Being a real estate agent is not easy. Your schedule is unpredictable, you can end up working a long time without pay, and competition can be fierce.
However, for those that are willing to put in the work, it can be incredibly rewarding. Both financially and emotionally.
One of my favorite things to do is grabbing lunch or coffee with other agents. I always learn so much. Because of this blog, I’ve had many agents reach out to me about the investing side of real estate.
They see the opportunity. I think a lot of agents do. It can be huge.
What is see is that learning the investing side of real estate is not just a good opportunity. I think it’s essential for long term success.
To really make a life-long career out of this, I think you need those tools. Find an agent who has thrived for 20+ years in this business, and there’s a good chance they’ve been involved in the investment side. Here are a couple reasons why.
1. We don’t have a retirement plan
Most W-2 jobs have a 401k or some type of retirement plan. Agents don’t have that. Yet, saving for retirement is just as important for agents. Probably even more so, given the up and down nature of our profession. Sure, there are options for investing in tax-advantaged accounts for stocks and bonds, but where is your “edge” in those markets?
2. We have an “edge” in the greatest wealth creation vehicle ever created
The market we participate in everyday happens to be the same market that has led to the greatest percentage of millionaires in America. It’s not an accident. There are characteristics of the real estate market that make it hard not to grow your wealth. Stability, access to leverage, and control are just some of these characteristics. If we gain access to “insider information” in real estate we can legally trade on that all day long. That’s an “edge.”
3. We have tax advantages non-agents don’t have
There is a special election for real estate professionals that allows us to deduct more real estate losses than non-professionals. These losses can include “paper losses” such as the depreciation of rental properties (that are actually making money.) Do yourself a favor and ask tax professional exactly how great this can be.
4. We can grow our business while we grow our wealth
Every realtor needs a few solid sources of business (or spokes in the wheel.) Investing can be an incredible source. 80% of my realtor business has been generated from investment activity. If I had the time, there are a dozen more ways I could leverage investment activity from myself and my clients to bring in more traditional realtor business.
5. Grow in experience
I learn something new with every single deal I close. That’s the way real estate goes. There are endless variables. The more deals you close the better you get at it. By doing some deals for yourself every year, you can shorten the learning curve. I’ve found being an investor has made me a better agent, and being an agent has made me a better investor.
6. We have time flexibility
Investing well takes some time. It can take a lot or a little, it’s really up to you. Luckily, as self-employed agents, we have lots of flexibility around our schedules. Committing a couple of spare hours per month to your own deals, can really pay off big. Just ask Warren Buffett’s partner Charlie Munger. Look where “selling himself an hour each day” got him.
7. Gain new investor clients
Investing yourself gives you credibility with a whole new group of clients. Clients that are repeat customers, and may not require as much of your time as owner occupants. Working for other investors also gives you knowledge to use on your own deals.
8. Being your own client is easy
Closing deals is easier when you are totally in the drivers seat. As your own client you get to make all decisions on negotiations and terms. You may even become your best client!
9. Stay busy in the winter
Selling real estate can be seasonal. We get busy in the Summer and slow down in the Winter. Do you enjoy that slow down? I don’t. I cant. With three kids under three years old, I’ve got to keep the pedal to the metal year round. Investing has allowed me to do just that.
10. Stay busy during recessions
Find an agent who has been in the business a long time. Ask them who was crushing it during the financial crisis and the “slow” years following. Here’s what they’ll say: REO agents, short sale agents, agents who represented private equity funds. The buyers on these deals were mostly investors. You could’ve been representing buyers, sellers, or yourself on these deals.
That’s the “WHY.” If you want to know learn exactly “HOW” I’ve utilized investing to grow my business and build wealth, I’m doing a FREE seminar in partnership with REI Live Saturday November 23rd from 9am to 11:30am CLICK HERE IF YOU’RE A REALTOR AND WOULD LIKE TO ATTEND!
Thanks for reading! If you liked this, please send me an email at robert.h.drum@gmail.com or reach out on Facebook!