With very few exceptions, real estate agents are on their own when it comes to retirement.
Other than eXp Realty and a few other brokerages Realtors are not provided a meaningful way to build equity and passive income by their broker.
Instead, they must take time to educate themselves on how to save and invest their money.
In this clip I discuss this fundamental issue real estate agents face and the reasons why they should invest in rental properties.
Transcript:
Chris Bounds 00:00
Ultimately, where I started getting this idea was, as far as switching from active flips to rentals is-I mean, it’s a lot more competitive today. There’s that. But also, if we would have kept just half, even less than half of all the rentals and not flipped them. (Inaudible)
Tom Cafarella 00:23
Do not go there with me right now. Do it right. Yeah.
Chris Bounds 00:26
You know what that number is. And for us? From an equity standpoint, I’d never have to work again. No, that’s not true on an active income. Truth be told rental properties aren’t passive. I mean, you do get some cash flow. I mean, you’re not gonna be able to retire off that unless you’ve got 50 Plus. Until they’re paid off.
From an equity standpoint, like we’d be sad. That’s why- that’s also why we’re going into the multifamily is just easier to scale at this point. Instead of buying a whole bunch of single families, I’ll just buy one multifamily and I’ll partner some other people and be able to scale faster. You said it before.
Recently, where the real estate agent-there is no retirement option. It’s actually worse from a retirement standpoint than most fortune 500 positions. Because, at least with them you can get a 401k, there’s certain stock incentives and then there are some rules and companies that have stock incentives now.
That it’s kind of a newer thing. As far as the typical real estate agents, most real estate brokerages, there isn’t a retirement. They actually must make enough money and then have the discipline to take the net of that money, take a portion of it and go invest it somewhere else. Whether it’s stocks, mutual funds, bonds, notes.
Tom Cafarella 01:56
That is so hard to do. That so hard to do. I’m an investor, I think about this stuff all the time. I know even for myself-as I make more active income, it’s so easy to to be like, oh, like I could get a bigger house a bigger car.
Chris Bounds 02:11
Because you’ve worked so hard for that active income. You feel like you deserve it. You do, but having the discipline to have delayed gratification and say, “hey, look, I’m not going to go out and buy the Range Rover, I’m actually going to put it towards a rental property.”
I’m gonna suck it up for another couple of years. Then I’m gonna do it again. And I’m gonna do it again. And I’m gonna do it again. That’s ultimately how folks-I mean, you want to take foreigners and when they come over, they keep that very minimalistic mindset and they worked their butts off.
They don’t spend anything, 30 years ago by they’ve got multimillion dollars of assets and businesses and all this and you’re like what? I mean, just because you don’t look like you’re rich driving the nice car, wearing the fancy clothes, going to lavish vacations, having the half a million plus $1,000 house.
It doesn’t necessarily mean you’re not wealthy. Another good book to recommend is The Millionaire Next Door. It’s a great case study and shows you exactly what the average millionaire in America looks like. And it’s not the person in the nice house in the nice car. It’s actually the blue collar worker that buys used cars and doesn’t go on lavish vacations and then typically have investments in real estate and own their own business.