Tag Archives: how to start a real estate business from scratch

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Your tax return doesn’t lie

Real estate is a numbers game. But it’s possible you’ve fallen into the trap of looking at the wrong numbers. I know I once did.

Years ago, when I was a principal, I thought the key to success was sales, sales and more sales. Then one day, though, it hit me like a brick in the back of the head: it’s not what you make, it’s what you keep that counts.

Let me run two scenarios by you, and you tell me which sounds better:

  • Scenario 1: You make $100 in sales, but you pay out $85 in costs, (rent and other expenses), leaving you with $15.
  • Scenario 2: You make $90 in sales, but your costs are $60, leaving you with $30
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How to be an effective leader in times of change

There’s an ancient saying: ‘may you live in interesting times.’ No two ways about it, so far, the 2020s have been very ‘interesting’!

We’ve experienced an extraordinary boom, the likes of which most have never experienced. And, thanks to the pandemic, some massive technology shifts have had a huge impact on how we do business. 

Now, as we settle back into doing business in an open society we are contending with the twin challenges of interest rate uncertainty and rising rates of inflation

Change may be inevitable. But it can also provoke anxiety – especially when a large amount happens in a short space of time. And while it’s easy to be a good leader when things are going smoothly, in challenging times a different approach is required.

So what can principals do to support their agents and other staff through uncertain times?

Be nurturing 

Everyone’s different. So while some people thrived in the Covid years with virtual tours, Zoom meetings, and the plethora of new technologies; others struggled. In my, post-covid conversations, with One Agency principals across Australia and New Zealand, I’ve heard there’s a fresh set of challenges. Staff are adjusting to their personal challenges of being back in an office environment, only to have to contend with a tightened market with rising inflation and interest rates, and these factors are having an impact on performance.

 

One Agency more commission in your wallet
Uncategorized

Your tax return doesn’t lie

Real estate is a numbers game. But it’s possible you’ve fallen into the trap of looking at the wrong numbers. I know I once did.

Years ago, when I was a principal, I thought the key to success was sales, sales and more sales. Then one day, though, it hit me like a brick in the back of the head: it’s not what you make, it’s what you keep that counts.

Let me run two scenarios by you, and you tell me which sounds better:

  • Scenario 1: You make $100 in sales, but you pay out $85 in costs, (rent and other expenses), leaving you with $15.
  • Scenario 2: You make $90 in sales, but your costs are $60, leaving you with $30
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How to be an effective leader in times of change

There’s an ancient saying: ‘may you live in interesting times.’ No two ways about it, the last two years have been very ‘interesting’ for the real estate industry. 

On the one hand, we’ve enjoyed an extraordinary boom, the likes of which most people have never experienced. On the other, the pandemic has had a massive impact on how we do business. Overnight, everything changed, as face-to-face was replaced with virtual and kitchen tables were converted into offices.

Change may be inevitable. But it can also provoke anxiety – especially when a large amount happens in a short space of time. And while it’s easy to be a good leader when things are going well, it’s been a different challenge during covid. 

So what can principals do to support their agents through both the changing market and the strange world in which we’re now living?

Be nurturing 

Everyone’s different. So while some agents have thrived in the new normal of virtual tours and Zoom meetings, others have struggled. In my conversations with One Agency principals around Australia, many have told me that covid has had a big impact on agents’ personal lives, which in turn has affected their job performance.

That’s probably not a surprise. For any agent used to working in a busy office, it may have felt isolating when they found themselves working alone for months on end. 

Then there are the additional personal challenges of dealing with vaccinations, home-schooling and, maybe, a diminishing income. 

My advice? Remember as a leader that your interpersonal skills are just as important as your sales skills. So nurture your agents by: 

  • Spending more one-on-one time with your agents to keep up their morale and make them feel valued 
  • Working hard to make all your agents feel like part of the team – not just the ones with the highest GCI 
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Group boss tells agents how to prepare for changes in 2022

The founder and CEO of One Agency has warned real estate professionals to start preparing for a very different and possibly slower market in 2022.

Paul Davies’ forecast, based on numerous indicators, price growth may slow in 2022. Traditionally, first in the capital cities and then the regions, and that days on market, accordingly, would increase. As a result, agents and principals will have to manage an environment with less turnover.

Mr Davies gave five reasons why he expected a slowdown in 2022.

“More stock is reportedly already coming onto the market. That means buyers can be more discerning and won’t have the same fear of missing out (FOMO) they experienced throughout 2021,” he said.

“Finance will become harder to get and more expensive. APRA tightened lending criteria in late 2021 and might do more tightening in 2022. Meanwhile, interest rates are likely to drift higher, continuing a trend that started in late 2021”.

“At the same time, there will be more talk about the Reserve Bank increasing the cash rate. That will be enough to dampen buyer confidence – even if the rate rise fails to occur.”

Mr Davies said the 2022 federal election would also negatively affect the market.

“If there’s one thing I’ve learned during my half-century in real estate, it’s that a lot of buyers suspend their decision-making before and after an election, as they wait to see how things will play out,” he said.

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Agents can become principals more easily with addition of new services

One Agency has added two new services to their turnkey solution, to make it easier than ever for agents to set up their own businesses, and keep more of their gross income.

One Agency founder and CEO Paul Davies said the group’s 620-plus agents and new recruits can now outsource their trust accounting and compliance, as well as their social media marketing to trusted, high-quality providers.

“A major obstacle that holds agents back from going out on their own is having to manage their own trust accounting and compliance. So we’ve solved that problem by establishing an alliance with Think Cloud Solutions, which can manage those crucial back-office tasks on behalf of the new business owner,” he said.

“Another issue is that some agents feel overwhelmed by the thought of having to handle their own social media. So we’ve solved that problem too, through an alliance with Bespoke Media, which can provide business owners with all the content they’d ever need”.

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Franchise free real estate group adds more members

One of the industry’s biggest groups continues to expand, with new members highly motivated to join a group that doesn’t charge franchise fees or insist on restrictive rules.

One Agency now has over 600 agents in Australasia, after recruiting four more in the past month – Elli Birnie (Brighton-Le-Sands, NSW), Jeff Chang (Parramatta, NSW), Hazel McGinty (Gosnells, WA) and Samantha Richards, (Toronto, NSW).

Furthermore, several of One Agency’s existing licensees in New Zealand have expanded their businesses by taking on new territories including Renate and Daniel Ochse in the Far North have expanded into Napier, while Ian Croft in Pukekohe has expanded into Papatoetoe.

Jeff Chang, who won RateMyAgent’s agent of the year for Parramatta in 2020, has moved from agent to principal after seven years in the industry.

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Industry experts reveal the hidden costs of establishing your own brand

While having your name over the door can be an enticing prospect, three industry experts say many principals underestimate the financial and emotional costs of establishing a brand. 

And, as it takes time and energy from the core business, principals should consider all their options before striking out on their own. 

Why principals are jumping ship 

Over the past few decades, the franchise model had come to dominate the Australian real estate industry. Many principals joined the big groups lured by the brand recognition and support that came with a long-established name. 

Then the internet changed the rules of the game. As a result, more principals question the franchise system, and look into going it alone. 

After all, nobody wants to pay commissions to head office and surrender a lot of control if they get little perceived value in return. 

Starting from scratch 

Nic Fren, former Real Estate agent and now, founder of Bespoke Media Group, outlined some of the initial expenses principals face building a brand from the ground up. 

“A branding kit complete with logo and colour palettes is between $10,000 and $15,000 to create,” he said. 

“A good website costs a minimum of $5,000. On top of this, comes flags, A-frames, signage, shop front and the like – so it’s easy to see how it soon stacks up.”

All these costs need to be paid before your business turns a dollar. Then it takes at least six months to discover if you are going to get a return on this investment.

And while choosing logos and fonts might be exciting at first, it eats up valuable time and headspace that should be spent winning new clients. 

“The last thing you want to do as a business owner is worry about how your newsletter templates look.”

Time is money 

Tristin Hanna, co-founder of brand and design consultancy Thursday Design, said a brand roll-out can take up to a year to complete, once all touch-points are considered.  It therefore requires a commitment to both time and budget to be delivered effectively.

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Why making more sales in 2021 is less important than you think

Have you got a goal for 2021? If not, let me suggest a goal for you – one that might take you by surprise.

No, don’t aim to make more sales in 2021. Instead, set yourself the goal of making more profits.

Last year was crazy. But it wasn’t completely unexpected – because if you study history, you know crises happen from time to time. Sooner or later, another one will occur. Maybe next year; maybe next decade. Nobody knows. All we know is that another crisis is coming.

So in 2021, whether you’re an agent or a principal, your goal should be to become more profitable. That way, no matter what happens in your local market, your business will be sustainable.

Of course, one way to increase your profits is to win more listings. But it’s also possible to make more money while making fewer sales.

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How to move past your fear and become a principal

Five years ago, I was where you are now. Nervous and fearful about making the step up to principal, even though I had 15 years of being a successful agent under my belt.

But, at nearly 50 years old, this was my ‘now or never’ moment – and I didn’t want to live a life full of regret. So I gathered my courage and leapt.

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The biggest lesson I’ve learned from this crisis

For a moment, I want you to imagine it’s 2019 – back when none of us had heard the term ‘coronavirus’.

It was a golden time, right? Well, no, it wasn’t, it was a tough year for many. My group, One Agency, has more than 150 licensees across Australasia, and when I visited our principals and agents, I saw just how many of them were operating in tough real estate markets.

Some, though, were thriving. Why? Because they’d built businesses designed not for summer but winter.

Fast forward 12 months and those principals and agents are still doing well, despite COVID.

That leads on to the biggest lesson I’ve learned from this crisis: you can never predict what will happen to your local market or the wider economy. So you need to build a business that can do well in any environment. How? By doing these three things:

  • Protect your revenue
  • Minimise your costs
  • Master your mindset

How to protect your revenue

Sales revenue is unpredictable, because you have no control over whether your local market goes up, down or sideways.

Property management revenue, though, is largely predictable, because rents are much less volatile than sales prices and volumes. That’s why every agency with a rent roll is safer.

Big or small, even one-person agencies can build rent rolls – you just outsource the different property management functions to freelance staff. One Agency has businesses of every size, including several solo operators, who do sales while managing more than 50 properties.

How to reduce your costs

You have limited control over your revenue, but you have complete control over your costs.

Remember: it’s not what you make, it’s what you keep that counts. That’s why you need to minimise your fixed costs and take a close look at your variable costs. Some ideas include:

  • Move from expensive main street premises to a cheaper, less visible office, or virtual office – these days, a strong digital presence is much more important than a strong physical presence
  • Send some tasks offshore – outsourcing will not only save you money, it will also make it easier for you to scale up and down when your revenue rises and falls
  • Refinance your debts – interest rates are at record lows, so you could potentially save thousands of dollars per year by investigating current lower-rate loans
  • Hold your group accountable – if you work with a branded group, research the market to see if you can find a group that will give you the same service for lower fees, as there is no such thing as a best brand, only a best operator

How to master your mindset

During my decades in real estate, I’ve learned that the market always turns – for better and worse.

You need to build a mindset that can handle these ups and downs. You can’t allow your mood to go up and down in tandem with the market, because that’s not sustainable.

When the market is booming, you need to remain level-headed; when the market is tanking, you need to remain optimistic.

Have a plan, work the plan and reset as necessary. A strategy with a goal keeps you focused.

So work hard on yourself. Hang out with positive people. Read personal development books. Take care of your physical and mental health. If you’re feeling down, don’t be afraid to ask for help.

Andrew Reeves
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Your 5-step guide to transitioning from agent to principal

Do you want to step up from agent to business owner? If so, let me explain exactly how to do it. The process is simple, although it does require a lot of hard work and sacrifices.

By way of background, I started my business in 2013; four years later, it was named One Agency International Office of the Year. By the time I sold my business in 2020, it had two offices, 20 staff, 420 properties under management and annual GCI of $3 million. So the five-step process I’m about to share really does work.

First, you need at least five years of industry experience, so you understand the ins and outs of real estate. I had 14 years of experience when I opened my business, although, in hindsight, I realise I could’ve made the jump years earlier.

Second, you need to take advice from those who have been there and done that. An obvious way to do that is to join a group. I think I would’ve been successful if I’d gone out as an independent, but it would’ve been harder and taken longer. By joining a group, I was given all the back-end support I needed, which allowed me to focus on growing my business and maximising my profits. Another thing I did was seek outside support – I used a business coach and a property management consultant to become a better principal.

Third, you need to focus on building a rent roll. A rent roll is the foundation of your business. It gives you consistent income, which allows you to get through different kinds of markets. If you build a rent roll, you’ve always got a saleable asset. It also helps you in your local market, because it means more signs, more marketing and more exposure, which allows you to grow your brand. Whenever you sell a property to an investor, try to turn that buyer into a property management client.

Fourth, you need to remember the saying that One Agency founder and CEO Paul Davies has become famous for – it’s not what you make, it’s what you keep that counts. Profits are far more important than revenue. Always look for ways to minimise your costs, especially your fixed costs. (One reason I chose One Agency was because I didn’t have to pay commissions to head office.) Also, defend your income by building a rent roll.

Fifth, you need to see relationships as a form of currency. Our game is all about relationships, but they take time to build. The more people you get to know, and the more effort you invest in nurturing those relationships, the more clients and referrals you’ll attract.

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8 ways to grow your real estate business in Australasia

When you’re starting a new business or trying to build your existing real estate business, it goes without saying: it’ll take time and perseverance. But not much of it comes down to ‘luck’, so here are some of our tried-and-true tips on how to make sure that whatever you put in, you’ll get back in success and profit.

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Planning your first year in your real estate business

Starting a business can be scary but with forward planning and the right tools in place you will look back on your first year and feel amazed at how far you’ve come.

Here are key factors to consider and questions to ask yourself as you prepare to launch your real estate business.

As with much in life, planning is everything. Working out how you will operate is key to narrowing down your options and giving you a clear path forward.

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Learn how Isaac Nguyen became a #1 agent in under 3 years

When we spoke to one of our top-performing members recently and asked him what he’d have done differently when he started his business, he told us of two key activities that could have helped his business from Day One.

Read on to see what they are.

How long have you worked in real estate?

It’s been around 13 years, working for a couple of major franchises in the area.

What drew you to real estate as a career?

I’d been working in pharmaceutical sales, which involved a lot of travelling. My priority became spending time with my family so I looked to real estate. It had always been at the back of my mind so it wasn’t a big leap for me.

What awards or recognition have you achieved in real estate?

Ranked #1 Sales Agent in Durack, Forest Lake & Inala.

A-List Awards Top 1% of Sales Agents in QLD for 4 consecutive years.

A-List Excellence Award for Most Properties Sold in the whole of Qld

Ranked in the top 10 Real Estate Agents in QLD for most properties sold.