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Wednesday, Feb 1, 2023

Starting Out Means Long Days, and No Dream Wheels or Perks

Commercial real estate often brings with it six-figure incomes and membership to the Jonathan Club. But the road to riches begins at a much lower pay scale. Consider Gibran Begum.

Begum’s days at Cushman & Wakefield Inc.’s downtown office often start before daybreak and end after sunset, when he gets on the Santa Monica (10) freeway en route to his modest one-bedroom apartment in Venice. “You want to be in the office and making phone calls before other brokers are getting their first cup of coffee,” he said.

Forget about the luxury cars and expensive suits at least in the early years. Starting out as a broker selling commercial buildings or cutting leases is a lot like entry level jobs in other industries low pay ($14,000 to $40,000 a year, depending on the level of business), long days (50 to 60 hours a week), stiff competition and little job security.

“With any position starting off, it’s not going be the most appealing income stream,” Begum said. “If you are able to weather the initial phase of building your own business then you will win, but that means time is both on your side and against you.”

Some firms throw first-year hires into a kind of boiler room, where they cold-call thousands of company-provided leads and the pay is almost exclusively based on commissions. Because few have clients or connections to begin with, it can take years before a broker has a roster of steady business.

Limited social life

Hustling to get the attention of prospective clients either tenants in need of a lease or landlords looking to fill space or sell their buildings occupies much of a young broker’s time. And a lot of that wooing is done without the benefit of prestigious club memberships or expense-account lunches with prospective clients.

Driving downtown over the weekend, Begum takes notes on unfamiliar buildings so he can find the names of the owner and the tenants when he’s back in the office on Monday. Sitting at the beach, he’s strategizing upcoming deals. Even climbing North Palisade, a 14,000-foot peak in the Central Sierra Nevada range earlier this month, Begum was all business.

“I did the climb with someone who works at a big company,” he recalled. “It turns out there might be some good business there, and I now have a relationship with someone I didn’t have before.”

Starting out can also leave little time for a social life outside the office. And when new brokers have a chance to go out with friends, many find themselves on a tight budget after paying rent and bills. “It does definitely make it a little tricky to find time for everyone who is in your life,” said Begum, who got married last year.

Despite the long hours, Begum said he has been able to spend time with his wife. “It’s a careful balancing act,” he said. “I’ve got someone who is very understanding of what the job entails.”

Lisa Hoshek, a 26-year-old starting out at CB Richard Ellis Inc., said that unless a new broker already has savings, some belt-tightening can be expected. “Initially starting out the first couple of years you acquire credit card debt,” she said, “but you have to believe you’ll be able to pay it off in the future.”

A rule of thumb is to have a year’s salary in the bank to ride out slow spells in the market. Brokers are also generally urged to resist using a first commission to buy a new car. (Both guidelines are often ignored.)

To help new brokers start out, as well as lower the high rate of turnover, many brokerages have started training programs.

Hoshek started at CB Richard Ellis through a two-year apprenticeship that rotates brokers through the company’s regional offices, providing a taste of all aspects of the business. She went through several rounds of interviews that took a couple of months to complete before getting word she had been accepted.

During training, she was paid a straight salary that was just enough to “keep your head above water.”

“I was mentally preparing myself those two years,” she said. “I knew the potential was greater on the other side. It’s also what draws people to this industry.”

Forget fancy cars

Mark Tarczynski, a senior broker at CB Richard Ellis, said that while conditions can be tough starting out, commissions do improve over time. It was particularly tough for Tarczynski, who started out just as Los Angeles real estate values plunged in the early 1990s, when the region sunk into a deep recession.

“It was an extremely painful time for me,” he said. “It was a long slow climb out.”

Still, Tarczynski said he’s never felt the need for a fancy car or an expensive club membership to close deals. Though he recently purchased a luxury convertible, for most of his career he drove an old Nissan sedan. “I have never seen somebody make a decision because of the car I drive,” he said. “Never.”

For Begum, the allure of having more expensive toys persists, but he’s found it best to not pay attention to what other brokers are driving or buying.

“If you’re always thinking about what the next person is driving or doing, you’re going to be washed away in the sea of competition,” he said. “Besides, there are a lot of brokers driving nice cars who don’t necessarily have a lot of business.”


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