owners that are in REAP! I mean they’re super distressed….

Mentor: I feel like you’re not listening to me.

New Agent: You know what we should do? We should get all the buyers from CoStar and build a super buyer database. And work the buyers and bring them deals.

Mentor: Its better to build that database organically over time.

New Agent: I just want all the leads coming to me rather than me chasing them you know? I want inbound leads!

Mentor: I think everyone wants that.

New Agent: The numbers in this database suck! We need dialers! I’m tired of only reaching 7 people a day. I want to talk to 40 people a day!

Mentor: It takes a while to research the database

New Agent: I’m going to cold-call the neighbors of every deal on the market and pitch the deal.

Mentor: You’re just going to do whatever you want huh?

New Agent: I just want to sell one of these big $40M buildings in Downtown LA already you know? That’s all I want. Is that too much to ask?

Mentor: Tell me how you really feel.

New Agent: We should create an algorithm that underwrites all the properties and then lets mail them offers in the mail!

Mentor: How many calls have you made today?

New Agent: Calls? Pfft! Its time for lunch see ya.

In case you haven’t figured it out yet. The new agent was ME… when I first started out.😅 These are all the ideas that I had and all the things I would say because I was looking for a shortcut. Unfortunately it blunted my success and I had to learn that the hard way. Now before you misunderstand what I’m saying here I am not by any means discouraging innovation. Processes can change and systems can improve. But what I would suggest before you try to disrupt the industry and change the game, is take care of the essentials first, then work on your side projects afterward. Before you bet your entire business model on an idea you think might work. The easiest recipe for failure that I see in this business is when I meet a new agent that thinks they know better than the senior. The senior makes money when you do, so do you really think they would mislead you and give you bad advice?

Conclusion

If you were thinking about doing commercial real estate and I talked you out of it, then I’ve done my job. Not that we don’t want you to join the industry, but we would rather you know the truth now… than waste 6 months of your time and find out later. But if after reading this you’re still interested and even excited like I was when someone first told me this, then welcome to commercial real estate. Reading this gets you excited because you vibrate at a higher frequency. You hold yourself to a higher standard. You were born to push boundaries and test limits. You don’t want it to be easy because you know if it is, it ain’t worth it. You would rather choke on greatness, than nimble on mediocrity. You would rather fail at doing something impossible than succeed at doing something easy. And you realize that you’re a shark and you belong in a shark tank. Commercial Real Estate is the Navy Seals of sales, and you want to be a part of that. You want to align yourself with the best, and compete with the best, because you are the best. You’re a gladiator and you were born to fight — and this is Sparta. If this is you, then welcome home.