Farm Hand to Aspiring Investor to Student to Agent: My First 18 Months in Real Estate
Low Barrier Entry=High Dropout Rate
The average newly licensed real estate agent completes 0.8 transactions within their first 18 months. Staggering statistics, that’s less than 1 deal…less than $12,000 average in income in 18 months. Most never learn how to fend for themselves. Thanks to my network I survived my first year, but I was damn close to driving an Uber strapped for cash.
I had just moved back home to the D.C. area after working on a farm in rural North Carolina. Determined to strike back out on my own I started work for a startup and began saving everything I could to purchase my first house. After an initial suggestion from my mom, my plan was to purchase a home and rent out the extra bedrooms “house-hacking” my first investment, utilizing roommates to subsidize the expenses. I started reading about investing and attended local investor meet-ups as I saved for a down payment.
Easy Come Easy Go
After reaching the two-year employment mark that most lenders require for a mortgage, I had also saved enough for my down payment. I was ready to buy my first investment property and excited to move to a new city while working remotely for the real estate startup I was with. My dream of owning a home at the age of 21 while most of my friends were still in school was so close I could taste it. Things were great when all of a sudden the plan shook. The start-up owner, my employer stopped paying his contractors and then his employees, the company was collapsing. I had to make a move.
I had seen it coming 5 months prior when our accountant left, never to be replaced not even by an automated system. A company cannot survive without a system for accounting. Ignoring my gut I was determined to hit my two-year mark so my loan application would be approved. The lack of payment left me no choice, it was time to find new work. I immediately called my mortgage officer:
“Juan, remind me, what are the guidelines for the two consecutive years of employment rule for a mortgage?”
My lender responded by saying that I had to work for the same company, or in the same role within the same industry for two consecutive years.
“They need to see consistency, and that you aren’t jumping from real estate to education to healthcare to another industry…” he explained.
“Are there any other ways to keep on track”, I replied.
Juan said, “Yes, if you’re a student during any point in those two years we count that as full-time employment”.
Bingo, two days before classes started I enrolled at my local community college. Buying myself time to find employment in the property preservation industry and keep my home ownership dream alive.
Through continued research into real estate investing, I decided to get my real estate license and learn the business. I could learn everything about investing by representing investors as their agent. I jumped right in, my last final for the spring semester was on a Saturday, Mother’s day was Sunday, and that Monday I was attending my first day of real estate classes. With so many ideas I was ready to jump into the world of real estate and start executing. After passing the tests I affiliated with one of the largest and most established brokerages in the D.C. area joining an office that had $1 Billion in sales each of the 2 years prior. The office was welcoming to a sharply dressed 22-year-old with a smile and desire to learn. Some novel ideas for the new frontier of real estate advertising didn’t hurt either. However, the methods of doing business were geared toward retail real estate, not investing. I was learning but not the business that I wanted to learn, plus with all of the monthly expenses I was losing money.
I remembered back to my real estate investor group…I had met a young broker who recently founded a start-up brokerage. She mentioned that she had too much business and was looking for help. At the time I told her I wanted to give the brokerage I was with a shot, but 6 months later I was meeting her at her office discussing her brokerage and what she could offer me as an independent contractor.
“100% commission, company provided leads; we cover your insurance, signs, marketing expenses, and we actively help you grow your business”.
I was skeptical, but my next best option was working on a team as an employee with no say in whom my clients were and a much less generous commission split. I signed the ICA, and within a few months had spoken on stage at the largest residential real estate conference in the U.S., had sold my first listing, represented two buyers in purchases, closed over a dozen leases, and had several more clients in the pipeline. I was on a roll and learning on an exponential curve.
Hands on Education > Monetary Value
Not only were the sales coming in, but I was learning how the business worked. In and out, I learned how brokerages really make their money, why so many agents fail their first year, how mortgage, insurance, title, and brokerage all tie together. I learned about sales and more importantly how to read people. I was developing marketing and recruiting systems to help the brokerage grow. I was learning human resources, economic models of why to hire candidate X over candidate Y. This was the brokerage for me, and the people around me would become my mentors. My goals changed from wanting one investment property to growing my own real estate company and rethinking the way that we live in suburbs and cities.
A Kick in the Teeth is What I Needed
I lost my job in the beginning, so what. Starting out on my own in real estate was tough. Giving up was never an option. Through adversity, my life changed. Signing up for college classes out of necessity eventually led to my attendance at one of the best schools in the country. Getting my real estate license to learn about the business taught me more than I could have ever imagined, and I made valuable lasting relationships AND money in the process. The path towards my goal was becoming clear. I found opportunities when none presented themselves. That’s what the hustle, and life are all about.