Shifting from commission pursuit to wealth building
I am in my 21st year in real estate. I wish I had this commission-to-wealth awareness earlier in my career. But I really get it now and want to do a quick overview of how you can move in this direction sooner rather than later. I am writing this as I plan a long overdue trip to Hawaii. As we work through the somewhat arduous trip planning & booking research (hours & hours on the Google; guess we could have hired a travel advisor, but that’s not our style), it is all too clear that I desire more vacations & the wealth & freedom to do so easily without much concern for really how expensive it is to travel to Hawaii & other bucket-list destinations.
So back to the commission-to-wealth thing … the ongoing commission pursuit is a GRIND. Every Realtor knows this. Whether you are a modest producer or a ringer, it’s an ongoing cycle of lead pipeline management (find, screen, nurture, repeat), of always the next deal, the next door, the next client, the next closing. Always on-call, constant phone monitoring, annoying the family with our weak attention span, ongoing hustle to shift to the market. It’s a great business & it pays well … mostly pays well yet plenty of downward commission pressure in the industry … and we get to help people change their lives. It’s rewarding. And a grind.
So the shift from commission-focus (immediate & short-term) to wealth-building (long-term & sustainable) is not only a financial & business decision, it’s more a lifestyle decision. Businesses build lives, right? So as much as the coach in me is always probing into your business fundamentals, why don’t we just skip college, jump to grad school & probe into your life? So how is your life & what direction is it heading?
I am in hot pursuit of financial freedom, not a paycheck, not the next commission check or the GCI goal of the year. I intend to not worry about my GCI three years from now. Let’s look at how you can do that.
There are a number of ways for a real estate pro to build financial freedom. Here’s my take:
SELL & SAVE - Sell real estate & save save save. I recently read about a movement where folks live frugally, really frugal, invest like 80% of their income, and then retire at age 40. It’s a fascinating plan … wish I had embraced that at age 25.
INVESTMENT PROPS - Sell real estate & save & buy cash-flowing investment properties. One property a year, maybe one every other year, gradually building cash flow & net worth.
FLIP - Flip real estate, especially the version where you live in the house & move every three years to avoid capital gains (no cap gains on your primary residence). In this model you are using the gain to level up (each time having more cash to work with) or you sock it away in another investment vehicle and build eventual wealth.
ADU - Have an accessory dwelling unit (ADU) on your property that rents out & basically pays your mortgage. This approach allows you to save save save or easily book a Hawaiian vacation.
MOM & DAD or THE QUEEN - Inherit money & invest it wisely.
OWNERSHIP – If you have ownership in a brokerage, you may be building wealth. Or are you? For many small & medium-sized brokerages, they’re more “broke” than anything & one lawsuit away from shutting down or constantly worrying about losing their 3 top agents & keeping everyone happy. If you own your brokerage building, then you’re in better shape than those with large commercial leases to pay every month regardless of how much real estate the agents are closing. When the market goes down, then your income tanks but your expenses sort of stay the same. If you have ownership in a large brokerage, congratulations … those are not readily available in the industry and are not always profitable. So honestly, this is not much of an option for most in the industry.
STOCK – Align yourself with a company that not only helps you sell real estate, but doubles down on your sales activity by also providing stock, stock with a company that is building & going places. This is one of the reasons I moved my business to eXp. I knew I could move toward freedom & wealth & retirement much faster if I was basically paid a lot more for the same amount of work. In every year I have spent at eXp, I have basically doubled or tripled my commission with the value of my stock. I find this math to be such a no-brainer … same amount of work, 2-3x the ROI. For top top producers, I have seen the ROI at 10x. This is business fundamental ROI & basic math.
MULTIPLE INCOME STREAMS – The wealthy have many streams of income. The average person has the job or commission and probably some sort of investment portfolio. Next level might be an investment property or two (how’s your cashflow on that duplex? A few hundred $$ a month?). But what about some sort of mailbox money? The typical multi-millionaire averages 5+ streams of income, some or many of them passive. This is one of the other reasons I moved my license to eXp … revenue share = passive income. This is business fundamental ROI & basic math.
Just to make this real, I’ll share with you my multiple streams. Some are small, one has huge potential and that’s where I focus. I have commission (yes, I sell real estate), an investment portfolio with Merrill Lynch, we sold our investment properties (luckily selling our coastal properties before Hurricane Harvey), I’m sitting on & living in a goldmine property on the edge of Austin so that is not cash until we sell it. I have a small business coaching practice; my books sell on Amazon (you do not get rich writing & selling a book … but it does create other opportunities). I have some paid teaching & speaking gigs. And I have revenue share with my brokerage. It’s this last one that has huge potential for me (and could for you too).
As I write this in April 2021, my revenue share is averaging about $3k per month. My revenue share opportunity increases as I sponsor agents to eXp. eXp believes that if you help grow the company, then you should share in the revenue. Hallelujah! It’s not just the execs who profit from the brokerage success!!! I had a version of this with my old brokerage but it never really paid much of anything. Because I am focusing on & building this, I will be on track to hit 6 figures of revenue share within a couple of years, 6 figures of passive income … that is my goal, my freedom ticket, and it is achievable.
If you like math & want to build wealth & freedom & one day lessen the commission pursuit hamster wheel grind, then eXp may be for you & we should talk. Or maybe it’s not for you … but it is for 50,000 agents including some of real head-turners in the industry like Grant Cardone, Michael Valdez, John Lahey, Sherry Swift, Fee Gentry, Julie & Tim Harris, Holly Mayberry, Terrence Murphy, Fred Weaver, Kevin Kaufman, Tarek El Moussa … and more. Click here to schedule a short call with me … we’ll talk about you & do some math.
So what are you doing to move your life forward faster? Hamster wheel or Hawaii … you choose.