Running this thing like a business is important because you may eventually decide to build your own broker’s business. (I know a lot of brokers out there right now are cringing. “Hey! What are you doing teaching them to build their own brokerage company?”)
Relax! Maybe they will build another office under your tutelage. Maybe they can build a branch office. These guys are your broker of record; they are 51% owner and you are 49% owner. I am not saying they should take your business away. I am saying you should leverage what you are doing to build business for yourself. If you want to stay with your current brokerage company, do it.
There is another entire subject matter, a whole class there. It is very intense and it does take a while. You need to go through an application process to see if you qualify. This is true whether I teach you or whether you go through your own company. Keller Williams shows you how to franchise and they teach you how to do it. It is an awesome program.
No matter where you go, you need to be a business person. You are now evolving. You just happen to apply your trade to the world of Real Estate. You are basically going to put on a new hat, the hat of a business owner.
You have to learn how to recruit Agents, manage your income, and manage your expenses. You have to learn how to manage risk, and most importantly, you have to learn how to manage people. If you really make a lot of money, you can hire a manager to do all of that stuff. You are simply the rainmaker, cashing checks every month and helping to bring in business. That is your brokerage.
This is a very high-level description of what has to happen. Take a continuing education class on the management role of being a broker of record. You will get a lot out of that.
The next type of business you can build is a property management business. When I built mine, I did it underneath my brokerage company. This was okay in the beginning because I just wanted to incubate it. I wanted to make sure I could make a go of it, make some money from it, and not kill myself or my team.
It took off! I had a property management business like it was shot out of a cannon. It was like the brokerage business. We started off literally right at the beginning of the recession and while most other people were shrinking or dying, we were growing like crazy.
I built my property management company within that context, underneath the umbrella of the brokerage company in the beginning. Initially, I surveyed all my clients. I said, “Who would use property management if I built one based on lessons I’ve learned over the years to operate your properties?” That survey got us 40 units right out of the gate.
Immediately I hired a person to do the daily operational stuff for me. The daily responsibilities. With 40 units it was well worth it. I grew the business from 40 units to 200 units within a single year. In the second year, it grew to 400 units and to 700 units in the third year, nearly doubling our business each year.
The reality is that I ran it like a business. I had my owners to take care of. I had tenants to take care of. I had employees to take care of. I had medical insurance, payroll taxes, and the whole nine yards. I had to develop a formal marketing system. More importantly, I had to create a property management system that was more automated. What I was doing was working, but I needed to systematize and automate further.
If you are going to create a property management company, you have to have your head in the game. You have to have some thick skin, and really be behind it emotionally. It has to be a passion for you.
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