Do Real Estate Brokers Really Die Broke?
It has been unfairly suggested that real estate brokers die broke thanks to this being a “fast money” profession. While industry insiders know this is completely inaccurate, it’s also surprising to see firsthand how few ever acquire any meaningful amount of investment property over their career.
In a recent survey of commercial brokers, less than 20% of respondents indicated owning real estate beyond their single-family home. This is a staggering statistic when you consider the market savvy and knowledge they possess.
However, attaining success as a real estate broker isn’t exactly easy. Balancing the art of wealth creation for commission only professionals requires a tremendous focus. Inconsistent cash flow, typically no base salary to depend on, the natural tendency to get distracted pursuing that next big deal, and the inherent challenges of representing ourselves in an opportunity all create significant obstacles along the way.
Despite these impediments, there are several leading professionals who have found a way to excel at both brokerage and investment. While there is no one size fits all strategy that works for everyone, provided are a series of simple steps designed to assist anyone who desires to start acquiring property:
- Make Sacrifices Early On. Unless you have a wealthy aunt prepared to leave you a substantial inheritance, the great things in life take time, hard work and dedication. An easy place to start is setting aside 10% of your commissions in a separate account. When you close that big deal, challenge yourself to contribute more to your future.
- Establish Goals. Proactively document your long-term goals. Be specific. It’s much easier to hit a defined target. Develop a realistic strategy and work your way up. Don’t expect to own that downtown high rise or major business park overnight.
- Identify Key Partnerships. Seek out key partners to help you get started. Those “family and friends” deals everyone talks about are real. In addition, many investors are receptive to the broker participating in a transaction. Bottom line, make sure you are developing relationships with like-minded people who are pursuing investments.
- Buy Right. It sounds simple but you can never change what you ultimately pay for a property. Don’t ever underestimate the importance of due diligence and buying not only the right investment, but at the most competitive pricing possible. Leave the emotions at home and trust your instinct.
The truth of course is that brokers don’t die broke. Further, that the simplest plans for investment can create a lasting impact – including consistent, predictable income streams and equity to build your future around.
Do you have a plan in place that has delivered proven results? Be a mentor and please share your success story with the next generation of real estate professionals. Above all, encourage them to invest!