Working For Yourself vs With a Brokerage

[Carl Dispoto]

I passed my real estate exam about a month ago and am just waiting for my license to arrive from NJ. I have already started the process of working as an IC with a nearby brokerage that does residential, commercial, property management, investment, etc.

In starting my BiggerPockets reading, I notice of their guidance revolves around getting into real estate independently or with a partner, perhaps forming an LLC. It does not mention whether having an IC relationship with a brokerage is beneficial or detrimental.

So, what are the thoughts on this. I feel like working with successful, multi-facted brokerage would be a great learning experience to prepare for perhaps doing it on my own in the future. Is it allowable to work with a brokerage while also handling some real estate investment deals independently? Os is that a conflict of interests?

Any feedback would be appreciated.

[Paul De Luca]

People are considered independent contractors when their income is based primarily off production rather than hours. So to me, that's beneficial since it allows leverage of your systems and time. An employee has no leverage with their time. You could work 40 hours at a rate of $20/hr and make $1600 every two weeks. A real estate agent gets paid based on # of units sold and the resulting commissions. But there's no cap on your earning potential.

Since you're just getting started, I would work for a brokerage for at least 3-5 years before venturing off to do a sole proprietorship. That way you can learn the business and you'll have a book of business before transitioning to do your own thing.

But yes, real estate agents can invest independently while working. Be sure to read your independent contractor agreement with your brokerage for specifics though.