New commercial real estate brokers have a lot on their plates when it comes to getting started in the industry. Breaking into the profession is not easy and requires much effort. Luckily, this is a profession that rewards effort.
There are not many careers that have such a correlation between effort and income potential. The more focus and drive you have, the better your chance for success.
Many fundamental principles are taught in broker training programs. However, probably the most important fundamentals that are missing are cash flow management, long-term savings goals, and organizational structure. The sooner you have direction on these aspects of your career, the faster you will realize financial and career success.
Many brokers start their careers as 1099 independent contractors, while others are W-2 employees as they learn the trade. If you begin as 100% commission, our experience is that income goals look like $25k in Year One, $50k in Year Two, and breaking into six figures by Year Three. Some brokers exceed expectations early on, though.
In an eat what you kill environment, income expectations can fluctuate dramatically. Every broker working with us is asked about their income goal for the year in January. We are frequently adjusting the plan by mid-year because expectations have changed.
You don’t know that the biggest transaction of your career will happen at the end of this year. Success can take off faster than you expect. This is why we advise every CRE broker set up as an S Corp early in their career.
Sure, there are new responsibilities and costs associated with an S Corp, but they are overcome with relatively low income expectations. As soon as your income expectations jump, you won’t have to scramble to set up an entity taxed as an S Corp and learn every nuance of operating as an S Corp.
Get through that learning curve before income accelerates. In fact, operating as an S Corp will likely lead to faster success because of the operational and organizational structures required of the S Corp.
Better yet, offload as many responsibilities unrelated to your clients as possible. The more focus you have on your clients and business, the better. Your income potential is directly related to your focus.
A financial advisor, accountant, and bookkeeper are integral to your success. Having these professionals on the same team supporting you is even better. Don’t be the middleman communicating between professionals. Your time is too valuable.
