Today’s post comes courtesy of Charlie at AgentWealthHustle.com. Charlie is a real estate professional with a passion for teaching real estate agents how to achieve the financial independence needed for a solid retirement. Check out his bio following this valuable article!
The Power of Revenue Share to Achieve Financial Freedom
If you had the potential to replace your annual commission income simply by showing a better brokerage model to some real estate agents you already know, would you do it? Or would you keep slugging away closing transactions to put food on the table until you keel over for good?
The biggest hurdles for successful real estate agents aren’t the transactions, the lead generation, or even the difficulties of some clients (you know who I’m talking about!). The most difficult thing to achieve as a real estate agent is…retirement. It’s time to discover how the power of revenue share can help real estate agents retire – and as quickly as they want!
COMMISSIONS DON’T HELP RETIREMENT
Ever wonder why agents are always 20 years older when you meet them than their profile picture?! Realtors work into their sixties and seventies – long after the salaried workforce has retired for good. Why?
The reason agents never retire is simple: most agents only make income from commissions.
Yep, we’re 1099 employees – independent contractors working for our brokers. We don’t make a salary, we have no retirement benefits, and in many cases, we have no healthcare benefits.
The ONLY time we make money that we can spend on anything in life – including saving up for retirement – is when we close a transaction. It’s a vicious cycle. You close the deal, get the check, pay your bills, and then… save for retirement? Probably not right? Just remember this catchphrase:
To keep paying the bills, you have to keep closing the deals.
THE HARD WAY TO RETIRE WITH $75,000 A YEAR: STOCK MARKET INVESTING
You certainly can retire as a real estate agent by going the typical American route of investing in the stock market. A stock market retirement requires a LOT of consistent contributions for decades.
Using the 3% rule, to withdraw $75,000 a year in retirement, you’d need about a $2,500,000 nest egg saved up (yes, that’s $2.5 Million).
Let’s assume you’re 22 and you want to retire at 60 and haven’t saved anything yet. To build up that $2.5M nest egg, at a 6% return over 38 years, you’d have to start and continue investing about $1,450 a month for all 456 months. That’s $17,400 a year for 38 years. Doesn’t sound easy!
MORE DOWNSIDES TO A STOCK-BASED RETIREMENT
- If you have even time until you want to retire, you’ll need to either work longer or contribute more to make up for it.
- If you miss any contributions, you’ll have to work longer or catch up.
- Traditional and Roth IRA tax-advantaged retirement accounts can usually only be tapped in to without penalty after age 59.5: so 59 and a half is the earliest possible retirement age.
- The market is generally a long term win, but it is impossible to predict what will happen near your planned retirement year. A poorly timed recession could delay your retirement for years to come.
But there’s a better way than trying to invest your way to a sizable retirement nest egg as an agent: enter the power of revenue share!
THE EASY WAY TO RETIRE WITH $75,000: THE POWER REVENUE SHARE
BUT FIRST: WHAT IS REVENUE SHARE?
Revenue share is where a brokerage shares its earnings with its agents for helping to grow the company. This is a win-win because the broker can pay agents rather than spending money on advertising to grow the business. This is a great way to retain and reward agents!
Generally, revenue share is paid from the brokerage to the agents based on the gross commission income earned by agents you introduce to the company. Quick example:
Let’s say you earn 3.5% of gross commission income for agents you introduce to the brokerage. Joe joins the company after you showed him the benefits and brings in $80,000 in gross commission each year. To thank you, your broker pays you 3.5% of $80,000 = $2,800 each year.
Now the real power of revenue share is that:
- There is no limit to how many agents you can introduce and revenue share you can earn.
- Attracting agents isn’t limited to your local area: agents you introduce can be located anywhere in the USA!
- If agents you introduced also introduce agents, you can receive revenue share for up to seven tiers of agents – and you didn’t even do any work to introduce those agents! This can be exponential.
$75,000 A YEAR THROUGH THE POWER OF REVENUE SHARE
For easy math, we’ll assume that all agents that join the brokerage due to your efforts reach $80,000 in gross commission income each year. Think of that as closing twelve $222,222 properties a year at 3% commission.
There are many ways to reach a target income goal with revenue share. Here are hypothetical scenarios for $75,000 a year in revenue share:
- You introduce 27 agents to the brokerage nationwide: $75,600 / year
- Introduce 13 agents who each introduce 1 more = $78,000 / year
- Introduce 9 agents who each introduce 2 more = $82,800 / year
- Or Introduce 5 agents who each introduce 4 more = $78,000 / year
One interesting thing about the power of revenue share is that you can grow your income as much or as little as you want; quickly or slowly. But this is certain: early adopters have the most to gain thanks to the attraction efforts of the agents they introduce to the company.
REVENUE SHARE FOR FINANCIAL FREEDOM
How much income do you want a month? Pick a number, any number. There are over 2 million real estate agents in the US alone and less than 2% are part of a model with the full power of revenue share. Your only limitation is how much you are willing to put in to introduce agents!
HITTING YOUR FINANCIAL FREEDOM NUMBER
When I ask most people what their passive income financial freedom number is, everyone says the same thing: $10,000 a month (= $120,000 a year). That isn’t much harder to hit than our retirement goal above!
There are two ways to go about building your revenue share:
- Slowly: leverage time for your revenue share to grow. Directly attract agents and then let their growth efforts grow your own revenue share.
- Quickly: work on it more to grow your income immediately. Directly attract as many agents as required to hit your goal. If those agents then grow their revenue share, it will increase your income as well!
So now you’ll understand which of these options is more immediate than the others, but all of these hypothetical scenarios achieve $120,000 a year. Again for ease, we’ll assume all agents gross $80,000 commission each year:
- You introduce 43 agents to the brokerage nationwide: $120,400 / year
- Introduce 20 agents who each introduce 1 more = $120,000 / year
- Introduce 10 agents who each introduce 2 more who then introduce 1 more = $132,000 / year
You can see that the real power of revenue share comes into play when the agents you introduce start bringing other agents to the brokerage and so on. Your workload goes down while your income goes up! Think about the revenue share of agents that are already directly responsible for HUNDREDS of agents coming to the brokerage!
If all you did was introduce 10 producing agents to the brokerage that went out and introduced 5 more, who then went and brought 1 more each to the company, at $80,000 gross commission for each agent that’d total up to $288,000 a year in revenue share. And there are still FOUR more tiers you can receive revenue share from!
What if you found one nearby independent or franchise brokerage that would benefit from being brokered by a better model? This happens all the time. You could bring tens to hundreds of agents into your revenue share all at once! Think about what that will do for your financial freedom.
START BUILDING YOUR REVENUE SHARE TODAY
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With 80-100% commission, tons of training and support you can access from anywhere, and additional income options like stock awards, revenue share, and agent teams, this brokerage grew 63% in 2019 alone. Born out of the last housing crash, this company is disrupting the industry for the benefit of the agents!
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BUILD MORE PASSIVE INCOME STREAMS
At AgentWealthHustle.com, our mission is to take real estate agents to the next level by helping them grow multiple streams of passive income, from real estate and stock market investing to team building, we cover it all. The wealthy have multiple sources of income. They understand that if you don’t learn how to make money when you sleep, you’ll never retire!
Learn about other passive income streams for real estate agents.
11 WAYS TO ATTRACT REAL ESTATE AGENTS FOR REVENUE SHARE
Attracting agents isn’t even that difficult when you have an agent-centric brokerage model that maximizes value, income, flexibility, and resources for their agents.
From networking to social media, here are eleven easy ways to grow revenue share!
About The Author
Charlie C
Dad, Husband, Military Engineer, Real Estate Investor, Real Estate Agent, Blogger, Youtuber, Builder of Businesses. If you’re not growing you’re dying. My goal is to grow the success of myself and others every single day. Nothing quite compares to succeeding together! Our mission to show other real estate agents that they can build a passive income to retire, create financial freedom, and grow their income with proven techniques. I started this endeavor with my friend Kobe Xin and we are growing our team every day!
