So, you’re thinking of going into real estate full-time? That’s awesome. Real estate can be one of the most exciting, fun, and, yes, lucrative careers for those who succeed. It can also be frustrating, overwhelming, nerve-wracking, and expensive. It can rip your heart out one day and make you feel like you’re on top of a mountain the next. Despite what you might have seen on HGTV or assume because you see Realtors out at lunch in a fancy car, real estate is not for the faint of heart. To give you an example, it’s midnight and here I am writing this after a full day of training, client work, a sales meeting, prospecting, and a business dinner. I’m not bitching, I’m just making sure you get the full picture before you jump off that cliff.
It’s difficult to measure, but the attrition rate of real estate agents is estimated to be somewhere between 70-90%, depending on market conditions and location.
I’m not trying to talk you out of it. I just want you to be aware. There are one million Realtors in the United States. There are a handful of HGTV shows. This is just a little bit of a reality check. Don’t let it discourage you.
I have the good fortune to be able to meet a lot of agents who are just getting their license. In more cases than not, one of the first things out of their mouth is something along the lines of, “I’m working at (insert employer here) for now, but I really want to make the move to real estate full-time. When is the right time to quit my day job?” or “How do I know when it’s the right time to quit?”
The problem with the question is that there is not a one-size-fits-all answer. Each person is different, each job is different, and your exit strategy will be based on a number of variables. So, based on that, here are my best answers based on the most common variables.
1) Money, Money, Money
The first and biggest consideration is money, whether you think you’re ready or not. Let’s start with the facts about what it costs to be a productive agent. Your expenses will include association and MLS dues, computer, tablet, phone, vehicular expenses, marketing, software, entertainment, brokerage fees, taxes, and the list goes on. Like I mentioned before, being a Realtor is not a cheap endeavor. So, based on what your plan is for running your business full-time (you have one of those, right?), you need to create a business budget.
Second, you need to know your personal expenses and you need to know how that will change based on the change in your employment status. Once you know what you need to comfortably live on a monthly basis, you need to have at least 6 months saved. Please note that I said live comfortably. Being stressed out over money will not help you succeed. Yes, you need to know that the money will eventually run out and that you will need to produce in order to replenish it, but you also need to be able to go out to coffee or grab dinner with friends without worry. If you feel like 6 months isn’t enough, build more savings.
Understand that, even if you walk into the business with a couple of transactions waiting for you, there are still significant startup costs and you aren’t going to see money from those transactions for 30-45 days, at a minimum. What’s your plan after those couple of transactions? You need to make sure you can afford to run your business and your life.
2) Your Pipeline and Circles of Influence
As I mentioned in the last paragraph, many people jump into the business with a couple of deals waiting on them or they have a friend that is going to buy soon or some such example. That’s great, but do you have one or two of those every month for the next year? What if you’re new to town and don’t know anyone? Where is your business going to come from? Going back to point one about money, do you have enough to survive without a regular income and do you have enough to fund your business until you have a regular pipeline of clients?
One of the crazy things about this industry is that, for a lot of people, success is really just a war of attrition. The longer you are in it, the longer you are doing the right things, the more likely you are to be successful. If you think for one second that you are going to walk right into being a real estate agent and immediately be a millionaire (or even a hundred thousandaire), you are mistaken. It just doesn’t happen that way very often.
So, make the second thing you do, after you look at the money side of things, be start to lay out your business plan. What will the costs be? How long until the activities start to show returns? Set your goals. Compare that to the money from above. Then ask yourself the money questions all over again.
3) Your Ability to Work
Finally, and this is a two-part question, you need to know your ability to actually do your job. The reason this is a two-part question is that part of the question pertains to your ability to do your job as a Realtor and the other part has to do with your ability to do your job as a Realtor while also doing another job.
So, let’s tackle the first part of that question. Are you a self-starter? How well do you deal with rejection? How well can you work from home or do you need a more structured office atmosphere? How well can you manage your time? These are all important questions because they will dictate, in part, the level of success you have in the real estate industry. Whether or not you’re detail-oriented, aggressive, a salesperson, or any other stereotype you want to think is conducive to real estate, it doesn’t matter. Your ability to do the day in, day out tasks that aren’t glamorous, aren’t fun, but are profitable is what matters.
On the second part of the question, can you do those things while working another job? You might not do them at such a high rate of activity. You might have to automate a good deal of them through a CRM system. The question is, can you manage the two? Can you take off in the middle of the day to show a house? Do you have the freedom of weekends and evenings if you need to show or go to appointments? If the answer to any of those questions is no, you might need to reconsider trying to do both or hold off until the money is there to go full-time, or rethink the answers until you can figure out a way to make it work. Your passion will drive you.
The long story short is that there are a lot of considerations before you plunge head first into real estate without a safety net. Don’t take them lightly because they can affect not only how you do business but whether or not you’re successful. There is nothing wrong with working while you transition into the industry. I did it. I recommend it to a lot of people. For some people it is right, for others it isn’t. Take your time. You are going to be in this business for a long time. Making a smart decision on how you start your career can be the determining factor in just how long.