Real Estate Agent - Not a Fastlane Gig?

[SamuelTF]

I wanted to open up discussion for the idea that being a Real Estate agent, as a 1099 employee does not fully fit into the Fastlane dogma. It is much like being a sales representative at a company, with a bit more freedom.

Owning a successful brokerage might fit into the Fastlane dogma, as you own the whole enterprise, rather than being a cog in that enterprise. However, some may opt to just be a successful salesperson over being a broker, due to the overhead.

While I still think there is a lot of opportunity in Real Estate, I think most of the generated income is not passive. In fact, this is true for most fields.

How many of you are in real estate and what are your thoughts on this?


As a side note also, I view the investing side of real estate as more of a means of maintaining wealth, rather than building it and growing it exponentially or rapidly.

 

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[WJK]

I wanted to open up discussion for the idea that being a Real Estate agent, as a 1099 employee does not fully fit into the Fastlane dogma. It is much like being a sales representative at a company, with a bit more freedom.

Owning a successful brokerage might fit into the Fastlane dogma, as you own the whole enterprise, rather than being a cog in that enterprise. However, some may opt to just be a successful salesperson over being a broker, due to the overhead.

While I still think there is a lot of opportunity in Real Estate, I think most of the generated income is not passive. In fact, this is true for most fields.

How many of you are in real estate and what are your thoughts on this?


As a side note also, I view the investing side of real estate as more of a means of maintaining wealth, rather than building it and growing it exponentially or rapidly.

I started as a typical 1099 salesman.. on a standard commission split.. 45 years ago in 1976. I've owned offices, rented a desk with a broker's license... got my Certified General Appraisal license when they licensed us... went to law school after my first family was raised to upgrade my skills... which I turned into being an expert witness in State and Federal court... I also did litigation support...bought, sold, flipped, held, invested in RE... I've made fortunes and lost them... and started once again... Now I'm a retired professional RE investor... Is it a Fastlane track? I can't answer that question. It's sure NOT a classic path.

 

[SamuelTF]

I started as a typical 1099 salesman.. on a standard commission split.. 45 years ago in 1976. I've owned offices, rented a desk with a broker's license... got my Certified General Appraisal license when they licensed us... went to law school after my first family was raised to upgrade my skills... which I turned into being an expert witness in State and Federal court... I also did litigation support...bought, sold, flipped, held, invested in RE... I've made fortunes and lost them... and started once again... Now I'm a retired professional RE investor... Is it a Fastlane track? I can't answer that question. It's sure NOT a classic path.

Thanks for your response. How did you do in 2008 when the market crashed?

 

[MJ DeMarco]

Depends if you can scale customers, agents and the price of the houses you sell/broker.

There are many RE agents here in the Phx area that easily make 7-figures a year -- but they aren't selling trailers in Mesa, they're selling luxury estates -- their subagents are tasked with the trailers.

Overall, it is challenged on the E in the CENTS formula -- it also might be challenged on the C and N in the future since the industry is ripe for disruption.

 

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[WJK]

Thanks for your response. How did you do in 2008 when the market crashed?

I did fine. I retired in 2003 and moved from Los Angeles to my property in Alaska. I was making my rentals in my mobile home park work and running my self-service Laundromat. But, I got hit really hard in 1980 and 1990. In 1980, interest rates went from 12% to 21% just about overnight. The RE world suddenly stopped. I owned 2 RE offices with a partner. They were history pretty fast. In 1990 our world melted down again. That took down the Saving & Loan and Thrift industries, and it lasted the whole decade. Other factors during those years that added to that pain were the Northridge earthquake and terrible wildfires. Then again I got hit hard in the Rodney King riots. They burned down our commercial buildings and huge sections of the Los Angeles ghettos. Did you know that fire insurance doesn't work during civil unrest? It's an exception in those policies. And the bank still wants their mortgages paid. And think about what that riot did to residential property prices. That's all I could think about this last summer when they let those fools burn down parts of cities all over the nation. My friend and business partner from those days still talk just about every day, but we don't talk about what happened to us in those riots.

 

[Metz]

Depends if you can scale customers, agents and the price of the houses you sell/broker.

There are many RE agents here in the Phx area that easily make 7-figures a year -- but they aren't selling trailers in Mesa, they're selling luxury estates -- their subagents are tasked with the trailers.

Overall, it is challenged on the E in the CENTS formula -- it also might be challenged on the C and N in the future since the industry is ripe for disruption.

This. I'm not a real estate agent/broker but I've helped people in RE and home financing scale their presence and start making more money.

I think the biggest factor is whether or not you're content working solely within the framework of your job: you work for a brokerage and keep working with the same kinds of clients, listings, and property values with your income solely being tied to what the market values those properties at. I think perhaps (and correct me if I'm wrong) this might be why you view this kinda work as a means to maintain wealth rather than to grow it, let alone exponentially.

However, beyond just starting your own brokerage or going after more expensive estates, finding a profitable niche while combining other strategies (like starting your own firm once you build enough rapport in a niche) can be more along the lines of the fastlane. The boss of one of my RE friends who's helped me get some pitch time with the brokerage he works for focuses on commercial properties, specifically breweries (it's Washington so everyone and their mother seems to have their own craft brewery nowadays). Apparently, he's to the point now where he exclusively helps buy and sell breweries and has been making money hand over fist doing so.

But like I said, I've no direct RE experience so take my perspective with a grain of salt. Though the clients I've worked with who I helped hone in on a specific niche, even while working salaried/contract through a brokerage or bank, started to build momentum much quicker than their coworkers who just tried to compete for more of the same kinds of clients they've always looked for.

 

[SamuelTF]

Depends if you can scale customers, agents and the price of the houses you sell/broker.

There are many RE agents here in the Phx area that easily make 7-figures a year -- but they aren't selling trailers in Mesa, they're selling luxury estates -- their subagents are tasked with the trailers.

Overall, it is challenged on the E in the CENTS formula -- it also might be challenged on the C and N in the future since the industry is ripe for disruption.

Yes, this takes time and a ton of effort to build up to and it isn’t very difficult to get licensed. I think the real barrier to entry lies in the fact that you have to do the work: make cold-calls, deal with picky clients, build your network by working those trailers and rental deals that you don’t want to doetc. Another barrier is that there isn’t the best training for agents. Many corporate sales jobs provide months of training, while in real estate a lot of times you are left to figure things out and do your own independent research to become competent.

We are seeing this disruption happen already, but I’m not sure how easily we can replace a knowledgeable and experienced agent guiding someone through the process of buying or selling. Having an understanding of the value of various materials in a home and the location can be beneficial. Algorithms that companies like Zillow uses to estimate home values can only be somewhat accurate, but they don’t encompass all the details. I think some people think the process of buying and selling is a lot simpler than it really is.

Thanks for taking the time to be so active on your own forum.

 

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[SamuelTF]

I did fine. I retired in 2003 and moved from Los Angeles to my property in Alaska. I was making my rentals in my mobile home park work and running my self-service Laundromat. But, I got hit really hard in 1980 and 1990. In 1980, interest rates went from 12% to 21% just about overnight. The RE world suddenly stopped. I owned 2 RE offices with a partner. They were history pretty fast. In 1990 our world melted down again. That took down the Saving & Loan and Thrift industries, and it lasted the whole decade. Other factors during those years that added to that pain were the Northridge earthquake and terrible wildfires. Then again I got hit hard in the Rodney King riots. They burned down our commercial buildings and huge sections of the Los Angeles ghettos. Did you know that fire insurance doesn't work during civil unrest? It's an exception in those policies. And the bank still wants their mortgages paid. And think about what that riot did to residential property prices. That's all I could think about this last summer when they let those fools burn down parts of cities all over the nation. My friend and business partner from those days still talk just about every day, but we don't talk about what happened to us in those riots.

That’s ridiculous but I believe it. Did you end up selling after the riot situation?

 

[SamuelTF]

This. I'm not a real estate agent/broker but I've helped people in RE and home financing scale their presence and start making more money.

I think the biggest factor is whether or not you're content working solely within the framework of your job: you work for a brokerage and keep working with the same kinds of clients, listings, and property values with your income solely being tied to what the market values those properties at. I think perhaps (and correct me if I'm wrong) this might be why you view this kinda work as a means to maintain wealth rather than to grow it, let alone exponentially.

However, beyond just starting your own brokerage or going after more expensive estates, finding a profitable niche while combining other strategies (like starting your own firm once you build enough rapport in a niche) can be more along the lines of the fastlane. The boss of one of my RE friends who's helped me get some pitch time with the brokerage he works for focuses on commercial properties, specifically breweries (it's Washington so everyone and their mother seems to have their own craft brewery nowadays). Apparently, he's to the point now where he exclusively helps buy and sell breweries and has been making money hand over fist doing so.

But like I said, I've no direct RE experience so take my perspective with a grain of salt. Though the clients I've worked with who I helped hone in on a specific niche, even while working salaried/contract through a brokerage or bank, started to build momentum much quicker than their coworkers who just tried to compete for more of the same kinds of clients they've always looked for.

I was more so talking about how real estate investing is more of a means of maintaining wealth- as most of the time the only income it produces is rent.

I suppose doing fix-and-flips MIGHT have much better yields.

I like commercial real estate because of the ticket-price of the sales. I don’t know if I would really want to niche down like that, though. Unless, maybe, I kind of fell into that niche in the process of prospecting by chance. I’m not sure I would ever turn down anyone who wanted to buy commercial property

 

[WJK]

Yes, this takes time and a ton of effort to build up to and it isn’t very difficult to get licensed. I think the real barrier to entry lies in the fact that you have to do the work: make cold-calls, deal with picky clients, build your network by working those trailers and rental deals that you don’t want to doetc. Another barrier is that there isn’t the best training for agents. Many corporate sales jobs provide months of training, while in real estate a lot of times you are left to figure things out and do your own independent research to become competent.

We are seeing this disruption happen already, but I’m not sure how easily we can replace a knowledgeable and experienced agent guiding someone through the process of buying or selling. Having an understanding of the value of various materials in a home and the location can be beneficial. Algorithms that companies like Zillow uses to estimate home values can only be somewhat accurate, but they don’t encompass all the details. I think some people think the process of buying and selling is a lot simpler than it really is.

Thanks for taking the time to be so active on your own forum.

When I started as an salesman in 1976, there was NO training at all. My broker grabbed my newly minted license out of my hand and added, "There's your desk. There's your phone. Go to work." I cried all the time during my first 3 months. Tommy Hawkins was transitioning from being "the boy in the band uniform" to putting out his first training audio tapes and starting his seminars. I got a copy of his tapes a couple years later.

Yes, RE is a roller coaster ride for the agents and brokers. But, RE has been a great career for me. I've done everything you can do in the business -- except be a title officer or escrow officer. There are a few of us old crusty RE people around -- but, most of us are retired now doing our own thing.

 

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