I am currently getting my brokers license and I am still trying to decide between going residential or commercial. My question is what does everyone think the big differences are as far as income, getting clients, and best companies to work for?<br /><br />My second question is what is the best way to find clients in commercial?<br /><br />In the long run which one would you choose?

First of all, Commercial Real Estate is defind in the USA as 5 residential units or above. It includes everything in real estate other than 1 to 4 units in residential. Therefore, if you sold a duplex home to an investor that the primarily use of it is for rental units, it is NOT a commercial sale, it is a residential sale, regardless the value of the transaction.

Commercial Real Estate Brokers have a longer period of lead time to enter the market and to receive their first commission. Although the commission a commercial broker receives normally is larger since the transactions are much bigger than the residential brokers. In a market where the avergage housing are sold at 150K, commercial brokerage closing are more less in the Million dollar range. So, if you close one deal in commerial its like to close 5 to 10 deals in residential. The commerial deals normally has a smaller commission percentage, unlike residential commissions total commerial commissions are in the 4% to 2% whereas the residential commissions are in the 6% to 4% range. On a super large deal such as a 50 to 100 million dollar deal, commercial commissions are in the 1% range.

It is very difficult to enter the commerical sales or lease brokerage and the attrition rate is high. Most ppl enter the commerical real estate by joining a property management firm starting with property management. The other way around is to enter the commerical mortgage arena and become a loan broker. Either way the barrior of entry is high. Most large firms recruite entry level personal from top colleges and universities. In Californina, you better off if you are graduates from UC Berkeley...

In my personal brokerage land sales deals, we have an average wait time of 2 years before the commission check will be received.. However, the wait time is very worthwhile, in one of the year our company received over 500K of commissions.

With the latest information I have, regarding commercial mortgage loans... is that the days of the 90 LTV are gone.

Now lenders are looking for deals that have LTV's around 60 - 65% and the subject property better shine and rock this world. In other words it has to be a strong clean deal.

If it is an apartment complex, there still might be a little flexibility to get the deal done. But it will be looked at very closely.

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Commercial Mortgage Loan Information

These days, because of economic downturn, commercial business today are having a hard time compare to residential real estate.. One that may concern on this is the fact that people are using there money wisely and don't spend in the things they don't needed..

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There is no answer to your question. Because it depends on your ability to succeed in each case. They are in fact two different businesses. even though they all sell real estate.

Only about one out of 20 broker/agent is in true commercial real estate, because its barrier of entry is much higher than residential. There are millions of houses for sale, but only less than 1% of the number of deals are available in commercial properties and of those only 20 to 30 percent of them actially cloeses.

Commercial real estate, however has more than one angles, other than sales, you can venture into property management and leasing.

The Deals in commercial real estate is much larger, more complex and lot easier to fall out of escrow. OTOH, the rewards are bigger. Normally, we are looking for one or two deals closing each year on the average. The high performers in the nation, however, closes 27 deals per year. The top performer in residential, closes 500 deals per year.

In order to establish the commerical real estate business, you need to establish yourself in the business community and establish realtionship with business people surrounding you. Have good realsionship with the banks. Know all the brokers near you in person. Its a differenet world from the residential market.

See their are different things which you have to consider
at the different level like you made a residential one they
have their views as to other and to make the residential
you have to be more concerned about the people.

In commercial one i think their are more people and
make it more and more people are involved in it.

Thanks
Jone

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Northwest Arkansas Real Estate

Thanks for your all kind of support have being just a same kind of issues regarding Commercial vs. Residential.. facing so much confusion concerning that.

I am gonna to congratulate all of you, that you've shared the important aspect of Commercial Vs Residential. I am very happy that every one did a well job..

Thanks,

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Well if your target location is full of tourist then go for commercial if otherwise you go for residential of course. It's your call, good luck.

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