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In this monthly column, Antoine Askowitz explores a hypothetical real estate situation on both sides of the broker/agent dynamic. As a broker-owner of one of South Florida’s leading real estate offices and an active agent who regularly sells over 100 homes a year, he brings a unique perspective to this relationship.
This month’s story features a mid-career agent who takes retirement planning seriously and turns to her office and broker for a full range of benefits, advice and options. His broker believes that all agents should add real estate investments to their portfolios for reasons that go beyond financial rewards.
Agent’s point of view
Middle age is fast approaching, which means it’s time for me to take my retirement more seriously. As a busy and successful agent with a national office, I’ve been blessed with a stable income and decent benefits, but when it comes to retirement planning, I’m basically on my own.
I have a few modest investments and a basic IRA account, but between my kids’ tuition and the rising cost of living, my retirement has always come last.
The agent-office relationship in the 2000s is very different from when my parents were selling real estate. Although they see themselves as employees of their office (and the office treats them accordingly), agents in today’s world are more like independent contractors and enjoy much more freedom.
But a quiet cost of that freedom was that the offices played a passive role in educating agents like me about retirement, and didn’t encourage more savings early in our careers. (But I see that some national real estate companies are beginning to offer group retirement plans to their agents.)
Instead of structured benefits and expert planning, how can my broker help me plan for my retirement?
Broker’s point of view
It always amazes me how few agents consider for themselves the extraordinary investment vehicle they deal with every day: residential real estate! While they may view their own home equity 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 a real shame because it would boost both their bottom line and their ability to sell homes.
Intuitively, I understand the paradox: agents focus on their customers and not on themselves. But agents should buy real estate for some of the same reasons as their clients, and beyond: historically, real estate has the potential to generate income while steadily appreciating in value. Due to their superior understanding and experience of market trends, this is a retirement investment that offers agents the opportunity to benefit from their own expertise, with minimal risk.
If an agent were simply considering what’s stopping them from taking the plunge into investing in real estate, I think they’d find the same answer as any other investor – finding the money to start. The craziest thing is that these same agents would probably be able to guide a potential investor towards the search for financial support! There is always a way.
Frankly, the key is to leverage other people’s money – and there are plenty of ways to do that. One of the easiest ways is to capitalize on currently low interest rates by refinancing their home and taking out equity to use for investments.
This would probably mean that the investment properties would have mortgages, so the net return on investment might not be as high as it could be, but the goal is for the property to earn enough income to be self-financing . The real gain would come on the resale of the investment property in a few years, so a little patience would be critical.
Another possible investment scenario would be to find like-minded connections who would be willing to split purchase costs and pay cash. These partners would also share profits after expenses such as taxes, insurance and property management. I always suggest that an investor in this situation speak with their lawyer to create contracts, and with their accountant and financial advisor to plan any tax relief.
These are just two of many possible scenarios in which agents could use their unique skills and experience to enrich their retirement nest – and there are also extended benefits beyond the obvious financial rewards. Buying a property as an investor gives agents a truly different perspective; the one they can never truly appreciate as “just” the agent.
Dealing with title, insurance, lenders, contractors, etc., as the buyer of the property – and the anxieties, excitement and wonder that come with it – naturally creates a level of empathy that will enhance any agent’s ability to work with clients.
How to solve
There are a number of ways brokers can help their agents with the process of investing in their own property. The first step is part of an annual business planning session where goals are set to determine what the agent’s personal financial needs are and how they can be met.
Does she view real estate as an entrepreneur would or does she view it as a job? An entrepreneur sees opportunities everywhere and will take advantage of them to make their dreams come true, where the working individual simply trades hours for income. The education of the “entrepreneur agent” in business planning will always include investment within the budget.
Beyond business planning and agent training, some companies may offer incentives in the form of commission waivers for the agent’s investments. Regardless of how the agent chooses to invest in their future, the reality is that the best way to access true wealth and a future of financial security is through passive income – when your money earns 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 directs the activities of more than 160 agents. For three consecutive years (2018, 2019 and 2020), Anthony has been honored as “Head Broker of the Year” by Miami Agent Magazine Agents Choice Award. Follow Antoine on Instagram.
NOTE: Anthony Askowitz is not an attorney and does not give legal advice. Please consult a licensed attorney regarding the matters discussed in this column.