Considering a real estate career - tell me the ups and downs

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Considering a real estate career - tell me the ups and downs

Karen M.
Hales Corners, WI · Member since 2013 · 229 posts · 80 votes

Hi Everyone,

I have been interested in real estate investing for a couple years, but have decided NOT to pursue buying rental homes at this time.  I have three young kids and decided it would be easier to invest in stocks for many reasons (liquidity, diversification, not taking on debt, not managing tenants, etc.)  The kind of properties I want to own are beyond my means!

However, I am considering selling real estate as a J-O-B.  Right now I am a fitness instructor and I teach 10 classes a week, and I am a mom.  I have a great schedule but I am not bringing in much money for our family. 

I am considering getting a real estate license and selling homes for a living.  I might even want to be a "part time" real estate agent.  I am concerned about balancing family life with selling real estate, however-- I don't need to watch TV.  I do need to keep the fridge full and the kids on task at school and at home.

I think the benefits would be great - I would get to know our market very well and develop skills related to real estate, and I would be able to save 100% of my income and put it towards either stock or real estate investments.

Please tell me about the reality of being an agent, and getting started. 

What kind of budget would you set for startup costs?

How do you see the retail real estate market changing?  What will life be like for retail agents in 5 or 10 years?  (Edit to add: I live in a market that is good for rentals and could possibly help investors here.  The only caveat is that I expect to be selective on neighborhoods and safety.) 

What sucks about being a real estate agent?  I was effectively talked out of land lording by Bigger Pockets star, Ben Leybovich -- and that was very helpful!  Land lording likely doesn't suit my personality right now, it's too much money, too much debt, too many headaches.  Being an agent will have headaches, but it seems easier. What's your input? 

Thanks so much,
Karen

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Scott Beck
Investor · Murphy, TX · Member since 2015 · 145 posts · 53 votes
10y

Hi @Karen M.,

Several suggestions:

  • Have at least 6 months of living expenses saved up before going down this path. (FYI, it usually take about 6 months to close your first deal. There are some exceptions to this, but they are rare.)
  • Set up meetings with local brokers and find out what is required to be an agent in their brokerage. Look at both the big and small players. Ask about their cost structures and expectations.
  • Talk to local agents about how they view their job and how much time they spend on it. Also ask them about the brokerage they are signed with, as you will most likely get a much different perspective from what the broker told you.

Before making a decision I recommend reading the following:

  • How much money do you need to save before becoming a real estate agent? (http://investfourmore.com/2014/06/how-much-money-do-you-need-to-save-before-becoming-a-real-estate-agent/ )Note that Invest Four More is a website by @Mark Ferguson. He has lots of useful information related to being an agent and doing RE investing. You might consider following his posts here on BP and looking at his website.
  • The links at the U.S. Small Business Administration website (https://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business )
  • "21 Things I Wish My Broker Had Told Me" by Frank Cook (Dearborn Real Estate Education 2007).
  • "The Millionaire Real Estate Agent," by Garry Keller and Dave Jenks.

These will all give you different perspectives on what you need to know to be successful.

Good luck!

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  • Chris Soignier
    Real Estate Broker · North Richland Hills, TX · Member since 2013 · 1k+ posts · 607 votes
    10y

    I'm a new agent, so can only offer my perspective from that angle. As you can imagine, being a real estate agent has many pluses and minuses. First off, it's expensive....education to get licensed, MLS fees, Realtor fees, brokerage fees, Supra key fees, marketing costs, etc. It's not a job as much as starting a business, and you'll need to invest a fair amount of capital to get it rolling and start bringing customers in.

    The good is that hours can be very flexible, though to be successful, you'll need to make yourself available on your clients' schedule, whether that be weekends, evenings, etc. You may also put in significant effort for clients where you never get paid, and when you do, it's can be a long sales cycle till payday. MLS access is also great for finding discounted properties, research, and marketing for leads.

    0Reply
  • Scott Beck
    Investor · Murphy, TX · Member since 2015 · 145 posts · 53 votes
    10y

    Hi @Karen M.,

    Several suggestions:

    • Have at least 6 months of living expenses saved up before going down this path. (FYI, it usually take about 6 months to close your first deal. There are some exceptions to this, but they are rare.)
    • Set up meetings with local brokers and find out what is required to be an agent in their brokerage. Look at both the big and small players. Ask about their cost structures and expectations.
    • Talk to local agents about how they view their job and how much time they spend on it. Also ask them about the brokerage they are signed with, as you will most likely get a much different perspective from what the broker told you.

    Before making a decision I recommend reading the following:

    • How much money do you need to save before becoming a real estate agent? (http://investfourmore.com/2014/06/how-much-money-do-you-need-to-save-before-becoming-a-real-estate-agent/ )Note that Invest Four More is a website by @Mark Ferguson. He has lots of useful information related to being an agent and doing RE investing. You might consider following his posts here on BP and looking at his website.
    • The links at the U.S. Small Business Administration website (https://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business )
    • "21 Things I Wish My Broker Had Told Me" by Frank Cook (Dearborn Real Estate Education 2007).
    • "The Millionaire Real Estate Agent," by Garry Keller and Dave Jenks.

    These will all give you different perspectives on what you need to know to be successful.

    Good luck!

    4Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    I think one thing that causes so many people to get their license...then ultimately leave the industry quickly is a complete misunderstanding of what being a real estate agent means. Being a real estate agent is not a JOB, but rather being the owner of a SMALL BUSINESS.  Like starting any small business, it requires capital, as well as the fact that you will likely operate at a loss for sometime before turning a profit.  Now if you can look at it through those lens, I think you have a higher chance of being successful.  There are very few small businesses you can start for less than $20k, and being an agent is one of them.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    Karen with your 3 young kids I do not think a residential agent will be a good fit.

    Before spending a ton of money and time on licensing and tests etc. do you have local friends that are successful agents or brokers?

    Maybe you could just shadow them doing tasks that do not require  a license. You could then get an inside look into what is required of being a successful agent.

    Sure you can get licensed just to buy investments yourself but have said you do not want to be a landlord. New agents on the residential side usually drive first time home buyers all over creation spinning wheels and give up 50% to the brokerage until the split gets better. Sellers usually want experience on the listing side so new agents tend to not get traction with that side of the business until a few years in.

    What is the average home price in your area? If it's 75k versus 300k you will be doing a lot of hustling. You could also sit a subdivision and sell builder houses all day. Residential your weekends will be gone and if your significant other will be off on weekends and kids want to do things it will put a ton of stress on your family.

    I have been doing this 12 years now. One of the hardest yet most rewarding things I have done. I enjoy the commercial side of real estate so I stay there. The residential market is hot right now so many people getting licensed. I saw this junk before in 2005. Everyone and their brother jumps in and when buyers fog a mirror anyone can eek out a few sales. When the market shifts to neutral or down again that shows the real players who can make sales in any market. Those are the full time brokers & agents who hones their craft and do not get complacent.

    Lot's of my residential agent friends right now are loading up on crap from closings and taking vacations. I am taking my money and investing it so when a slow cycle hits again and have hundreds and hundreds of thousands coming in passively each year. 

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  • Laura Temple
    Real Estate Agent · Eagle River, AK · Member since 2013 · 2 posts · 4 votes
    10y
    Consider looking for work with an agent, such as an admin working into transaction coordination. Many will reimburse you for the cost of getting your license and pay your fees. You also have the advantage of hands-on training with more experienced realtors. You may not be able to sell right away, but once you have your license, you can work it out to get referral fees from your boss. This way you can work the hours you've agreed upon.
    3Reply
  • Matt Lefebvre
    Real Estate Broker · Manchester, NH · Member since 2014 · 630 posts · 420 votes
    10y

    Hi @Karen M.!  I'll tell you right now, that I absolutely love being a real estate agent.  And there are two different ways you can treat becoming a real estate agent, with two very different outcomes.  You can either sell real estate as a "J-O-B", or you can build a real estate business.  The biggest difference between the two is the mindset you have.  

    There's nothing wrong with having a job in real estate, and you can make a pretty substantial income from it after working for a while.  I know agents who make six figure incomes and operate on a 40-50 hour work week.  

    If you have a business and expansion mindset, you can always grow from being simply a real estate agent, to owning a real estate business that can make many times what you can by yourself.  

    Comparing it to other "business start-ups", starting as a real estate agent is relatively inexpensive if you want to be on a shoestring budget.  You can get away with the barebones... probably around $2,000.  You don't need all of the marketing materials that others have and can save yourself a lot of money by putting them off until you start generating a profit.  However you will need to account for your living expenses until your first closing.... which can take up to six months.  

    Although the residential retail market largely depends on the area you're located in, across the country, we are starting to see a rise.  No one can predict the future, but I would expect it to continue to appreciate and increase in activity over the next five years.  

    Here's what sucks about being a real estate agent though...

    • Dealing with rejection on a daily basis
    • Always having to act as the mediator and "broker" between people
    • No steady source of income (until you've established your business)
    • If you really want to put in 100%, "flexible hours" don't exist.  In the beginning you will have to answer those calls on Sundays to show properties.

    I'm sure I could talk all day about the ups and downs of real estate, but that's a brief overview to answer some of your questions... hope it helps!  And feel free to use me as a resource if you have any more questions or want some insight.

    1Reply
  • Craig E.
    Investor · Sacramento, CA · Member since 2011 · 87 posts · 56 votes
    10y
    Originally posted by @Karen M.:

    How do you see the retail real estate market changing?  What will life be like for retail agents in 5 or 10 years?  

    Google - Real Estate Industry Disruption.  Check out some of the new platforms/ starts ups  getting traction.  Don't rely on the current, antiquated brokerage model.  Consider how you can do it differently, better, add value.  As an agent, look for a progressive brokerage to work for.  Start interviewing brokers.  

    0Reply
  • Karen M.
    OP
    Hales Corners, WI · Member since 2013 · 229 posts · 80 votes
    10y
    Originally posted by @Joel Owens:

    Karen with your 3 young kids I do not think a residential agent will be a good fit.

    Before spending a ton of money and time on licensing and tests etc. do you have local friends that are successful agents or brokers?

    Maybe you could just shadow them doing tasks that do not require  a license. You could then get an inside look into what is required of being a successful agent.

    Sure you can get licensed just to buy investments yourself but have said you do not want to be a landlord. New agents on the residential side usually drive first time home buyers all over creation spinning wheels and give up 50% to the brokerage until the split gets better. Sellers usually want experience on the listing side so new agents tend to not get traction with that side of the business until a few years in.

    What is the average home price in your area? If it's 75k versus 300k you will be doing a lot of hustling. You could also sit a subdivision and sell builder houses all day. Residential your weekends will be gone and if your significant other will be off on weekends and kids want to do things it will put a ton of stress on your family.

    I have been doing this 12 years now. One of the hardest yet most rewarding things I have done. I enjoy the commercial side of real estate so I stay there. The residential market is hot right now so many people getting licensed. I saw this junk before in 2005. Everyone and their brother jumps in and when buyers fog a mirror anyone can eek out a few sales. When the market shifts to neutral or down again that shows the real players who can make sales in any market. Those are the full time brokers & agents who hones their craft and do not get complacent.

    Lot's of my residential agent friends right now are loading up on crap from closings and taking vacations. I am taking my money and investing it so when a slow cycle hits again and have hundreds and hundreds of thousands coming in passively each year. 

    Hey Joel, thank you for the insights.  During the summer I bought a few real estate agent books and read them, and I came to the conclusion then that being a real estate agent right now is probably not the best fit.  I keep coming back to it though, just as I keep coming back to looking at being a landlord for passive income.  My interest might be a distraction, but, there are a lot of nice things about both being an agent, and/or having investment properties. 

    I was thinking that if I become an agent, perhaps I will do it when the boys are teenagers and getting ready for college.  Part of my issue is that right now I'm a housewife that works part time -- and it's a dilemma -- should I go an earn more income, or should I focus more on what I'm doing -- caring for home and family?  I can work on widening our social circle and being active in the community, just in case I get into residential real estate down the road. 

    My immediate neighborhood has homes $150k - $350k range. 

    I am not sure that I will have the right amount of hustle -- I have tenacity, I don't give up, and I could succeed by just grinding it out, but then again.  It's nice to be with the family on the weekends.  Thats a goal in itself!

    I'll start another thread here because I spied a home I would like to buy, but cannot afford the cash for.  Never mind, I won't start the thread, it's the right property but not the right time for us to become landlords (even in a nice house for auction.com in our town, next door to some of our friends!)  I don't have the cash to buy it, I don't want to sell out of our stocks to raise enough of the cash to figure out down payment / loan deal / hard money whatever.

    I'm rambling.  Auction.com is very interesting.   Watching the market is *very* interesting, but I think my market to watch for right now still is the stock market.  I'm several points ahead of the S&P this year and I have been making income with options.  It's working and fits my life so much better. 

    Thank you for talking to me about it!

    Karen

    P.S.  Commercial seems like a smart place to be.  All the commercial people I've met come across as very sharp and very smooth! 

    0Reply
  • Karen M.
    OP
    Hales Corners, WI · Member since 2013 · 229 posts · 80 votes
    10y

    Thanks everybody for your great feedback -- Bigger Pockets is a wonderful place and I love this community.  I'l figure a way to get into RE eventually... 

    0Reply
  • Christopher Brainard
    Rental Property Investor · Rockwall, TX · Member since 2015 · 891 posts · 701 votes
    10y
    Originally posted by @Karen M.:

    P.S.  Commercial seems like a smart place to be.  All the commercial people I've met come across as very sharp and very smooth! 

    That's because you need to be very sharp to survive in the commercial space. 

    Based on reading through this thread, I think you got good advice from several people. Being a successful agent and/or investor takes a lot of time (or money) and it doesn't sound like you're at the point in life where you want to sacrifice your family life (or risk your current finances to invest). If you are truly interested in Real Estate, spend some time on the forums, read a lot, decide what specific area of Real Estate interests you and go from there. The education here is free and education is power.

    -Christopher

    1Reply
  • David Hunter
    Residential Real Estate Agent · Cleveland, OH · Member since 2008 · 579 posts · 225 votes
    10y

    The biggest negative is the mostly-false "You can create your own hours" statement.

    Sure, in imaginary world it's a true statement, but in real estate if you want to make a business out of this and make a lot of money then you must be available when your clients want you to be available.

    What's that?  You can't show at 6:30pm because you have to go to your kids recital?  Ok, we'll go find another agent.

    That's how it works.

    Also, real estate is life-or-death for most people.  If you're sick and can't get into the doctors for a day or two you just wait it out.  But, if your client wants to buy a house at 9:00pm you better be available.  Because if you convince them to wait until the next day it could be sold by then and you'll never live it down.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Karen M.  basically its a lifestyle.. if you embrace it as such then you can do very well. And for sure if you have to be home at 5pm to cook dinner every night it won't work on the Resi side.

    Commerical or leasing is a 9 to 5 and not many weekends gig... start as assistant and see how you like it...

    My wife was a single mother raising three daughters by herself and was a top producer.. She had to be she had 3 mouths to feed. !!  you end up taking your kids on appointments oldest daughter is an agent now.

    I grew up in the business my dad took me to meetings from when I was old enough to remember.. and yes I got very board sitting in the car for 2 hours  LOL.. but there are sacrafice's in everything.

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  • Dawn BrenengenBusiness Member
    Moderator
    Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    @Karen M. How old are your kids?  I'm a full time agent and property manager, and I have two 3.5 year olds.  It's a crazy and chaotic schedule, but I actually thrive on being busy and pulled in a million directions.  I wouldn't have it any other way.  The key is having a good support system.  If i need to show a house at 5:00, I can call my next door neighbor, my mom or tell my husband to come home from work early.  My husband is a great co-parent, and we share household and child responsibilities.  He is NOT doing me a "favor" by coming home so I can work.  

    I work outside of the house while they are in preschool.  I answer email and return phone calls during nap time, and I answer emails and do paperwork after they go to bed.  If I need additional time, I call my mom, my neighbor or a babysitter.  I don't work too many weekends other than an occasional showing here and there, but I'm available if I need to be. I easily work 40+ hours/week, but the income I make to support my family is worth the time, and I really do love working for myself.

    I think you got some really great answers already, but don't let people discourage you from trying something new.  

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