APR 2, 2022
The last month has been incredibly humbling. On top of leaving a stable job and going into real estate full time, I’ve realized how scary it is for anyone that’s been in my shoes. From your corner deli & pizzeria, to the likes of companies like Walmart — it all started with the risk to venture out. I have so much more respect for every entrepreneur; small or large, successful or failed.
It’s a comforting thought on the flip side: if others can, why not me?
In reality, my psyche fluctuates throughout the day. I oscillate between “LFG I got this” to “wtf am I doing bro.” The good news is that I’m less doubtful day by day. It’s like working out a muscle, the more you use it the stronger it gets.
I’m aware of the repercussions of my career choices on the road to my first deal. Unless I’m able to raise enough cash through commissions and wholesaling, I won’t meet my only goal for the year (acquire my first building) — I’m still hopeful. I haven’t set any cash targets for myself either, I’m in the process of figuring out whether or not I can even execute on this proof of concept.
With that said, let’s jump into the juicy details of one of the two ways I’m going to raise enough cash for my first commercial acquisition.
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Becoming a real estate agent is pretty straightforward. You take & pass a mandatory course, and then you take & pass your state exam — you don’t even need to graduate high school. Because it’s so easy, there’s a huge supply of agents. Competition is fierce, and the name of the game is: listings.
When an agent and homeowner sign an ‘exclusive listing agreement,’ it means the agent now has legal and fiduciary duty to her client (homeowner) when marketing or selling the property. It also means that regardless of where the buyer comes from, the agent gets his commission (5-6% of price, split buyer & seller agent). So hypothetically, an agent could do 0 work and still make a decent payday. With median home prices in NYC hovering around $750k, an agent makes ~ $20k per transaction.
But, listings don’t fall from the sky. Real estate is a heavy relationship based sale and the first few years are incredibly difficult while both managing your costs and marketing yourself — you shouldn’t expect to make much money the first year or so. Right now, I’m only working on one listing and that too I got lucky with; I plan on reinvesting my commission into marketing because no one’s going to spoon feed me more business. As an agent, you have to go out and hunt yourself.
The pro of being an agent is that you’re your own business. Sure you operate under a broker’s license, but you’re responsible for all you bring in. That means no one can force you to ‘come into work,’ if you don’t work you don’t eat lol! Leads are valuable, and generating leads at the top of funnel is where most give up. It’s hard, especially for people that are shy and unable to talk to strangers. Prospecting leads is basically what I did the first 2 years of my sales career as an SDR (sales development rep, entry position in a sales team).
One of the biggest cons of being an agent is that you can’t be successful enough to replace a stable job + benefits if you’re not organized or comfortable with uncertainty. Will you close deals? Yes absolutely, everyone closes a few deals. The difference being the amount of money you make from a few deals is a lot less than base + bonuses at a job. What I’ve realized is that since the barrier to entry is so low, a lot of people get their license while maintaining a full time job — I think it’s one thing to do real estate as a side hustle vs. full time. I’ve experienced both sides of the coin, and can safely say that the latter is a lot scarier, but you can dedicate 100% of your focus towards it to see it through.
Since my short term focus has been to supplement my cashflow, I’ve been spending a my energy on getting more listings without having to spend on marketing. It’s a lot of grunt work. A good area to start for newbies like me is ‘expired listings.’ These are listings that were on market without being sold — meaning the agreement the previous agent had has expired, and the homeowner may want to switch agents :)
Out of a list of 150 expired listings, less than 5% pick up and not hangup right away. I’ve yet to have any luck with the expired listings, but I’m choosing to focus on the small wins: someone kindly tells me no thank you, another who at least asks me to call back in a few months, etc.
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As the weeks go on, I get more confident in my ability to stomach the risk and uncertainty. Although I know that compared to my peers I have a higher risk tolerance, but being a new founder at this point of my life is the hardest test of mental fortitude. It’s difficult to not give up, and I don’t blame anyone for quitting.
I know that good things don’t come fast, and in a few years I’ll look back at this time fondly — but it’s tough to think macro when your micro is in the danger zone. I look forward to documenting more of my progress through this blog, I’m grateful I can look back at the posts as a quasi business journal to get a good understanding of what ‘young Mo’ was like in 2022.
