There’s always that one agent who’s constantly flashing a new G-Wagon or expensive watch on their polished Instagram feed. From the outside, it’s all a win.
Meanwhile, the plumber without the spotlight is quietly buying his third duplex.
Our industry is addicted to looking successful. We’re terrified of not looking successful enough. We’ve confused a $20,000 commission check (which is just income) with actual wealth (assets that work for you).
Agents are pressured to be on a hamster wheel, spending money we don’t have to impress people we don’t know, all so we can get the next client and do it all over again.
We’re all running a race, but the plumber is the only one who knows the finish line isn’t a flashier car. It is financial independence and the ability not to have to work until you’re 90.
Agents need a reality check
If you are not motivated enough to start seriously saving for retirement, here is a reality check. Take how much savings you have now and divide it by how much income you need annually to pay your bills. That number is about how many years your savings will last in retirement.
For example, if you have $500,000 of total retirement savings and you need $100,000 a year to live, you have about five years of retirement savings.
Here are five reasons your plumber is winning the real game (and how you can, too).
1. The plumber invests in appreciating assets
That $1,500 a month lease on your luxury SUV? You call it a “brand expense.” Your plumber calls it what it is: a liability.
Their “brand” is a 10-year-old Ford van (that they bought used) with a magnet on the side. It’s a tool. It makes them money. When they have extra cash, they buy another tool that makes them more money: a new sewer camera, another van or a rental property.
You’re buying things that lose value to project an image. They are buying things that produce future income.
2. Plumbers know their ‘salary’
You get a $20,000 commission check. You feel rich. You’re just temporarily holding money for the IRS (30 percent), your broker (20 percent), your marketing (10 percent) and your G-Wagon payment.
The plumber pays themselves a salary. They know what they make, say, $80,000 a year. That’s what they live on. It doesn’t matter if their business made $250,000. All that “extra” profit is not for spending. It’s for investing.
3. Plumbers love ‘boring’
You’re telling yourself that next year you will start buying investment real estate so you can retire someday. But it never seems to happen.
The plumber is buying the boring, ugly duplex that smells vaguely like cat pee and needs work. Their buddies pitch in, and guess what? That “ugly” property has a makeover, providing positive cash flow and tax write-offs every single month like clockwork. It’s a boring, predictable money machine.
4. A plumber’s ego is not their business plan
The plumber doesn’t care about being the “Top 1 percent plumber in the market.” A plumber’s identity is “I’m a plumber who does good work and makes a good living.”
The plumber has “get-rich-slow” money. Agents have “look-rich-now” anxiety, and it can set an individual up for failure.
5. The plumber pays themselves first
This is the one that hurts.
When you get a commission check, who do you pay first? Everyone else but you. That needs to change immediately.
When the plumber gets paid, they write a check to their investment account. The plumber’s “future self” is their most important bill.
How agents can shift their financial mindset
Start taking baby steps. You don’t have to sell your car and buy a van. Buy a newer G-Wagon in great shape that is 3 years old at a 35 percent depreciated discount.
Take your next commission check. Before you pay for the “show,” before you upgrade anything, take 10 percent or more from every commission and pay yourself first.
Decrease your debt-to-income ratio so you can qualify to buy investment real estate.
Talk to other agents who are already investing in real estate. Start to study and get to know your local market from an investor’s point of view.
Use strategic leverage to buy your first rental by putting 25-30 percent down and securing a 30-year fixed-rate mortgage, even if you plan to pay it off in 20 years so that you can qualify more easily for the mortgage, and it provides break-even or positive cash flow.
Make a promise to yourself
Educate yourself on real estate investing. Create your own simple real estate-based retirement plan. It is not rocket science. For example, if you need $100,000 of investment income to retire and each rental provides $20,000 in annual net rental income, you need to buy at least 5 rentals.
When you get paid, your future gets paid first. Just a small, stubborn decision repeated until it looks like freedom. That’s how ordinary people, plumbers, agents and anyone end up financially independent.
Jeff Sibel is an associate broker with The Real Brokerage and founder of Wealth Agent Institute living in Skippack, Pennsylvania. Connect with him on Instagram or YouTube.
