After 15 years in the U.S. Marine Corps, Marcus & Millichap’s Joseph Ferguson decided he wanted a change.
So, he picked up some books on real estate, feeling it was a plausible career once he left. He studied up and bought a house using a Veterans Affairs loan and flipped it for a profit.
“I wanted to see if I can do that for a career,” Ferguson said. “Wasn’t as easy as I thought it would be.”
Ferguson started looking elsewhere, and he decided to shift his focus slightly from residential real estate to commercial real estate. He eventually started in an entry-level program at Marcus & Millichap.
Ferguson, now in the position of senior associate for the hospitality team, has been with the firm for over three years now. He sat down with Finance & Commerce to have a conversation about his transition from the military, his work at Marcus & Millichap and talks about when it might be the best time to buy a hotel.
This interview has been edited for length and clarity.
Q: What was your role in the military? What was your specific job?
A: I was in the United States Marine Corps. I started off in supply. From there, I went to an infantry battalion where I was responsible for logistics and security operations, deployed to Iraq in that role, came back and got the honorable duty to become a drill instructor, which is probably the best three years that I spent in Marine Corps.
From there I floated around to a different couple of units, working in logistics and then came to Minnesota, where I was here to support the Recruiting Command and their entire operation in a five-state region, here in Minneapolis and the surrounding areas.
And that’s where I decided to get out and actually decided to stay in Minnesota, even though I’m from Los Angeles. I traded the lovely weather year-round for miserable cold. But for whatever reason, I love it, and I’ve been here eight years.
Q: What brought you specifically to the hospitality team for Marcus & Millichap?
A: Every agent (at Marcus & Millichap) has a specific product type that they specialize in in a specific geographic area. I decided to join industrial, and I was hammering the phones like a beast. I mean, I was cold-calling like you wouldn’t believe. I was here to at 6 in the morning, leaving at 8 at night trying to understand who the buyers were and who the sellers were.
And in doing that, there was a gentleman here by the name of Jon Ruzicka, who’s been here for 15 years now and he had a team of two other hotel agents, very successful. He noticed my work ethic, my determination, my willingness to be here first and leave last. He asked me if I wanted to join his team.
After about a month of working in industrial, I spent the weekend thinking about it, and the mentorship opportunity was just something that I couldn’t pass up. And that’s actually how I got into selling hotels.
Q: What do you feel like are the primary tasks that you do in your job?
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A: I’d say first thing is trying to understand the market. We do work in a five-state area, Minnesota, and the states surrounding it. The first thing I do every day is I come in and I look, I research the market. I want to know what has sold, what has been bought. I want to know what rates are, whatever current news there is in our market, where’s new development going, just the overall sentiment of the market. I want to capture that every morning.
Next my job is to primarily reach out and speak to people that are in the market. Not just owners, not just prospective buyers, but I’m also building relationships with third-party vendors, attorneys, appraisers, insurance brokers, all people that are involved in the hotel real estate market. Here in the Midwest, I do that for probably about 40% of my days, talking to people, talking to owners.
From there, we’re looking to meet people: go on site, tour hotels. We’re looking to obtain financials underwrite the property, to determine value in the current marketplace, and we measure that against our experience. And quite frankly, we sell more hotels than any other brokerage here in the upper Midwest, so we have a very, very relevant taste for where the market is and what the value of a hotel is.
Q: What do you feel like the primary forces and primary characteristics of today’s hospitality and hotel market? A: Specifically in the hotel space, my team and I sold 20 hotels last year, and we sold 12 hotels year to date, and we’re halfway through the year, so we’re looking to outpace that both will be record years. We haven’t seen that distress in the hotel space, we haven’t seen a bottleneck in velocity or properties transacting.
In fact, in Minneapolis CBD alone, our RevPAR, revenue per available room, year-to-date is up 10%. The historical average is around 3%.
Ultimately, the market is doing well. Hotels are performing well. The average daily rate, the amount that the hotel can charge a guest, has increased tremendously year-over-year at a pace of about 5% since COVID started, and occupancy is kind of hovered where it was before, maybe a slight decrease this year of about 3%. Ultimately, performance and transaction volume is, quite frankly, at an all-time high, at least here in the upper Midwest.
Q: I think everyone knows when you’re looking to buy a house, the hot time to do that is probably April to June or July. Is there a period like that, or the hotel market, where it’s particularly hot? A: If you’re a prospective buyer, you’re typically going to want to get into a hotel prior to the summer months. Between January and April is when the buying activity is usually the highest, because the goal is to get under contract and close the hotel somewhere between April and May, so that you can get in and immediately capture that summer revenue, which goes until about October, November, depending on markets. There’s a lot of various pockets in Minnesota, so the markets are a little different.
Ultimately, somewhere between May and November is the peak seasons for revenue, and that’s where you’re going to see well prior to that you’re going to see the peak transaction volume.
Q: Do you have any advice for folks who might be following in your footsteps in a similar way that you exited the military after a career there and entered the CRE field? A : If someone’s in the military, you should know about a program that DOD offers, called the SkillBridge Program, and I’m not an expert on it, but it’s something along the lines of, in your last six months before you transition, you can be allotted the ability to go and intern or train in something for your next career while still getting paid and still on active duty.
It’s an incredible program, and in fact, Marcus & Millichap has created a division to specifically help foster people transitioning out of the military into the career of commercial real estate.
If you’re looking to get into real estate, I would say it is definitely a grind, specifically in commercial real estate, it is a grind of learning and understanding what this job is all about. I’d say, prepare to not make any money in the first 12 months, just come here ready to learn.
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