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- Don't start a real estate team
Don’t do it.
Don’t.
I’m warning you.
Do not start a real estate team.
Uncle Buck does not support you starting a real estate team
Ok, I did it too.
But dammit, I should not have done it. I don’t regret it because now I have the chance to tell you about how I wasted time and money. My real gift in life is messing up so you don’t have to.
The key is messing up forward. Each of these colossal mistakes unlocked something new. A lesson, a partnership, a new approach, or sometimes a good ol’ slice of humble pie. Served with whipped cream.
Here is why you do not want to start a real estate team (unless you’re passionate about leading and managing a team of realtors):
It’s one of the toughest businesses to make work profitably. The perception isn’t always reality because most “big team leaders” are on stage selling you the dream of scaling. Because they are recruiting! There are successful teams out there, but do not get sucked into the trap that starting a team is your only growth path. YOU HAVE OPTIONS!
Pulling back the curtain, you’ll find the not-so-fun overhead costs. Followed by the tough task of managing agents with a wide range of needs and motivation levels.
Live footage of a new real estate team leader in their 1st month
Running a real estate team is not based on real estate expertise. It is 100% people management. So unless you have people management experience, or truly love every aspect of managing people's day-to-day, then it simply won't work.
Real Estate Team Economic Breakdown (Monthly)
Item | Why | Monthly Cost |
|---|---|---|
Admin Salary | Handle the paperwork | -$5,000 |
Office | Need a place to sit | -$2,000 |
Leads | 200 leads for 5 agents ($50 per lead) | -$10,000 |
Cost of Sales | Lock box, signs, etc | -$3,000 |
Total | -$20,000 |
That’s our overhead, now let’s see what our agents might produce.
Assuming 5 agents
1 monthly deal per agent from leads (not gonna happen)
50/50 split
$10k average spread
$5k per deal for team
1 monthly deal per agent from their network (definitely not gonna happen)
75/split
$10k average spread
$2.5k per deal for team
Deals | Revenue | Team Revenue Take |
|---|---|---|
Lead Sourced Deals | $50,000 | $25,000 |
Self Sourced Deals | $50,000 | $12,500 |
Total | $37,500 |
So if you are cooking with 5 agents who are taking down 2 deals per month, supporting them properly, then you are generating $37,500 every month. Remember, the average national realtor sells between 4-5 homes per year.
Line Item | $$$ |
|---|---|
Total Costs | -$20,000 |
Total Revenue | $37,500 |
Total Profit | $17,500 |
The result is $17,500 in profit.
That’s fantastic. It would mean you’re making $210,000 per year. That’s a big deal!
But we didn’t talk about the never-ending need to recruit agents, replace agents when they leave, performance manage agents who aren’t meeting expectations and the list goes on. Trust me, I’ve been there. If you aren’t all in, it’s not going to work.
None of this is bad, but ask yourself:
Is there a better way?
I think so. You can generate this much profit by expanding your ability to disposition houses using wholesaling, flipping, sub-two, and holding rentals.
Create your own leads with data (Holler at Batch Skip Trace, ask me for a promo code)
Hire an acquisition person to work the leads
Make spreads wholesaling, flipping, and working those leads
Sellers who can’t go off-market and list with you as a realtor
If this gets too big, you can find a key partner for retail listing
Transaction coordinator who can admin for agency + investment
Use profits for top of funnel to do more marketing
What numbers could this approach generate?
2 wholesale deals per month = $30k
2 listings per month = $20k
1 per month = $30k
That’s $80k per month x 12 months = $960k/year… So basically $1m/year.
Let’s try this path first and see what you think. If it doesn’t work, you can always go back to starting a real estate team. Then in two years, you can write this same newsletter to stop others from doing it.
— Temp
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