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This article was last updated on June 9, 2022.
In this monthly column, Anthony Askowitz explores a hypothetical real estate situation from both sides of the broker/agent dynamic. As the broker-owner of one of South Florida’s leading real estate offices, and a working agent who consistently sells more than 100 homes a year, he brings a unique perspective to this relationship.
Picture this, a mid-career agent who is getting serious about retirement planning and looking to her office and broker for a full range of benefits, guidance and options. Her broker believes all agents should add real estate investments to their portfolios for reasons that extend beyond financial rewards.
Middle age is quickly approaching, which means it’s time for me to get more serious about retirement. As a busy and successful agent with a national office, I’ve been fortunate to earn a steady income and enjoy decent benefits, but when it comes to retirement planning, I am essentially on my own.
I have a few modest investments and a basic IRA account, but between my children’s college tuitions and the rising cost of living, my retirement has always come last.
The agent-office relationship in the 2000s is far different from the time when my parents sold real estate. Although they considered themselves employees of their office (and the office treated them accordingly), agents in today’s world are really more like independent contractors and enjoy a great deal more freedom.
But a quiet cost of that freedom has been offices taking a passive role in educating agents like me about retirement, and not encouraging more saving at the start of our careers. (But I do see that some national real estate companies are starting to offer pooled retirement plans to their agents.)
In lieu of structured benefits and expert planning, how can my broker help me plan for my retirement?
I am always amazed at how few agents consider for themselves the extraordinary investment vehicle they deal with every day — residential real estate! Although they may consider the equity in their own home as part of their portfolio, they too rarely have the vision to reap the benefits of their own wisdom and experience in their chosen profession.
It’s really a shame because doing so would advance both their bottom lines and their ability to sell homes.
Intuitively, I understand the paradox: Agents are focused on their clients and not themselves. But agents should buy real estate for some of the same reasons their clients do, and beyond: Historically, real properties have the potential to produce income while steadily appreciating in value. Because of their superior understanding and experience with market trends, this is one retirement investment that offers agents the opportunity to benefit from their own expertise, with minimal risk.
If an agent would just contemplate what is keeping them from taking the step to investing in real estate, I believe they would come up with the same answer as any other investor — finding the cash to get started. The crazy thing is that these same agents would probably know how to guide a potential investor to finding financial support! There is always a way.
A possible investing scenario would be to find like-minded connections who would agree to share the expense of the purchase and pay cash. These partners would also share the profits after expenses such as taxes, insurance and property management. I always suggest an investor in this situation speak with their attorney to create contracts, and with their accountant and financial adviser to map out any tax breaks.
Buying property as an investor gives agents a truly different perspective; one they can never quite appreciate as “just” the agent.
Dealing with the title, insurance, lenders, contractors, etc., as the property buyer — as well as the anxieties, excitement, and wonder that goes along with it — naturally creates a level of empathy that will improve any agent’s ability to work with clients.
How to resolve
There are a number of ways brokers can assist their agents with the process of investing in their own real estate. The first step is part of an annual business planning session in which goals are set, to determine what the agent’s personal financial needs are and how they can be met.
Does she look at real estate as an entrepreneur would, or does she see it as a job? An entrepreneur sees opportunities everywhere and will capitalize on them to make their dreams a reality, where the individual who is working a job simply exchanges hours for income. Educating the “entrepreneur agent” in business planning will always include investing as part of the budget.
Beyond providing the business planning, and educating the agent, some companies may offer incentives in the form of commission waivers for agent investments. Regardless of how the agent chooses to invest in their future, the reality is that the best way to true wealth and a future of financial security is through passive income — when your money makes money for you.
Anthony Askowitz is the broker-owner of RE/MAX Advance Realty, with offices in Hollywood Beach, Davie, Miramar, North Miami, South Miami, Kendall, and the Florida Keys, and where he leads the activities of more than 160 agents. For three consecutive years (2018, 2019, and 2020), Anthony was honored as the “Managing Broker of the Year” by Miami Agent Magazine’s Agents’ Choice Awards. Follow Anthony on Instagram.
NOTE: Anthony Askowitz is not an attorney and does not give legal advice. Please consult a licensed attorney regarding matters discussed in this column.