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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Mike S.
Cambridge, MA · Member since 2017 · 42 posts · 6 votes
7y
@DuBeaux Dingle IMHO id guess any client of a realtor would be super confused if their realtor didnt atleast OWN their home let alone some type of investment property. I just would not feel secure working with a buyer agent that had zero experience w/owning.
0 Reply
Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
7y
@Mike S., But here's the counter point to that - I've fired real estate agents who were significant investors. Why? Because they were my competition. it only took once or twice of hearing "..Oh you just missed that one..." to realize that what was actually being said was "you're going to get dibbseys after me and after my other stronger relationships have a crack at it". There is an inherent conflict of interest when your realtor is also a competitor.
If I expect my realtor to be an experienced investor and to be putting my investing interests first I'm setting myself up to be shopped by them all day long. And more power to the realtors who are that aggressive and motivated. It doesn't make them bad realtors. It makes them great investors. And that's why you want to work with them. But if you're working with a great investor as your realtor then be satisfied with second place at the table.
I love energetic realtors who love being a realtor and don't want to be an active investor.
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7 Reply
Charles Kao
Specialist · Grand Rapids, MI · Member since 2016 · 1k+ posts · 611 votes
7y
@DuBeaux Dingle
Same reasons alot of financial
advisors are broke....they treat it
as a job not a profession. I asked
a realtor once who tried to get me to list my house with her even though my wife was listing realtor why with 30 years of experience she never invested and she said it was because her husband said it was risky. That about sums up it up.
3 Reply
Quito Keutla
Real Estate Agent · Renton, WA · Member since 2017 · 204 posts · 151 votes
7y
@DuBeaux Dingle Work on not being the average agent, most successful agents I know do invest. The beauty of real estate is there are many creative ways to acquire it with little or no money and BP has all sorts of strategies. Happy Investing!
3 Reply
Vanesa Gonzalez
Rental Property Investor · Miami Beach, FL · Member since 2017 · 105 posts · 59 votes
7y
@DuBeaux Dingle I started as an investor and after a couple of years working with realtors that had no idea how to work with investors, I decided to get my RE license. And the first thing I noticed was exactly that! Most realtors I know do not invest in RE.
1 Reply
Suly B.
Rental Property Investor · Denver, CO · Member since 2018 · 81 posts · 62 votes
7y
@Michael Van I love your comment! I have tons of respect for people who live well below their means when it comes to vacations, cars, clothing, living spaces etc.
According to Thomas J. Stanley, author of “The Millionaire Next Door. Over 1 million millionaires live in homes valued under $300,000.
I'm a house hacker and a firm believer that living below your means is a little nugget that helps in a BIG way to reach financial freedom.
1 Reply
Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
7y
@DuBeaux Dingle
Some reasons:
- My realtor had rental properties, but ended up selling them. Ultimately he hated being a landlord. He determined it was a distraction from his reality business, where he makes a much higher return on time/money invested.
- Many high income people don't invest in real estate, doctors, entertainers, etc. They invest in other businesses, hedge funds, stock market, etc. Real estate is not the only avenue.
- Realtors make money, but they also spend it. Just because you are realtor doesn't magically give you better money management skills. Even high income realtors can be broke if their life style expenses are high enough.
- Selling houses is transnactional. You close and you get a check. Rental properties are a long term commitment with continuous problems. As a landlord you accept that solving these problems is part of the job, but some people just prefer a clean transaction, where they don't have to deal with the hassle.
5 Reply
Kevin Branin
Real Estate Agent · Philadelphia, PA · Member since 2016 · 115 posts · 61 votes
7y
@Anthony Vann I'm with you on the mindset. You have to think long term as an investor, at least a successful one. Save a dollar today, get four tomorrow. Time Value of money baby.
1 Reply
Darnise Smith
Lewes, DE · Member since 2018 · 1 post · 0 votes
7y
@Nick C. Exactly!!
0 Reply
Rob Jafek
Mesa, AZ · Member since 2018 · 24 posts · 9 votes
7y
We lend to a lot of realtors. They tend to know areas very well, and know other people in the business to help with their projects.
Having said that, they are related lines of businesses, but not the same. If you are good at 'realtor things' (not gonna pretend I know that business), how many of those skills are transferable to 'investor things'? While I am sure there are elements of hard and soft skills in each line, maybe there is more of a focus or value to one type in realtor or investing. Like I said: lots of overlap, but also lots of differences.
Bit of an aside, but once in a while we hear stories of guys who have rehabbed a house, and think they will sell it themselves to save some money. Consistent with many studies and all, they end up with lower prices and longer time on market. So, there's a reason for the specializations, the trick is to figure out what you do best, and can you do more of it. And: is your time and energy better spent working on something narrow, like one OR the other, or is your time and energy better spent a bit broader, so do BOTH?
0 Reply
Michael Van
Investor · Chicago, IL · Member since 2018 · 46 posts · 55 votes
7y
@Steve Vaughan I love that you brought up the Pareto Principle. It truly applies in any and every situation. The truth of the matter is, is as many people mentioned real estate agents are transactional. To @Adam Blachnio 's point, having a commission life style which does not lead to thinking about one's future.
The unfortunate and most contributing factor is how society has built our expectations. Most people are taught to think about what's in front of them, the next shiny object, or even how much can I afford per month? Think about this as it applies to mortgages. A mortgage at 5% is basically a bank saying that we will give you the money for this $100,000 house and at the end of it take $90,000 in interest. Oh but your monthly payment will only be about $650, is that okay?
The ultimate point is that people in general, not just realtors, are not great stewards of their money. Short term gain and societal views on money make the less disciplined people spend so much more. It's gotten even worse with social media because the 1% lifestyle is in front of people's faces even more now. And even those not in the 1% are fronting in their social media by renting mansions and exotic cars for a day to do their videos.
Just live below your means and invest the rest. Until your means are high enough that work for the lifestyle that you want, just keep chugging along. Everyone has a different view on success. Good luck everyone!
@Ade AmooThank you for supporting the point and yes, the Millionaire Next Door is a great book to read that really drives the point home.
@Jay Hinrichs I completely agree with you about the 1099 part as well. As a 1099 independent contractor, our goal at the end of the year is to expense out our lifestyle and as much as we can to get our effective income as low as possible. This does not work well when you're trying to qualify for a loan which requires or rather looks favorably upon higher incomes.
@Suly B. Thank you for being you. Seriously, rockstars that rejoice in living well below their means are the ones that will pave the path to their own future. Most people think they have an income problem when it's really an expense problem. The old addage rings true "More money, more problems". Work on playing defense with your finances first because that is the #1 thing that you can control. From there it's all about the direction you want to take YOUR money. Don't work for your money, have your money work for you.
4 Reply
Shannon Cohan
Realtor · Tampa Bay Area · Member since 2019 · 24 posts · 12 votes
7y
I’d agree with Nick! You are the company you keep. Some people are motivated to just make a pay check and some are more interested in making their money work for them.
Its all about your long term goals. Good luck with everything I’m sure you’ll get there in time!
1 Reply
Christopher Lombardi
Developer · Point Pleasant Beach, NJ · Member since 2015 · 303 posts · 216 votes
7y
@DuBeaux Dingle I see a lot of commercial agents investing in deals but few residential realtors. Maybe the commercial guys see what clients are capable of while residential just sees homes as a place to live and a commission to be made. What do you think?
1 Reply
Alvin Sylvain
Los Angeles · Member since 2018 · 464 posts · 471 votes
7y
There is a book called "The Millionaire Next Door", which I have not read, but I've heard a lot about. You might be surprised to find out which of your neighbors with overgrown lawns, paint peeling walls, and beat-up cars, are in fact fabulously wealthy. They either invest in RE, own busines(es), day trade like crazy, or something. Whatever it is, they're doing what they love and don't feel the need to waste money showing off how much money they have.
Me, I still want a Porsche 911 convertible. Blue.
1 Reply
Bjorik Mutize
Real Estate Broker · Minneapolis, MN · Member since 2016 · 530 posts · 398 votes
7y
3 pages in, i would like to raise my hand saying every single agent and broker i have ever met invests, lol. Maybe not large scale but definitely 1 to a handful of investment properties!
1 Reply
Peter Pratti
Rental Property Investor · Knoxville, TN · Member since 2017 · 147 posts · 65 votes
7y
The multi-family brokers I work with definitely invest in multi-family. I would guess at lower levels agents are in it for the short term money or trying to get started. As I see agents and brokers with more experience, a lot of them are invested in real estate.
1 Reply
Grant Rothenburger
Investor · Taylor Mill, KY · Member since 2016 · 2k+ posts · 964 votes
7y
@DuBeaux Dingle A lot of them do. Sounds like the one's you're around are the wrong ones to learn from though.
1 Reply
Takunda T.
Winnipeg, Manitoba · Member since 2018 · 1 post · 0 votes
7y
@John Thedford l like your mindset! All the best.
0 Reply
Albert Bui
Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ 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
I work with many real estate agents but my guess for why they do not invest is because they are stuck in their own ways. Its a mindset.
Some happen to be accidental landlords (aka they buy a condo for their kid to go to college then rent out the condo after).
Some of the best agents have great income but they beholden to their business on a daily basis.
0 Reply
Brittney R.Pro Member
Rental Property Investor · Houston, TX · Member since 2017 · 10 posts · 11 votes
7y
Being a realtor is a sales job... no more no less.. Just like selling shoes... Having a sales job in the real estate industry doesn't mean you have the MINDSET of an investor.
3 Reply
Jimmy Deringer
Real Estate Agent · Spokane, WA · Member since 2013 · 123 posts · 66 votes
7y
Because no one ever gave them the book "Rich Dad Poor Dad" when they were younger. :)
0 Reply
Bill Plymouth
Real Estate Agent · Philadelphia, PA · Member since 2018 · 416 posts · 396 votes
7y
The whole reason I joined real estate was to build capital to invest, and learn about my market.
Some people have different goals. Regardless of how successful, some people just don’t manage their money well. They might have a high income, but they could spend it all. There is a potential that they chose other means of investing.
0 Reply
Suly B.
Rental Property Investor · Denver, CO · Member since 2018 · 81 posts · 62 votes
7y
@Michael Van 5 stars! Very impressed with your point of view and responses to everyone who mentioned you in their response.
You definitely know your stuff and you will go far because you're also actively educating those around you along the way.
1 Reply
Steve Mason
Rental Property Investor · Nashville, TN · Member since 2017 · 38 posts · 15 votes
7y
When I was a Realtor, I wondered that myself. Looking back, I was so busy making a living and chasing the next lead, I really didn't take time to invest like I should have. One thing I noticed, most Realtors didn't come across many investable properties. Most clients wanted a retail price for any junky property. I think being an investor is a different skillset than a Realtor. I finally got into it, after getting out of being a Realtor. Best of luck.
1 Reply
Hai Loc
Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes
7y
Your rolling with the wrong rollers
1 Reply

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