There are 101 different ways to make your first million in real estate. For some people, they just grind their way up to a million. For me, I need leverage. We cannot talk about leverage without talking about real estate, especially about equity and the cash flow column.
After I got my real estate license for investing, I realized that you can actually broker deals for other people and earn money, or commission, as well! While I enjoy doing this, I realize this method of earning money has several issues:
- Commission is taxed at the highest bracket.
- You work to find a deal for other people instead of yourself – why?
Just like tennis, real estate brokerage is actually a cruel business, and only the top 5% make any real money. The rest are just faking it and in survival mode.
There was no way that I knew (as of when I first got my license) to incorporate equity and cash flow into the brokerage model. Commission can make you look rich, but not wealthy.
This is one of the main reasons why I hesitated to let go of my W2 job for a long time. I really did not want to trade one job for another. I knew I needed to learn about sales. However, in my mind, it just didn’t make any logical sense to trade an IT job, which is stable and well-paid, for a sales job, which is not stable, not well-paid, and requires you to work more weekends and nights than an IT job. So I kept looking and looking until one day my friend gave me a call. His name is Jimmy.
Jimmy: “Huy, did you quit your job yet?”
Huy: “No man, not yet. I don’t think it will work out. Although I don’t enjoy working here that much, I’d rather earn the income until they lay me off and use that income to keep buying real estate.”
Jimmy: “Have you heard of a company called eXp Realty? I think they might fit what you’re looking for.”
Huy: “No, haven’t heard of it. What is it?”
Jimmy: “Let me introduce you to Amanda, I think she’s cool.”
A simple conversation like that, but little did I know that lunch date with Amanda was about to change my career life in a different direction.
We met for sushi at lunch, and not wasting any time, Amanda launched into the presentation after a couple of small talk. I didn’t actually understand eXp 100% when I first heard about the model, but I was able to grasp a few key ideas:
- They have really good training and support – although I already know what I am doing, it doesn’t hurt to have additional help and training when needed.
- They have the equity component. Stock was worth nothing back then, but at least it was there. I remember what Rich Dad said, “The rich don’t work for money (commission), the rich work for equity.” This checked the box.
- eXp has the cash flow component: the revenue share. I have always been a fan of network marketing. I think it’s the best model for building sales skills and leadership. But the problem I ran into with network marketing was that I couldn’t find a product I liked to sell. Over at eXp, the product is simply real estate services, and I liked what I saw so far.
This happened at the same time I was having issues with my W2 job, just to put things into context. I liked what I heard but still hesitated to make the jump. So I kept in contact with Amanda and tried to learn more about her and what they were doing in real estate. I also called one of my friends and mentors, Juan Hernandez, out for lunch for some banh mi. I don’t remember the exact sentence, but it was something like this:
Me: “What is my next move, man? I feel like I am stuck, not making any good moves for the last five years.”
Juan: “Well, I don’t see how you can make any moves if you spend eight hours a day working for somebody else. I mean, it’s doable, but what else can you do with your time? Take a leap and see?”
And that is ALL I needed to hear to make my next move. Just like that, I made two bold moves: I turned in my three-week notice, and I said goodbye to my old brokerage. I really missed them, but I felt like this thing called eXp Realty was somehow pulling me forward. I always followed the Rich Dad model of working for equity and cash flow, and it seemed like eXp checked all the boxes.
Little did I know that the first two years after quitting my job would be the most challenging time of my career. It’s actually very different working for yourself vs. working for others as clients. I didn’t realize that I left a job of having one boss to come to this thing called real estate brokerage and have ten bosses.
For those who are struggling right now in real estate brokerage, you are not alone. This is a cutthroat industry with lots and lots of competition. But if you follow the advice I’m about to tell you, you will do just fine and be well on your way to adding another income stream to your life.
- Find a group, a team, or just a person who is willing to teach and not afraid to share knowledge. One good thing about eXp Realty is that everyone is a shareholder, and especially if you are in the same revenue share group, the leader of that group will be incentivized to help and support your business because they will be financially rewarded as well. During my first few months with eXp Realty, I tried to find every opportunity to hang out with my sponsor as much as I could. I would go to all their events, ask to sit in on their team training. On a slow day, I would just show up at Amanda’s office and pretend to work there, hoping to run into some opportunity. Stay close to your sponsor or your sponsor’s sponsor – that’s my first advice. They’ve been there and done that.
- Look at what people do and have, not what they say. Talk is cheap, especially in real estate brokerage, where everyone is trying to polish their image. It’s hard to tell who’s successful when everyone dresses nicely and talks smoothly. But dig just a little deeper, and you’ll see if they know their stuff or not. There’s only so much in real estate you can learn from a textbook. The rest you learn on the street. So it’s always good to associate yourself with real producers, people who are WILLING and ABLE to get you to the next level. I look at my sponsor, and she’s a real producer. Not only that, the people around her are good people as well. It’s not so much about what she said; I look at what she has and the people she surrounds herself with. I could see myself getting there one day. I stopped analyzing and dove in. I suggest you do the same.
- Pick three, focus on one. Perhaps the biggest question in real estate brokerage is lead generation. How can you have an unlimited amount of buyers and sellers to work with? Well, there are a hundred and one ways to generate leads in real estate. You need to pick three that work for you and actually focus on one, leveraging your unfair advantage.
I believe everyone is at least good at one thing based on their personality and background. There must be something that you’re naturally better at than anyone else, and it doesn’t cost you a lot of energy to do it.
Whatever that is for you, find out and hone in on it. For me, due to my unique introvert but high-I personality (on the DISC test), keeping in touch with old contacts came naturally to me and doesn’t drain my energy. I like staying in touch with people I’ve shared a chapter with, whether or not they buy a house from me. That allows me to maintain connections with people from elementary school, middle school, high school, college, university, and three job sites. Naturally, our conversations often lead to what we’re doing for a living, and real estate comes up, helping me grow my business and maintain awesome clients.
Put the book down for a moment and start thinking about your natural talent. What comes to you naturally that can help you gain some leverage in real estate? Write it down and take advantage of it.
I naturally don’t like working with strangers, and I know a lot of successful agents, especially those running big teams, just treat it like a business and work with whoever comes along. I can do it too, but I’m very aware that doing that will drain me. So cold calling or door knocking for listings was never my strength. When cold leads come in, I interview them as much as they interview me. I can close cold leads professionally, but not naturally, and I’m mindful of the tasks that cost me more energy than working with my sphere of influence.
That said, you can’t rely on just one lead source. Your business would be very unstable if you did. That’s why I suggest picking three. The other two for me are inbound calls from Google business pages and referrals from other eXp agents.
I spend a good chunk of time building relationships with other agents within the eXp community. I’m not sure if it’s just me, but I keep running into cool people at this brokerage and end up making tons of friends.
I particularly like Google reviews because after they read your reviews, blog, and social media presence, it’s like a friend calling you. Super easy to have a conversation and convert them.
If you follow the “pick three, focus on one” method that I mentioned, your first two years in real estate will be fine. You could even reach the ICON level like me and have a chance to earn back the $16,000 cap in the form of stock. This is HUGE for me. Again, I work for equity. Commission is nice and pays the bills, but I look forward to seeing how much stock I earn per transaction, rather than focusing on the commission itself at every closing.
The Revenue Share
This is the final piece of the equation that completes the wealth-building formula at eXp Realty. I remember my first revenue share check was $5.21. It came from a lease deal by an agent at my second level in the group. I remember being so EXCITED when I saw that $5.21 deposited into my checking account on the 22nd of the month.
“THE MODEL WORKED!” I yelled silently in my mind.
For the first half of my real estate career, I had to trade capital for cash flow. In order to generate cash flow from my rentals, I had to deploy capital. This is the first time I saw a model where, instead of investing in real estate, you can actually invest in PEOPLE.
You can’t BUY people, but you can inspire and INFLUENCE people, which in turn generates cash flow. I naturally want to inspire and influence people to invest in real estate or get their real estate license. Now, with the eXp model, I get paid for doing so. I wouldn’t mind doing it without pay, but getting paid is nicer.
Where does that $5.21 come from, you wonder? Our split is 80/20 with a $16,000 cap at eXp Realty. Before you cap, you send 20% of your commission to eXp in exchange for support, technology, and the environment the brokerage offers. Instead of keeping the whole 20%, eXp Realty gives a portion of that 20% back to the sponsoring agent. The details of that percentage are below.
For example, if you read this book and get inspired by me and decide to join eXp Realty, I will be your sponsor. You close a home, and your total commission is $10,000. You would keep $8,000 and send $2,000 to eXp.
Out of that $2,000, I will get $350 (17.5% of the $2,000) and Amanda (my sponsor) will get $400 (20% of the $2,000).
Let’s stop for a second and think about this.
I don’t know about you, but for me, when I put my investor hat on, it is very, very hard, if not impossible, to find a rental house that will actually cash flow $350 per month. Are you telling me now that there is a way to generate $350 per month just by attracting productive agents into the company, without deploying capital? And when you think about the compounding effect of this model, are you telling me that if I can help my agent attract an agent, I will even make more residual income?
I AM SO IN on this.
I honestly should have done more homework, asked more questions, but sometimes ignorance can also be a blessing. I dove in and started attracting agents right away, on top of earning my commission. I know that one day, this could be an option for me to get out of production, if I choose to.
By definition, once a sponsor explains the opportunity to you and signs you up with eXp, they finish their duty as the sponsor, and you are on your own. Some of us operate this way, and I can’t blame them, but a lot of us end up getting very involved in supporting each other’s businesses and helping each other attract agents.
This model works for me personally because I would never want to be on a production team, but in the meantime, being a solo agent is super lonely, even for an introvert like me. This model is somehow the perfect in-between of a formal sales team and a solo agent.
This model still allows me to focus on investing, do my own thing, and when I need some support, I know that I have a home to fall back on. And if anyone would like to learn what I am doing, it is just easier for me to mentor and support you since we are in the same group without any additional cost.
It is a perfect world for an investor-friendly agent.
It is a perfect world for a solo independent agent.
For others, it is a perfect world to grow a team. I am blessed to be the sponsor of many top-producing teams at eXp. So I know this model works if you have a sales team or if you have a brokerage.
At the time of writing this book, there are so many real estate models that have equity and revenue share. There is no good brokerage or bad brokerage; you just need to find the one that fits yours.
For me, I found home at eXp Realty. I hope you will have the same feeling that I am feeling.
Chapter summary:
- Find people who are both WILLING and ABLE to teach and mentor you.
- Look at what people do, not what they say they will do. Talk is cheap. Find a doer and follow them.
- Pick three methods of lead generation, and focus on one. Earn equity in your transactions automatically.
- Leverage the revenue share platform to create another stream of leveraged income.