Why aren't realtors investing?

139 Replies

Hey BP,

I'm relatively new as a real estate agent, but one of my main goals are to become a successful investor, focusing on building a portfolio of rental properties (hard to find cash-flowing properties in the Northern Virginia area btw, from what I've seen) 

As I haven't "made it" yet as an agent, it's crazy to see that the agents who are making good money, aren't investing themselves, with all the resources and tools they have at their disposal.  

Why is that? I feel like it's especially needed when you have a commission-based job

I invest in passive real estate investments, non-listed REITs mostly, and performing notes.  No interest in owning and dealing with rental properties myself.

The smart ones are. You must be hanging out with the wrong agents. 

I do....Id venture to guess that at least a quarter of the agents in my office invest in real estate in some form or another. Many invest in their own businesses as well, which does have a much higher ROI actually.

Like any industry, the Pareto Principle applies. 80% are average, 20% rockstars.  I'd venture its even closer to 90/10.   The agents that are here contributing to BP are def the top 10%. 

I ask the same of contractors.  Why don't you invest? You get calls from people with house problems all the time.  They look at me like I have a 3rd eye even though this is the 8th different job I'm hiring them for. 

Investing to hold a cash-flowing asset does not cross most sheeple's, I mean people's,  minds.   Baa-ah, gotta get to work. Baa-aah, it's almost Friday. Be grateful there aren't more of us :)

Most Realtors in my market I come across hate working with investors. This could be a reason they dont invest. Most dont care to take the time to learn that side of things. I think its foolish because we come across deals everyday. 

Some brokerages like Keller Williams encourage their agents to invest. Maybe it is time to change your workplace environment....

There truthfully could be a variety of reasons, of which many are market dependent. Have you asked the agents in your office if they have a RE investment portfolio? On the surface, it may not seem like they invest because they do not talk about it unless asked. Many of the agents I work with choose not to own rentals because they do not want the hassle of managing it, and they would make more ROI investing in their active agent/brokerage business. I have met other agents in my office that all they do is Flips and do not work with traditional clients, only other flippers and flip groups. I have been recommended by experienced agents to reach out to the local Chamber of Commerce to attend networking meetings and to see if there is a real estate investors association in my area. I would reason to say this advice should work for most new agents. This would allow you to make new connections, and if NOVA is anything like Indiana, you will find investors and agents with experience gravitate towards these groups. Hope this was of some help.

I tried out being an agent for a while. Top agents in the company I was working for were pulling in close to a 500k a year (avg income in my part of VA is around 60k to give you some context). But the price of that was that they were busy all the time. Once you get to that level you are a business and they did a lot to invest in themselves. Most would say they didn't have time to deal with anything else.

You should take a look at the book Cashflow Quadrant. It's phenomenal and it talks about the different mindsets of people in different quadrants: employee, investor, small business, and big business. It was shocking to me when I realized that people don't think the same and value the same things as I did. I knew it was true, but until reading the book I never really thought about it. Even those that have the time may not have the desire to invest because it takes a different mindset.

Originally posted by @Russell Brazil :

Many invest in their own businesses as well, which does have a much higher ROI actually.

 Yeah, this is important too.  I do both...

My real job is a real estate investor everything else is secondary.

@Anthony Vann had a really good point in that. Mindset is everything. There are a lot of agents that think they own their business but are more self-employed. They just own their job. I'm not entirely sure how a real estate agent can make it a business where in its truest sense like Kiyosaki states is a business tends to do better whether you're there or not. Most people tend to work in the business rather than on the business.  

I'm not sure how that works in the real estate industry but I'm trying to build a plan for something like that. If anyone has any insight that would be wonderful. 

Most agents in my area are not really what I’d call successful . Many rent and drive older cars . I’m not sure they could invest even if they wanted to because in rural areas and small cities RE agents are not paid very well from what I can tell .

@DuBeaux Dingle In my office a lot of agents don't invest and the one who does invest became investors before they got their license or did both around the same time. I often get asked to lunch to explain what I do and how I do it.

@Dennis M. You bring up a good point about their cars but be careful about using that to disqualify people to invest. Investors especially people like us know where our money and value goes and something like a new or really nice car just doesn't go as far as putting that money into an investment. I know a handful of guys in my area that live like they're broke and drive beater cars but they have a solid portfolio of investment properties. 

Originally posted by @Michael Van :

@Dennis M. You bring up a good point about their cars but be careful about using that to disqualify people to invest. Investors especially people like us know where our money and value goes and something like a new or really nice car just doesn't go as far as putting that money into an investment. I know a handful of guys in my area that live like they're broke and drive beater cars but they have a solid portfolio of investment properties. 

I understand that and you do to . The realtors I know aren’t driving beaters around so they can stack money for their investments , that’s for sure 

Because many of them are dead broke and up to their eye balls in debt just like the general population. Their day job is just that...a job to pay their bills and hopefully have enough left over to go on vacation and blow their $$ on the new iPhone or a new car. The majority are average and live average lives and handle their finances just like the average person....which is often poorly.

The good ones do invest...in their own business and their own craft and expertise. They handle their $$ wisely, by controlling spending, saving and investing.

Maybe some do invest and just dont talk about it .  

@DuBeaux Dingle it really depends on the agent and what their long term goals are. I am a real estate agent in Scottsdale, AZ and I have invested in over 10 properties since breaking in my real estate career 9 years ago. I know the long term benefits of owning real estate and as you mentioned in your post, it is important to have more sources of income in a commission based job. It is also a dream come true to be able to acquire value added properties and transition them into successful income producing properties.

@Michael Van good point. I drove my 2008 dark blue Dodge Grand Caravan to a closing on 11 units today. It's paid for and a whole lot cheaper than a new Super Duty Truck.

@DuBeaux Dingle As an agent, I continue to own and manage my rental property portfolio. I would add to it as well if the right property came along that fit my criteria. 

@Russell Brazil hit the nail on the head about investing in ourselves as a Realtor business. I'm currently putting my time/money into growing my real estate business/team so that I can help more clients. That's a better ROI for me in the short term.

Originally posted by @Dennis M. :
Originally posted by @Michael Van:

@Dennis M. You bring up a good point about their cars but be careful about using that to disqualify people to invest. Investors especially people like us know where our money and value goes and something like a new or really nice car just doesn't go as far as putting that money into an investment. I know a handful of guys in my area that live like they're broke and drive beater cars but they have a solid portfolio of investment properties. 

I understand that and you do to . The realtors I know aren’t driving beaters around so they can stack money for their investments , that’s for sure 

My FIL (no REI but he invests) who is worth a substantial amount of money from a successful business and lots of good/great investments drove around in a 1998 GMC Yukon until a couple years ago. My SIL finally talked him into upgrading to a new Escalade. He spends more time complaining about the extra features he can't figure out verse how nice it is. I think half expect to see his old truck back in the driveway when I visit. It's hard not to judge, but you never know who is driving that hoopty next to you.

I do!  I think it depends on your market and their income.  I find that many Realtors don't know much about investing and haven't sought out the education either

@DuBeaux Dingle   It all depends.  There's barriers to entry to every job and people normally don't enjoy leaving their comfort zones to try and cross them.

I know a lot of agents who dream about flipping houses.  However, they don't know anything about construction and this puts doubt in their minds.  That doubt is normally enough to keep them from moving outside of their normal day to day.

I had several agents in my previous brokerage who looked on with envy at what I was doing with rentals.  However, they always had excuses like "tenants always wreck your property", or "I don't want to deal with crybaby people all day."  

And then there's some agents who're so good at their job being an agent, that they don't have time for anything else.  I found myself in that boat, which is why I got my brokers license and backed off being a buyers agent.

Lot's of reasons why or why not.  It just comes down to the individuals goals and drive.

I remember attending a sales meeting as a new agent where the presenter said that "You can make a lot of money selling real estate but you won't keep it unless you own some". I took that to heart. Now, years later, I have 115 units and a mid-seven figure net worth as a result of real estate investing. 

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