Why aren't realtors investing?

Realtor · Northern Virginia · Member since 2018 · 17 posts · 31 votes

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

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Steve Vaughan

Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes

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 :)

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Yannik Cudjoe-Virgil
Rental Property Investor · Baltimore, MD · Member since 2016 · 253 posts · 178 votes
7y
@DuBeaux Dingle you would think so but they do not have a mindset of an investor. I am an agent as well and I have done deals for clients. I can tell you first hand that an agent is an underpaid wholesaler
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Scott Scheel
Flipper/Rehabber · Fort Lauderdale-Miami-Boca Raton, FL · Member since 2017 · 130 posts · 65 votes
7y
@Yannik Cudjoe-Virgil I'm in Florida, there are numerous real estate agents that do not understand investing. Brokerages advise their agents to go after listings, spend $$$ on Zillow/Trulia/Etc. and door knock. I started my own firm because my broker (at the time) discouraged me from dealing with investors because he wanted his close rate higher. He told me that investors are more likely to back out of deals and it would make his firm look bad. So I left and went on my own journey, it is so much more fulfilling.
1 Reply
Jerry Maze
Wholesaler · Portage, MI · Member since 2019 · 12 posts · 5 votes
7y
@DuBeaux Dingle
Great question! I was an agent for Re/Max for a number of years in Atlanta... I had gotten hooked up with a very large property management company... over 300 houses under management... the property management company owner referred all his property owners that moved out of state and wanted to sell their rentals to me to list and rehab for them... I did this for a split on my commission because I was new and needed experience listing and marketing properties to advance my “agent” career... the property management company owner offered to teach me everything about investing... here is why I was not interested... at that time, all my time, energy and resources were focused on the retail market and succeeding as an agent... I was close minded due to my lack of desire to learn something that seemed so foreign and “out of the box”!
In retrospect, that was the worst real estate related decision I ever made... I highly recommend agents learn, pursue and become active investors for the reason you stated... also, in addition, it broadens your potential client pool as a “Realtor” to include Real Estate investors!
3 Reply
Casey Powers
Las Vegas, NV · Member since 2018 · 403 posts · 474 votes
7y
Getting a real estate license to be an investor is like becoming a casino dealer in hopes of becoming a better gambler. It’s 2 different things.
Some agents do invest. But about 2/3 of licensed agents are doing less than 5 transactions a year (or worse), so most don’t have the money to invest.
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Lori Greene
Specialist · Huntsville, UT · Member since 2015 · 458 posts · 249 votes
7y
I'm not a Realtor but in my line of work, property value comps analysis, I've worked with 100's of them and some of them do invest in real estate. But it seems like the ones who don't invest just don't know enough about it or how to get started. So I'm always educating them on why they should and how they can get started.
One thing I've also noticed is how many investors try to avoid agents to save on commissions. But they don't realize how much more money they can make if they would use agents to help them find, buy and sell properties because it makes things move so much faster that you can do more deals. So, I'm always trying to educate investors on the benefits of working with agents.
Let's all work together!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
@Mica Moore @James Wise Mica you say ruthless Mr. Wise uses the term Savage..
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James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
7y
Originally posted by @Mica Moore:

Property management is the armpit of real estate. The tenants drama, maintaince & vacancy. It looks like easy money on paper -- but the reality is a lot of hard work. A PM helps but it doesn't solve all the problems. Tenants are ruthless -- you would not beliive it unless you experience it.
The fix & flip side? Have you dealt regularly with contactors? Very big headache --- getting them to perform ontime & within budget or even to have the crew show up at all & do quality work --- takes a lot of patience & oversight. Think you can DIY? Not as easy as it looks either, you could run into an array of issues. Then when time to sell -- it could not be as quick & easy a sell as you think. You're on the clock to make a profit and 99% of the time there is more work & energy involved that estimated.
There are a lot of big dreams & big talkers in this game -- but few consider the realities.
A savage game indeed!
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James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
7y
Originally posted by @DuBeaux Dingle:

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
90% of agents shouldn't be agents. Next year they won't be agents. The industry has a 90% turnover rate year after year. The fact that most anyone can get a license with relative ease combined with the promise of the freedom to make your own shedule & the unlimited earning potential brings all kinds of folks out of the woodwork. When the dust settles they quit when they realize it isn't what they had envisioned. Shortly thereafter a fresh new crop of agents march on in, only for their dreams to be slaughtered by the end of the year.
As for investors. The true investors, those who have no outside employment other than real estate related income. Most all of these investors are licensed themselves. Whether someone considers themselves an agent 1st & an investor 2nd or vice versa is all semantics.
I am licensed & I invest. I think anyone who would attempt to invest in real eatate full time would be a fool not to get licensed.
4 Reply
Kyle NeffPro Member
Rental Property Investor · Cincinnati, OH · Member since 2015 · 127 posts · 59 votes
7y
@Steve Vaughan this might be one of the best posts I’ve seen so far. Love the factual but light-heartedness. Thanks!
1 Reply
Michael Van
Investor · Chicago, IL · Member since 2018 · 46 posts · 55 votes
7y
@Suly B. Thanks for the props. I've always been told the best way to learn something is to be teaching it. On top of that there is so much real estate and business that no one person could ever handle it themselves. We're all in a community to prosper and do better for communities so I'm definitely glad to be a part of it.
0 Reply
Phillip DixonPro Member
Residential Real Estate Broker · Chicago, IL · Member since 2017 · 4 posts · 3 votes
7y
I definitely invest in rentals, but you have to meet the right Realtors. There are many that invest and even some that only sell their own properties.
0 Reply
Caden Bradbury
Lehi, UT · Member since 2018 · 7 posts · 3 votes
7y
@DuBeaux Dingle
Not sure if you listened to bigger pockets podcast from a few weeks back but Graham Stephan made some excellent points about investing as a real estate agent.
I think one reason is they don’t have the “wow” factor. Most people don’t regardless of there profession. Investors are a very peculiar type of person.
Another reason is that seasoned real estate agents have seen the market crash so many times. They have actually experienced the volatility of their jobs so they are scared themselves to buy a house out of fear the market will crash right after.
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
7y
The main reason I have seen over 15 years doing this is most agents are in the herds of 90% ofthe population living minute to minute trying to pay the bills with that J-O-B trying to keep the lights on and the stomachs full.
There is a certain level and dedication needed to get started and save up enough capital. Even if that step is accomplished buying when inexperienced often leads to losses that many cannot recover from or they give up. All of this leads many agents to just focus on transactions all the time and the NEXT DEAL to SURVIVE. Instead the focus should be on investing to create long term and stable revenue return streams. Then the broker/agent can be more picky on their ideal client they want to take on for transactions and live life on their own terms. Have you controlling the cash flow and not the other way around.
I drove back around 6 p.m. today. I saw cars rushing like mad trying to get home. It was like I was standing in the universe on the outside looking inside a fish bowl of people trapped in a tank going round and round with nowhere to escape. That seemed normal to me decades ago before I changed my life how I wanted it to be.
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James Farrel
Member since 2019 · 2 posts · 0 votes
7y
An investor who is not investing is not an inverstor. IMO
0 Reply
Jian G.
Rental Property Investor · San Diego, CA · Member since 2019 · 102 posts · 43 votes
7y
@DuBeaux Dingle
My thought is Most agent aren’t that educated. Just a license salesperson.
0 Reply
Chris Purcell
Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
7y
Originally posted by @DuBeaux Dingle:

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
The agents I associate with are Investors - no clue what the others are up to
1 Reply
Patti RobertsonBusiness Member
Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
7y
I’ll probably get crucified for this comment, but here goes... I’m speaking as a RE Broker, but more importantly and entrepreneur with diversified business investments. There are clearly exceptions to every rule, but I don’t find the agent pool in general to be among the sharpest tacks in the box. As an industry they have completely missed the mark and have let the internet companies sneak right in and hijack their industry. They still don’t seem to realize what happened and what is on the forefront for them.
Again as a general observation with obvious exceptions, agents tend to become prima donnas once they get any volume. Their income goes to their head, and most of them spend it instead of investing it. The SMART real estate agents and brokers recognize that real estate is one of the only ways to have a retirement vehicle that someone else mostly funds.
Do the investor community a favor and don’t tell the dumb agents what they are missing! Just think of yourself as being smarter than the average bear in your office and quietly build your empire while the people around you continue to work 7 days a week at their agent J.O.Bs.
757-472-2547
5 Reply
Sam Shueh
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
7y
If you are a 1099 getting a mortgage may be problematic. Majority realtors live on commission check and pay high credit card interest to stay above water. Most realtors are in the business finding deals and clients. The investor hires and fires realtors to do the grunt work.
The real successful realtors have some investment properties. Most just burn $ it....
3 Reply
Bryan Clement
Rental Property Investor · Union, ME · Member since 2018 · 161 posts · 104 votes
7y
@DuBeaux Dingle in talks with my father - in - law who is an agent, he always wants to buy more deals but him buying a deal means it's one less deal for his clients, so he tends to sell them. A lot of times he ends up regretting it a bit, but giving all the good and great deals to his clients is one of the reasons he's top five producer in the state of Maine. Just my two cents!
0 Reply
Chris Michael
Member since 2019 · 18 posts · 11 votes
7y
@Nick C. I am a newer agent with about a dozen transactions under my belt so my knowledge is growing a foundation to start learning the meat and potatoes. I want to begin flipping notes and distressed. I did part time field service work for a buddy of mine one summer in college (driving for dollars/evaluations). I grew up in our area and love where our market is at. Great demographics job growth tourism etc.
If you don’t mind, what areas are you targeting for investment?
I feel that I am biased to the North Pinellas and DTSP area because I grew up here-
0 Reply
Summer McDade
Property Manager · Eclectic, AL · Member since 2017 · 38 posts · 18 votes
7y
@DuBeaux Dingle I have only been an agent for a few years but I started with a rental, and I manage vacation rental properties (that I will probably never be able to afford 😂). My husband and I flipped a house and were able to get over 100% ROI. it was our first flip and the house was a dump to say the least. I know that flipping isn't investing, but it was an investment for us at the time because we had no idea if we would hold it to make it a rental or sell it after completion. But as we watched the market during the reno, we knew we had to sell. We were fortunate enough to be in real estate and see how the market was warming up here, for rentals AND sales) and we took an educated chance. So I get what you are saying. It baffles me too. But seeing how the secret here is out now, and we can't find flips or buy any rentals for a decent price either, be grateful there's more choice and negotiating room for you. Lol
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Tom Antonio
DE · Member since 2019 · 31 posts · 21 votes
7y
Great question Realtors are like any other profession. People usually work in a particular field because they need to make a living and gravitated to a particular profession for a million reasons. The majority of realtors in my 35 years of experience are sales people not necessarily real estate investors or speculators. I have met and worked with many very successful realtors that were in the business for a long time and only owned their own home. So really the question is almost like saying why are car sales people or insurance agents not investing in real estate. Investing in real estate is a passion that is very separate from being a great Agent and helping people make their home buying dreams come true, you can do that very well with out being a real estate investor your self.
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Tom Antonio
DE · Member since 2019 · 31 posts · 21 votes
7y
Now the other side of this is the fact that the average person thinking of getting in to the real estate wealth building life style are not using the above mentioned info to select their Realtor. If the client is looking to buy their dream home to raise their kids, retire to, or just moving from place to place for work or other reasons a good competent local Realtor is perfect for them. Now here is the "but" if the client is looking to get advise about investing like flipping, rentals, land speculating, multifamily, and all the other way to get in to the money making world of real estate that is when the question is so much more relative. Let me explain what I mean, if your Realtor only owns their own home and thats all they have owned or care to own thats when the flag should go up why is my Realtor not investing in real estate. First of all how will the Realtor instill confidence in the client about what a great market to invest in this is if they personally are not taking advantage of the opportunity. In closing to me the only time you should be concerned about a Realtor not investing in real estate is if you are hiring that person to help you grow your real estate fortune. Like any other profession there are people with specialized knowledge and investing in real estate and being a good Realtor are not related. thank you for reading and engaging, again great question.
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Georgui Kasaev
Realtor · Athens, GA · Member since 2017 · 336 posts · 123 votes
7y
@DuBeaux Dingle Hello and welcome, glad to hear you getting into the agency business. I am also a newer agent here in Athens Georgia. I actually started off as an investor only and then got my license and now work both sides of the fence.
I also see that a lot of agents in my area are not investing. However, I see that mostly with the younger agent. The top producers in my town have investment properties.
There are a lot of moving parts to be an agent. Which can be very challenging for someone who has never worked for themselves. It is one thing to think of your self as an entrepreneur and a completely different thing to actually having the discipline to do the things a business owner has to do every single day.
So, in my opinion, it's not that most agents do not want to invest, it is just that in order to get their agency business going they don't have the bandwidth to also invest. Until a few years down the line.
1 Reply
Suly B.
Rental Property Investor · Denver, CO · Member since 2018 · 81 posts · 62 votes
7y
@Michael Van I couldn't agree more, cheers to you!
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