Is Owning Your Own Real Estate Brokerage Profitable?

Is Owning Your Own Real Estate Brokerage Profitable?

Miami, FL · Member since 2013 · 31 posts · 2 votes

Hi All,

I've been in real estate for 10 years. My first 6 years were in residential and the last 4 have been in commercial. I've been lucky to do better then the average agent on both sides of the field and have been very grateful of that. Being in my late 20s, I have a very deep desire to follow the goals I've set out in my life and one of those goals happen to be opening my own real estate brokerage.

For those who have their own brokerages, are they as profitable as you had hope? Does keeping that extra 10-40% make it worth the risk and effort of opening your own office?

My vision is to be a broker who is practicing, bringing in my own business and also sharing leads to the agents in house for a bit of a larger split to the house. Since having experience in both commercial and residential, I'd like to be able to handle both types of transactions and not just specifically one. Of course there are other things I'd plan on offering the agents in house, like training, incentives, maybe even profit sharing but my general questions are above.

I would love to hear some insight from some of the professional on this forum. Thank you all in advance!

1Reply
182 views

Most Popular Reply

Mark UpdegraffBusiness Member
Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 692 votes
11y

I'm going for it!  I know @Joel Owens is probably right, but I always want to find out for myself!  I'm trying to enter a market with some pretty deep pockets, and it isn't easy.  I've been cold calling to recruit and getting stone walled.... I won't give up though.  I've got a couple newbies that I'm going to train, and 2 that I've trained for a year.  We definitely have the best deal for agents, but right now the push back I'm getting from people in other organizations is that "I like the culture"  and "I like the training" and "I like my mentor"

Ugg... I'll keep you all posted :D 

See this reply in the discussion

30 Replies

Jump to latestLatest
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    12y

    I have had my own brokerage since 2007.

    Used to have about 50 agents and eliminated all of them years ago.

    I only do commercial real estate for clients directly now and my own investments.

    What type of asset class are you transacting in commercial?? I specialize in apartment buildings and triple net leasing.

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    12y

    Love having my own brokerage... agents not so much.

    If you like managing large groups of people you might like it but those types usually like owning property management companies as well. I am just cut from a different cloth.

    Agents mostly are rusty and you end up doing the deal for them. Many do not keep up with licensing, continuing ed, have license suspended for student loan delinquency, child support, back taxes owed to IRS and on and on. It's heavy paperwork and the agents produce little to nothing in return but a large headache.

    You might enjoy it but it's not for me.

  • Residential Real Estate Broker · Chicago, IL · Member since 2013 · 6 posts · 0 votes
    12y

    I agree with Joel - if you enjoy managing, making sure no one is violating fair housing laws, sales meetings, the overhead, licensing compliance etc then have it. I am a Broker/Owner but have one agent and a few assistants. My day to day gets hectic with my own stuff - I would hate to have to field calls from agents with their issues. I was forced into going on my own and it has been great but just be ready as we know how this real estate market can be...........

  • Miami, FL · Member since 2013 · 31 posts · 2 votes
    12y

    @Joel Owens For commercial, I do a lot of medical office sales/leasing and retail sales. I see your view of why you may not like babysitting agents. 50 agents sounds like a lot! I guess to me, it's a way to work towards owning an actual business and not being only self employed. In other words, I can take a 1 week vacation and the machine can still operate without me being present. To answer your question, maybe it's because I don't know better yet, but I think I would be ok with managing and helping agents take deals from A - Z. Again, not having already walked your path, I can only imagine and make guesstimates right now.

    @LASHANDRIA SANDERSON How does your 1 agent do? Profitable? Worthy of your time to overlook? Don't worry, I won't tell them =)

  • Miami, FL · Member since 2013 · 31 posts · 2 votes
    12y
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    12y

    Hi Dylan,

    Sure you have theory and then real world application.

    I tried it and didn't like it. You can do investments that give you that same income stream without the agents for traveling with piece of mind.

    If I am doing the deal for them and helping I am making less than just doing the deal myself. It all comes down to what the split is to the brokerage and how involved you have to be with that agent to get the closing to happen. An occasional phone call or situation is one thing but I find many need much more than that.

    Maybe one day I will move to that closer to retirement or not.

  • Rental Property Investor · Colorado Springs, CO · Member since 2010 · 476 posts · 305 votes
    12y

    Hi Dylan, this is just the question for me since I own a brokerage company. When I first opened my brokerage company I didn't make much money. But I was also learning and had no experience whatsoever. I was learning as I went. I had another agent I hired to be the managing broker of the office since I wasn't even licensed. It wasn't until 2 years into the brokerage with lots of trial and error when we started to actually make money.

    My husband is now the managing broker and we don't like to hire a bunch of agents to hang their license under us because we tried that and we were tired of drama and constantly being bugged for questions. Especially when we were trying to do our own deals. It can be very profitable to do it this way where you have agents pay a desk fee or you get a split, but you will need somebody available at all times to answer the agents questions and to make sure they aren't doing anything wrong. We have an in-house attorney that reviews everything.

    My husband and I decided to keep the company small. We have a total of 6 buyers agents, my co-lister, my husband, and 5 non licensed support staff. We find this system to be better for our needs. My office is basically a TEAM office. Everybody that works there is on my team and I hand out buyer leads to the team, while me and my co-lister do all the listings. I have a blast and love doing it. This year already we have closed 240 deals with 30 more to close this month and probably another 30 next month. My buyers agents get only 35% of the commission but I pay for everything. So their 35% is all profit and I take all the risk and I pay for everything for them. I will increase their 35% higher if they have at least 3 deals for the month. I hope this helps.

  • Residential Real Estate Broker · Chicago, IL · Member since 2013 · 6 posts · 0 votes
    12y

    Dylan - I specialize in REO and I have 3 big accounts so my agent gets a ton of listings from me so She does very well- but as the market changes production will change as well but for now it's great. She has been a top producer the past few years so she is content :-)

  • Miami, FL · Member since 2013 · 31 posts · 2 votes
    12y

    @Monica BreckenridgeThank you for your detailed reply. I think your TEAM approach is a solid one. The commercial real estate office I am apart of is almost identical to your set up. We're a small boutique firm, but do the most deals in the market - a lot of a little, relatively in the commercial market.

    Beyond their splits, do you do any profit sharing with them by chance? Doing a team model like you have set up (or like how my current company has set up) is a great idea. I personally don't like the competition I see agents create against each other so to have a whole office working as a team to get deals closed, I think its a win win for everyone.

    @LASHANDRIA SANDERSON - REO listings are awesome =)

  • Rental Property Investor · Colorado Springs, CO · Member since 2010 · 476 posts · 305 votes
    12y

    I don't do any profit sharing with them. On their own deals they get 70 and I get 30. Most of my agents rely on me for their business though. But they may get onsie twosies of their own private deals.

  • Miami, FL · Member since 2013 · 31 posts · 2 votes
    12y

    @Monica Breckenridge Thats awesome.. again, so similar to the set up we have here at our office =) Great, I'm happy to hear that model works for you. 240 sides so far this year is PHENOMONAL.

  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    12y

    @Monica Breckenridge Welcome back! Are you still working short sales or has that market gone away? Maybe you can share how you became so successful at generating listings? I know you blog, and do marketing, etc. What else?

  • Rental Property Investor · Colorado Springs, CO · Member since 2010 · 476 posts · 305 votes
    12y

    I still do a lot of short sales. But they have decreased a lot. About half my listings are now regular listings. I get a lot of repeat referral business. I also work with a lot of investors. Many investors bring me their junk leads as well and I turn then into a listing. I also do short sales for other investors and they will buy the house and do a fix and flip. Then I will list the house again when the flip is done.

  • Miami, FL · Member since 2013 · 31 posts · 2 votes
    12y

    @Karen Margravethats a great question to ask @Monica Breckenridge. 240 sides is a lot of business so some marketing tips would be great!

  • Rental Property Investor · Colorado Springs, CO · Member since 2010 · 476 posts · 305 votes
    12y

    I also send out a lot of We Buy Houses marketing because I'm an investor as well. So I do buy a large portion of these, but most of them end up being listings. I do market a lot and my branding is incredible and people remember it. I also get lots of business from my directional signs going to my listings. I have one person in my office dedicated to handling buyer leads and getting them qualified. Then I have another person handling seller leads and scheduling my apts. last week we signed up 10 listings. I also work with a lot of builders. I will market their listings for free to bring in the buyer lead. They will pay 4-5% commission.

  • Real Estate Agent · San Antonio, TX · Member since 2011 · 19 posts · 6 votes
    12y

    Wow Guys!!! 15 minutes ago I was just a Realtor. Now I am a Commercial and Residential Broker with a small team of licensed agents and assistants. My office specializes in Apartment Buildings, triple net leases, REO's, medical office sales/leasing, retail sales, investment properties and short sales. BiggerPockets, nuff said! Thanks Guys!!

    Shooting for the Moon.

  • Wholesaler And Coach · Springfield, VA · Member since 2011 · 169 posts · 75 votes
    12y

    If you make much more than a 10% net margin as a brokerage you are doing very well. You also have added liability. You can make higher profit margins by operating a successful team.

  • Miami, FL · Member since 2013 · 31 posts · 2 votes
    12y

    @Monica Breckenridge what portion of your revenue would you say contributes to marketing?

  • Rental Property Investor · Colorado Springs, CO · Member since 2010 · 476 posts · 305 votes
    12y

    I'm taking a guess here but I think 10%.

  • Miami, FL · Member since 2013 · 31 posts · 2 votes
    12y

    That would be on point. I have a friend that use to work very closely with one of the top producers from southern ca (he's on the Wall Street list) and his marketing cost is exactly at 10% as well.

    Thank you for your comments. They've really helped create a clear path of where I see myself in the future. So, what happens when you want to take a vacation? With 5 non-licensed staff members, a co Lister on board and 6 buyers agents, it seems like they can handle themselves while you're gone?

  • Rental Property Investor · Colorado Springs, CO · Member since 2010 · 476 posts · 305 votes
    12y

    yes I can go on a vacation whenever I want. My function mainly is to run the business and make it better. i just put somebody in charge while i'm gone.

  • Commercial Real Estate Agent · East Providence, RI · Member since 2014 · 80 posts · 10 votes
    11y

    @monica I know this is an older post but what advice would you give someone working as an agent who wants to become a broker? 

  • Mark UpdegraffBusiness Member
    Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 692 votes
    11y

    I'm going for it!  I know @Joel Owens is probably right, but I always want to find out for myself!  I'm trying to enter a market with some pretty deep pockets, and it isn't easy.  I've been cold calling to recruit and getting stone walled.... I won't give up though.  I've got a couple newbies that I'm going to train, and 2 that I've trained for a year.  We definitely have the best deal for agents, but right now the push back I'm getting from people in other organizations is that "I like the culture"  and "I like the training" and "I like my mentor"

    Ugg... I'll keep you all posted :D 

  • Broker/Investor · Atlanta, GA · Member since 2015 · 3 posts · 1 vote
    10y

    Im also thinking about opening my own brokerage here in GA.  Does anyone know if I can do so out of my home office?

  • Las Cruces, NM · Member since 2016 · 1 post · 0 votes
    10y

    Out of curiosity, since you've been in the business 10 years, how old were you when you got your real estate license?

Join the conversationCreate a free account to reply, vote on answers and follow this thread.