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A Beginner’s Guide: How to Get Into Commercial Real Estate - Blooma

Written by Blooma | Dec 13, 2024 12:07:11 AM

Commercial real estate (CRE) is not just a market. It’s a world of possibilities where investments take shape, deals come to life, and fortunes are forged. 

At its core, CRE involves the buying, selling, leasing, and management of properties intended for business purposes rather than personal use. But it’s so much more than bricks and mortar; it’s the beating heart of commerce itself.

The allure of commercial real estate lies in its potential for both seasoned professionals and newcomers alike. It’s a sector that can deliver lucrative returns, provide a dynamic career path, and offer diverse opportunities for specialization. 

In fact, according to the National Association of Realtors (NAR), the commercial real estate industry contributes significantly to the U.S. economy, with millions of transactions totaling billions of dollars each year.

In this article, we’ll review the multifaceted world of commercial real estate, exploring its diverse segments, the steps to break into this exciting industry, and the technology you can use to support your journey. 

Understanding the Basics

Before diving into the intricate world of commercial real estate, you need to have a grasp of the fundamentals. This section will provide you with a solid foundation by exploring the various types of commercial real estate and the key terminologies associated with the industry. 

Types of Commercial Real Estate

  1. Office Buildings: This includes large corporate headquarters in bustling city centers and even suburban office parks. Office spaces are leased to businesses for their administrative and operational needs. 
  2. Retail Properties: This category includes shopping centers, malls, standalone stores, and other spaces where businesses sell goods and/or provide services to customers. Retail properties vary from neighborhood strip malls to high-end luxury boutiques. 
  3. Industrial Properties: Warehouses, distribution centers, manufacturing facilities, and industrial parks fall under this category. They serve as the backbone of the supply chain, housing goods in transit and facilitating production.
  4. Multifamily Properties: Also known as apartment complexes, these properties consist of multiple residential units under one roof. They provide housing to multiple families and are a significant part of the residential real estate market.
  5. Special Purpose Properties: These properties have a unique purpose such as hotels, hospitals, and more. They cater to specialized needs and often require tailored management. 

Key Terminologies 

  • Cap Rate (Capitalization Rate): A fundamental metric used to evaluate the potential profitability of an investment property. It’s calculated by dividing the property’s net operating income (NOI) by its current market value. 
  • Lease: A legal contract between a property owner (landlord) and a tenant specifying the terms and conditions under which the tenant can use the property. 
  • Lessor and Lessee: The lessor is the property owner or landlord who grants the lease. The lessee is the tenant who receives the right to use the property from the lessor. 
  • Brokerage:  The practice of representing clients in the purchase, sale, or lease of real estate. Commercial real estate agents and commercial real estate brokers facilitate transactions between buyers, sellers, landlords, and tenants.
  • Zoning: Local government regulations specify how land can be used within a particular area or district. Zoning laws often dictate the type of developments permitted in a given location. 

Steps to Starting in Commercial Real Estate

Breaking into the world of commercial real estate can be an exciting and rewarding journey but it also requires careful planning and preparation. Here are the key steps to know before embarking on a successful career in CRE.

Education and Licensing Requirements

In most jurisdictions, you’ll need to obtain a real estate license to practice as a commercial real estate professional. Requirements for licensing vary state by state, but they typically involve completing a specific number of education hours, passing an exam, and meeting other specific eligibility criteria.

Keep in mind that even after obtaining your initial real estate license, it’s crucial to stay updated with ongoing education. Many real estate associations and organizations offer courses and certifications that can enhance your knowledge and skills in CRE. 

Gaining Experience

Many beginners in CRE start their careers by joining a reputable brokerage firm. This provides an opportunity to learn from experienced professionals, gain exposure to various commercial property types, and build your own potential client base.

You can also consider internships or apprenticeships with established commercial real estate firms. These opportunities allow you to learn the ropes, gain practical experience, and make valuable industry connections.

Networking and Mentorship

You can build a robust network by attending industry events like the Inman Connect conference, joining real estate associations, and connecting with fellow professionals. Networking can lead to valuable referrals, partnerships, and real estate career opportunities. 

Finding a mentor with experience in CRE can further accelerate your learning curve. Mentors provide guidance, share experienced insights, and can help you navigate the complexities of the industry. 

Specialization and Continued Learning 

Consider specializing in a particular aspect of commercial real estate, such as office buildings, industrial properties, or retail spaces. Specialization can help you stand out and become an expert in your chosen field.

Given the dynamic nature of the industry, you should also make sure to have a continuing education that allows you to stay on top of market trends and regulations. Stay informed of real estate developments and how the commercial real estate market is faring through industry publications, seminars, and online resources. 

Pro-tip: Stay on top of the top commercial deals rocking the real estate business firms. This gives you an idea of the real estate deals to pursue, how commercial deals are impacted by various market factors, and grows your own property management skills. 

Using Technology for Support

In today’s fast-paced commercial real estate (CRE) industry, technology is not just a luxury—it’s a necessity. Keep reading to find out more about the role of automated underwriting platforms and highlight how innovative solutions like Blooma can be a game-changer for professionals in the field.

Introduction to Automated Underwriting Platforms

Automated underwriting platforms are a cornerstone of modern CRE operations. They bring the power of data analytics, artificial intelligence, and machine learning to streamline and enhance various aspects of the industry.

The main benefits these platforms offer include: 

  • Efficiency: They can process large volumes of data rapidly, saving time and reducing manual labor in property analysis and due diligence. This includes compiling and assessing real estate transactions.  
  • Accuracy: They provide accurate property valuations, risk assessments, cash flow predictions, and market trend analyses. This minimizes the margin for error in investment decisions and helps lenders approach deals with confidence. 
  • Data Integration: These platforms consolidate data from multiple sources, providing a comprehensive view of a property’s history, market conditions, and potential risks. 
  • Predictive Analytics: They have the power to predict future property values using real-time analytic inputs, thus enabling commercial real estate investors to seize the right opportunities at the right time. 

How Platforms like Blooma Can Help

Blooma is one such advanced automated underwriting platform that offers a host of features tailored to CRE professionals. 

Blooma integrates and pools in data from various sources, including market data, property values, and demographic information. This comprehensive dataset is instrumental in making the right investment decisions. 

The platform also provides access to advanced analytics tools and real-time data analysis. You can use this to stay ahead of market trends. Pair this with Blooma’s intuitive visualization tools to simplify the presentation of complex data, making it easier to understand and communicate with stakeholders. 

By leveraging Blooma’s capabilities, CRE professionals can enhance their journey in the field and be armed with a tool that guides data-driven decisions, boosts profitability, and mitigates risks. 

Start Your Commercial Real Estate Journey with Confidence Using Blooma

Are you ready to kick off your journey in CRE?

Take action with Blooma today! 

Discover the power of Blooma’s automated underwriting platform, designed to simplify and optimize your CRE endeavors. 

To do this, reach out to us and get a personalized demo to see how our platform can revolutionize your approach to property analysis, due diligence, and market research. 

With Blooma as your partner, you can navigate the seas of CRE with ease. 

Get started today!