Real Estate

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For anyone interested in entering the real estate world, a specialized degree in the field can provide a versatile path into the industry. Although a college degree has not been traditionally required in the past, completing these studies can result in significantly more opportunities for success. The degree can also act as a springboard to a variety of other career options. A real estate graduate can apply his or her knowledge to numerous facets of the industry. For new graduates with little to no experience in the field, a Realtor position is often recommended, as it can lay the groundwork for what they would like to accomplish in the future. We would like to thank John Crossman, President of Crossman & Company, a premier Real Estate firm in Orlando, Florida, for providing this relevant information for students interested in starting a career in Real Estate.

Brokerage and Leasing

Real estate agents that represent buyers, sellers, owners or tenants must be licensed by the states in which they work. Most states require a test before issuing a sales license, or for more advanced brokers, a license is based on experience and educational requirements.

Residential agents represent buyers or sellers in exchange for a fee, payable when a sale is completed. This productivity-based segment requires long and uncertain hours, often resulting in a high agent dropout rate.

Commercial brokerage requires people skills and a higher level of technical business knowledge. Most successful commercial agents need at least an undergraduate education. Many have graduate degrees in business, enabling them to work with corporations, tenants, institutional buyers and sellers, domestic and foreign business entities and a host of sophisticated investment and business clientele. Most commercial agents specialize in specific property types such as industrial, office, retail, hotels or apartments. Specialized education is available through a variety of trade associations. Successful commercial agents can earn executive-level compensation. They must closely watch markets to anticipate economic trends affecting the real estate industry.

For more information on residential brokerage, contact the National Association of Realtors, NAR. For commercial brokerage, contact CCIM. For office and industrial property, contact NAIOP or SIOR. For retail property, contact ICSC. For women in commercial real estate, contact CREW.

Construction and Architecture

Your education and experience in commercial real estate can open opportunities in some areas of the industry you may not have considered, including the architecture and construction segments of the real estate development process.

Becoming an architect or contactor requires special education, experience and licenses. Many major architectural and contracting firms have internal business development/marketing departments. These positions generally do not require extensive knowledge of the industries at the entry level, although to prosper and advance within this profession, significant knowledge would need to be acquired. Business development in these professions entails extensive involvement and participation in multiple industry related organizations, along with strong relationship building within the real estate industry. In many instances, you will become the “face and voice” of your company and will be responsible for public relations, customer relations, advertising, and other administrative functions such as developing, preparing, and implementing the company’s business and marketing plans.

For more information on construction and architecture, contact ULI; AGC (Associated General Contractors) and AIA (American Institute of Architects). ICSC is developing education courses and testing for a new professional designation, CDP (Certified Development, Design and Construction Professional) which will become a standard of excellence within the retail design and construction segment of the industry and a designation which you may want to pursue.

Appraisal and Consulting

Appraisers are paid to estimate the value of property after a systematic analysis of the prices paid for similar properties, or based on an analysis of discounted future cash flows. This valuation estimate requires market analysis and extensive research. Some appraisers work for a variety of clients on a fee basis; others are internal staff appraisers, producing value opinions for their employer. Most appraisers specialize in specific types of property. Federal laws require that any appraisal performed when the government is involved directly or indirectly must be done by a state certified appraiser. Certification is at two levels, residential and general, and is based on a combination of tests and experience. Trade association designations, which require more experience and education than the state certification process, also are required by many clients, the highest of which is the MAI (Member of the Appraisal Institute).

The outlook for appraisers involved in specialized appraisal and consulting is quite promising. Many commercial and consulting oriented appraisers work within larger consulting firms including accounting and market research firms. Technology is having a major impact on the commercial and residential sectors of the real estate industry.

For more information on appraisal and consulting, contact the Appraisal Institute, and the Real Estate Counselors.

Corporate Real Estate

All major corporations must deal with real estate assets. Corporate real estate management involves maximizing the firm’s resources devoted to space needs. Once simply viewed as a cost center, corporate real estate managers are now attempting to improve the efficiency of real estate usage by considering “just-in-time” office sharing and enhancing the productivity of the work environment. In addition, corporate real estate managers often deal with site analysis, buy versus lease decisions, acquisition and disposition, portfolio refinancing and sale-leaseback arrangements, property tax appeals and a host of facility management decisions.

For more information on corporate real estate, contact the National Association of Corporate Real Estate Executive, NACORE.

Institutional Real Estate Investment

Most of today’s large-scale real estate transactions ($10 million dollars and up) involve institutional investors. Among these are Real Estate Investment Trusts (REITs), the larger life insurance companies and pension funds. These institutions may utilize commercial brokers in the local markets, but they rely on internal staff to review and analyze proposed investments. Often these institutions look for a real estate background, and an MBA degree, when staffing such positions. Institutional investors pay attention to niche market trends, tax law trends, regulatory trends, geographically based economic trends, demographic trends and global economic trends, in addition to micro-level real estate analysis.

The slogan “think globally, act locally” can be applied to today’s institutional investment firms because many of them also “act globally.” Whether working with domestic or international investors, strong analytical skills, the ability to manage portfolios and excellent communication skills are required.

For more information, contact the National Institution of Real Estate Investment Trusts, NAREIT, and the National Association of Real Estate Investment Fiduciaries, NCREIF. Also contact RECRA, the Real Estate Capital Resources Association.

Property Management

Property management involves maximizing net revenues of property based on managing rental flows, tenant retention, and property operation. Property operation includes cleaning, maintenance and repairs, paying utilities, property insurance, property taxes, reporting to owners and overseeing resident or on-site managers. Property managers are usually involved in leasing and facility management decisions. Those that manage several properties and are involved in acquisition, disposition, financing and portfolio management decisions are known as “asset managers.” Most property managers start as on-site managers, working closely with tenants.

Consolidation is the general trend in the industry. Many property management firms are national or international in scope and are able to manage an entire institutional portfolio of various properties in different cities. Property managers’ fees are often based on rental collections, as well as the complexity of the property management work. For example, shopping center property managers may be involved in tenant merchant associations, joint promotions and advertising. It involves more time than, for example, a single tenant industrial property, where the primary management function is accounting-based control, reporting and monitoring.

For more information on property management, contact Building Owners Managers Association, BOMA, and the Institute of Real Estate Management, IREM.

Mortgage and Construction Lending

Mortgage lenders specialize by size of loan and property types. Primary lenders for residential single family properties include mortgage companies that resell loans in the secondary mortgage market, as well as commercial banks, savings institutions and credit unions. Banks and savings institutions usually pay employees on a salary plus bonus basis. Mortgage companies rely typically on productivity-based compensation. Loan officers must know about credit analysis, as well as appraisal, title, environmental concerns and a host of other government regulations. Multifamily mortgage lenders act much like commercial mortgage lenders with more emphasis on property analysis including market trends, tenant review, income and expense review as well as the value of the subject property. Commercial banks and savings institutions provide most of the smaller multifamily loans while life insurance companies, pension funds, Real Estate Investment Trusts (REIT) and pension funds provide larger scaled financing.

Non-residential mortgage loans involve commercial banks as well as life insurance companies and pension funds as typical suppliers of capital. Commercial mortgage lenders require more business education and analytical skills than the residential lenders. Mortgage brokers are often used to represent smaller life insurance companies and pension funds that cannot efficiently process their own loans. Mortgage brokers work on a commission basis paid after successfully placing mortgage loans that meet the needs of the borrower and lender.

Lending on construction projects is the most complicated end of the financing spectrum. It involves all of the concerns of the permanent mortgage lender (credit, income, expenses, property value and environmental) as well as absorption risk, construction cost risks and delays, and other concerns. Construction lenders are often hired from among the ranks of experienced mortgage lenders. Most construction lending is provided by commercial banks.

For more information on mortgage banking, contact the Mortgage Bankers Association, MBA.

Development

Developers are among the most entrepreneurial of the real estate players. They acquire land and prepare it for development, as well as oversee the construction process. Developers specialize in residential or commercial development, and they specialize by property size and type.

For more information on residential development, contact the National Association of Home Builders, NAHB, as well as the Multi-Housing Council. For more information on commercial development opportunities and trends, contact the Urban Land Institute (ULI), the National Association of Industrial and Office Parks (NAIOP), the International Development Research Council (IDRC), and the International Council of Shopping Centers (ICSC).