When I started buying property, I'd make appointments with real estate agents who will be take us on tours to view properties. They'd spend a lot of time and effort to answer questions and hope to get a sale. When viewing with these agents, I'd think to myself that I would never want to be a real estate agent. Simply because majority of the people they bring around are not serious buyers and that means 90 percent of their time is wasted. In simple statistics, they have to show as many as possible because the conversion rate is only 10%. This is why you see real estate agents running around all the time.
But a few years later, I found myself taking the real estate broker test! The reason is so I can represent myself on my own deals and make the buyer commission that would otherwise go to the buyer broker. If I knew a market better than the broker, my reasoning goes, then I may as well represent myself. Consequently, I spent 1 week to study for and to take the Salesperson exam. And another 2 weeks studying for and taking the Broker's exam. That was in November 2007. I became a Broker after 3 weeks of exams and test taking.
The difference between a Salesperson and Broker is that a newbie needs to take the Salesperson exam and work under the supervision of a Broker. After the Salesperson has completed about 10 transactions, he could take the Broker exam and become a Broker. Being a Broker means he can work for himself or start his own firm. Hence, the Broker license is the higher level license.
In my case, I could take the Broker's license without first becoming a Salesperson and selling X number of properties because New York State allows experienced developers and investors to go directly for the Broker's license. Less than 5 percent of Brokers get their license this way.
This is why I never see myself as a real estate agent. I don't like showing properties to strangers and have never done it. I don't like wasting time with people who are not serious. I don't like talking about granite countertop kitchens or marble bathrooms. I hate being viewed as a salesperson because I'm not one.
However, what I enjoy is buying property as investment. I enjoy bringing friends to view property and giving them an honest opinion about whether I think their long term net worth will increase as a result of buying a property. I enjoy looking at price per square foot. At potential rent increases. At whether real estate prices increase with inflation and to what extend. I enjoyed speaking to investors about investing in real estate compared to gold, both tangible assets with different attributes. I enjoy looking at cashflow projections of real estate and comparing the yield to Johnson&Johnson's dividend yield. And of course, I enjoy the high end show rooms of luxury Manhattan condos. I enjoy working with my international connections, going to country clubs and having a good time.
Based on the above, then why not become a commercial broker? Well, it's because I am not a salesperson. And commercial brokers, all very financially savvy, are even more sales-like than residential brokers. They just push numbers while their residential counterparts push granite countertops. Most commercial brokers make 50-100 cold calls a day to solicit business. This is something I can never do.
Hence, using the extra free time available now that the market has slowed down, I've narrowed the focus of my real estate advisory business. Note that I called it an advisory business instead of a brokerage business.
1. Help clients grow wealth through real estate
2. Only accept referrals
3. Leverage my financial analysis strength
4. Focus on my international clientele
These will be guiding principles as I re-brand and reposition my firm for the next phase of growth. My good friend told me yesterday that the key is to speak as if you've already achieved your dreams. In the present tense. By doing this, one's brain becomes wired to make the dream a reality. Hence, I now have a firm that is focused on real estate advisory and that caters to an international clientele.