Are you considering a career in real estate? If so, you’re not alone: the United States Bureau of Labor Statistics predicts continued growth in the industry’s employment over this decade.
The income potential is the most obvious draw. Indeed.com recently listed the average salary for a real estate agent in the U.S. at about $95,000, but many agents make much more. It’s not easy, though, and those cheerleaders in the business insisting they’ve devised fail-safe formulas guaranteeing novice real estate agents and investors instant success should be ignored.
That said, as someone who’s spent nearly 30 years in the business while evolving from agent to broker, investor, and real estate developer, I can tell you this: Don’t limit yourself and your opportunities. Real estate provides vast wealth potential in its many offshoots. So why not think like an entrepreneur and branch out beyond your comfort zone?
Here is a road map to success that I follow and recommend to aspiring agents, brokers, investors, and developers:
Learn the art of making money when you buy real estate
The single most-effective way to begin one’s real estate career is by representing buyers before migrating into the seller’s world. In short, being a buyer’s agent will help you become a better seller and a better real estate investor and developer. By learning how the buying process works, studying different financing options, and helping others find and purchase great properties, you will learn how to buy great real estate for yourself.
As a buyer’s agent, you can hone critical skills more quickly than as a seller’s agent. Your client will expect you to be a font of knowledge regarding the quality of the local school system, crime rates, zoning issues, transportation options, and creative financing solutions both for the short term and long term of their purchase.
Recognize the value of changing the use of existing properties
As a real estate agent or developer, you don’t have to be the biggest on the block. You just have to make the most of the land, properties, and buildings that are available to you.
When you learn the art of buying real estate you will develop the expertise and financing acumen to do deals like converting a lot with two houses on it into a 20-story building, and when those opportunities arise, do it. But there’s plenty of wealth to be generated by taking on the smaller projects. If you have an opportunity to add a bedroom so that you (or the property’s owners) can rent out the extra space and bring in an additional income stream, do it. Turn a three-bedroom home into a four-bedroom rental and sell it. Each successful deal will put you in a better position to execute bigger deals down the road.
Envision what a piece of real estate can become for you and your clients.
The biggest gains come when you build something from nothing
Humility is underrated. Over the course of my career, I’ve worked with clients who had empty bank accounts and clients who had more money than they knew what to do with.
People who have very little – and therefore have everything to lose if things go south – tend to appreciate other people’s help more than those who don’t really need it. Renters and working-class folks rarely forget a kind act, especially when it comes from a real estate agent. They’ll pay you back tenfold with referrals and loyalty for decades. When you help families turn nothing into something, you will create real wealth for them
and in turn you will develop the character and skill set to learn how to do this for yourself in building your own portfolio.
Cash flow is king
In real estate, you can’t afford to have your cash flow tied to your equity. Doing so is a cardinal sin that’s sunk more people than I can count.
I know that we all want to hold on to what we’ve built, and there is no question that holding on to valuable properties has proven to be the best strategy for wealth creation. Sometimes, however, you have to sell one development and turn your capital over so that you can move onto the next development.
Throughout my career I’ve made sure to keep money flowing into my coffers by diversifying my businesses and services. I continue to work with buyers, large and small, to earn commissions. I ran a renovation business for years. You need to systemize your operation so that you can focus on building additional revenue streams.
Building a client-engagement plan is everything
If you want to be successful in real estate, you need to touch your database every 10 days. No exceptions. Always keep in contact with your clients.
You can do so in a variety of ways: quarterly newsletters, market reports, personal visits, cards, and personal shout-outs with videos on their birthdays.
The two components I can add to this list are credibility and follow-through.
Remember that sometimes with development projects and change-of-use projects it feels like you’re never going to see a return on the money you’ve invested. But it’s important to follow through on your deals to the finish line. That’s the most crucial client-engagement tactic you can master, because your credibility is everything. It’s also character-building, which is key to becoming a real estate developer and investor
There’s no school or degree or workshop that can ever completely prepare you for a real estate career. It’s more like speeding across a multi-lane expressway crisscrossed with innumerable on- and off-ramps. The key is to make a commitment and just turn the wheel – but make sure and pay attention to the road map I’ve given you.
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