From knocking on doors to owning them.

Commercial real estate brokers interested in becoming commercial real estate owners received advice and also a few tales of caution from a group of former brokers who successfully made the switch.

Participating as panelists at a REBNY breakfast last week held to discuss the subject, the group addressed some of the key hurdles a broker must vault to go from knocking on doors to owning them, including how to negotiate the staggeringly high barrier to entry New York City's escalating market has created.

While many of the panelists bought the bulk of their real estate portfolios before prices began to sharply rise over the last few years, they suggested new entries into the marketplace take on off-market transactions that have been avoided by other more established investors.

"Look for things nobody else wants, look for a deal that's been flogged around the block so much it has scuff marks," said panelist Andrew Davidoff, a former broker at Jones Lang Wootton who went on to co-found real estate investment firm, The EMMES Group.

Fellow panelist, Elliot Ingerman, who was a managing director at Insignia/ESG for 11 years before he formed investment firm, Tribeca Associates, in 2001, indicated that it was exactly the kind of deal that Davidoff described--one perceived as undesirable by the market--which proved to be his firm's breakthrough in Manhattan.

Purchasing Penncom Plaza soon after the company formed and before class B buildings had experienced major cap rate compression, Ingerman ignored the building's one time 10% occupancy rate that had scared investors off and wisely focused instead on the way the property had quietly began turning around.

"It's very difficult to find deals, finding the off-market deal is key," Ingerman said, indicating that his firm, like most new firms, stood almost no chance of success entering formal auctions when it first entered the market.

Finding off market deals that offer the potential for hidden value may not be as hard as some might imagine and Davidoff indicated that oftentimes brokers have a contact they already know that could lead to a deal.

Such was the case for Davidoff when, during his time as an investment sales broker, he worked with an owner seeking to refinance a bridge loan for a portfolio office. The loan was unable to be refinanced but Davidoff remembered the deal because he had gotten to know the properties the loan was attached to. When his investment firm had just been formed, he bought the bridge loan from the lender and then leveraged that to buy the properties from the owner.

"I still own those buildings," Davidoff said.

The rewards for successfully buying into the New York City market are great, the panel indicated. Once an investor has established any sort of reputation and track record as a successful property owner, the record amounts of capital that have flooded the market are at his fingertips. But despite the buying power that all the capital has provided many investors, panelist Leon Silverman, founder of Silverman Realty & Associates, cautioned potential investors to temper their aggressiveness in trying to acquire an asset too loftily priced.

"There was a building in Stamford we bid on and I knew the broker and asked him where we stood," Silverman said. "Out of 20 bidders, he told me we were 19. We obviously didn't get it, but now it's sitting half vacant, so you have to be careful." Another caution the panel enthusiastically broadcast was for investors to choose their financiers and any business partners carefully. Charles Bendit, who is a co-founder and co-CEO of Taconic Investment Partners, described an early deal he did with a partner that nearly cost him his reputation and potentially even his career as a real estate owner.

"I purchased an apartment building in New Jersey and had a bad partner who stole money from the deal," Bendit said. "He went bankrupt and it wouldn't be too good for me if one of the first properties I had went bankrupt along with him, so I had to bail the property out. You really need partner where you're both looking out for each other's interest."

"People who are bad people will throw away contracts and papers and say 'sue me,'" Ingerman warned. Brokers, used to having an in-house law department may find themselves unprepared for such a case.

"Now it's you hiring the lawyer, not the firm," he said. "You' re out there on your own."

But despite the risks and rigors, the panel encouraged those bent on becoming real estate investors to pursue their dreams.

"I said, if I don't do this I'll be kicking myself 10-15 years down the road," Davidoff said.

"I just absolutely wanted to do this," said panelist Kevin Wang, founder of KRW Realty Advisors. "It was a force."