You Don’t Need Today’s Idea of a Team To Succeed In a Big Way

by Jeff Brown

Real Estate Investments Broker

Author website

Teams have proven themselves a potentially profitable strategy in real estate brokerage, as almost every mid-large company has at least one pretty successful team under its roof. I’ve never had buyer agents or specialized listing agents on my team. I use the same philosophy Dad and his buds.

Though they all agreed about the possible income teams offered, many eschewed that approach for a modified MO, still more or less using a team. They preferred the OldSchool blueprint which had the go-to guy at the top, with support staff doing all non-revenue producing labor.

I’m convinced that approach is more conducive to a real estate investment broker than the army of buyer agents approach used in houses. Here’s why.

Caveat: The investment niche about which I’m speaking is residential income, mostly smaller stuff, say 1-4 units, though it would be just as effective with larger properties, as I’ve done before myself. It assumes knowledge of pertinent tax codes, complete understanding of before/after tax cash flow analysis, and the judgment to apply those skill sets in the implementation of the proper strategies dictated by proper analysis. Furthermore, I assume lead generation isn’t an issue. That is, there are enough prospects for a pro to get sufficient at-bats.

Let’s say your market’s median duplex price is $250,000 or so. A 3% side is $7,500. Let’s also assume the average net equity of your ‘low hanging fruit’ is $115,000 give or take. If your analysis shows a tax deferred exchange would markedly improve your client’s position, here’s what might happen. You effect the sale of his duplex, then ID about twice that much in ‘upleg’ property — property into which he trades. (This example uses 20% down payments.) You make 3% per side on those too — another $15,000 or so. One client, essentially one transaction, $22,500.

Compare that to the house team template. Using the same price point, and assuming the buyer agents are generating the sales, (and paid 50% of the commission) the team must do six separate transactions with six different clients to net the team leader the same gross income.

If you’re using the Bloodhound way of selling your listings (to the extent possible with rentals), your time is now spent finding the client’s upleg props.

Meanwhile, your staff is movin’ all your paperwork, TC stuff, dealin’ with inspectors, appraisers, and all the other maddening minutia that monopolize your time to the point of insanity. You’re free to do all the real moneymaking tasks. I know, I know — this isn’t groundbreaking in any way, shape, or form. Then why is it so underutilized?

An aside — I knew a Prudential agent (I worked there too.) in San Diego who had a $12/hr assistant for 20-25 hours weekly. He was consistently in the top 10 agents in a 150 agent office — twice being top dog. He worked 40-45 hours a week, took three weeks of vacation, and rarely worked weekends. He was either prospecting, listing, or pickin’ up checks. His pre-tax income almost always surpassed the ‘team’ leaders in the office. Russell Shaw didn’t work there. 🙂

Now imagine yourself as an investment property agent with reasonable lead generation. Median price of a duplex is $250,000. Could you list two measly duplexes for exchange monthly? One? If so, congrats cuz you just made about $270-540,000 to be exact. If you’re in a 100% office, your expenses will be limited to $10-12/hr assistants, and office costs — though in the past I’ve paid flat fees per transaction.

The third assistant, if I choose to have one, is an agent wishing to be mentored. Their job description is simple, and I apologize in advance for this. They’re my bitch ’till they’re able to operate on their own. I’ve used this approach several times with outstanding success in all but one case. They’re trained to become superb problem solvers, dealing with glitches that arise during investment transactions. As time passes they’re able to handle all but the most pressing or sophisticated problems. The only downside, for me, not them, is that after sufficient time they’re ready to more or less fly solo, which they invariably do. But while they’re there, they can’t be beat, and they’re cheap, cheap, cheap. Their real pay is being mentored.

I continued using this MO when I transitioned to doing business outa state since the end of 2003. I had to abandon my local market as it made no sense to even semi-intelligent investors.

Bottom line — it’s my contention many solid agents out there can hugely increase their income by ending their stubborn insistence on doing everything themselves. It’s simply not necessary. Neither is developing a team if that’s not your cuppa tea.

Am I makin’ sense to you?