Flip the Switch – From Real Estate Agent to Real Estate Investor

by Lorraine Beato

Cook & James is committed to building relationships in the community and wants to spotlight our Colleagues and Collaborators -- realtors, brokers, agents, and other industry experts – as guests on our blog. Previous guest posts have featured Tim Hur, Mario Fermin,  Johnell Woody and Rena Johnson. Today, in our ongoing guest blog series, Lorraine Beato, a respected Atlanta-area real estate agent and consultant, offers insight about how real estate professionals can change their mindset from hard working agent to hard earning investor and learn how to build their own personal wealth.

It all started when my daughter went to college.

I broke out room and board and realized we were paying $900 a month for her dorm room. Realizing this was more than if she were renting an apartment, I did some math. Surely we could figure something out and get her out of a room with three other girls and save some money. We purchased a town home half a mile from campus, she got two roommates and I turned a $900 monthly expense into a $500 net cash flow profit every month. In seven years, that $75,000 purchase appreciated to $140,000, turning that expense into long-term, regular, ongoing income that allowed us to build wealth passively.

Now that’s what I consider a win-win.

Through my personal experience, my mindset had shifted from agent to investor. It wasn’t until one of my good friends and colleagues was approaching 60 that I was truly propelled to move forward on my mission to help other agents flip the switch from agent to investor. Here’s what that friend said to me that inspired my mission to share my knowledge and get agents to “flip the switch.”

“I’ve spent the last two weeks in my car with buyers, my back is killing me, and I just don’t know how much longer I can do this. But I need to keep selling for several more years because don’t have enough retirement funds yet.”

I know that most real estate agents are great at showing homes, helping people define the pros and cons for properties, and advising sellers on de-cluttering and de-personalizing their houses. But they’re not great at figuring out how to build wealth, create passive income and invest in themselves. It’s not a negative, it’s just simply that no one is out there teaching agents that they should invest in the very product they sell on a daily basis.  You truly don’t know what you don’t know!

Consider some pretty startling stats. Salary.com noted in January 2019, the average annual earnings for real estate agents was $41,289 and 25% of agents actually earned less than $32,000 a year. While 25% made more than $70,000 annually, only 10% of agents earned more than $110,000 (according to the Bureau of Labor Statistics).

Compared to the average investor salary of $123, 937 nationally (September 2019 figures from Zip Recruiter), real estate agents clearly have much to gain from embracing an investor mindset. In fact, in today’s current climate of iBuyers – Zillow Instant Offers, Knock, Opendoor, Offerpad and new platforms seemingly daily – it’s all the more necessary for realtors to bring their A game. Flipping that switch mentally to a new way of thinking about real estate has perhaps never been more urgent.

In my mind, I went back to my corporate days in the financial services industry and I had to find a way to turn a debt into a credit, to turn an expense into income. I was able to “flip the switch” and I thought perhaps if I had a few conversations with other open-minded agents, that they would “get it” too. They just may need to have a conversation, have someone to illustrate what can be done and get a little more information.

Consider if you can rent a four-unit home and, after all expenses are paid, you are left with $200 per door. This give you $800 per month in passive income. Tenants can pay down the mortgage, build equity for you and you reap the tax benefits. Plus, your property will likely appreciate in value, further adding wealth-building potential.

Or what if your property could be a short-term rental on a platform like AirBnB or VRBO? Taking a property with a $1,000 per month mortgage and charging $100 per night is like putting up to $2,000 into your bank account every month.

This may seem obvious, but for realtors, adopting that investor mindset can be a real leap of faith.  All the basics are there… agents know how to run a CMA, know how to price and market a property, how to identify opportunity areas, and what items may be concerning to an inspector.

A real estate investor sees all these points but considers factors beyond a home’s physical features. An investor visualizes that the lower level of a certain property is prime for a rental space like AirBnB. An investor researches locations where properties have appreciated 15% in the last 12 months and are still on the rise. An investor envisions opening up the floor plan or adding square footage for additional profit. An investor takes note of new development in the area and sees potential in the area’s change and opportunity from the new business possibilities.

Pair an agent’s knowledge with this mindset of an investor and flipping the switch becomes a no-brainer. Depending on individual investment personality and risk tolerance, there are several approaches to achieve the leap from realtor to investor. You can fix and flip, buy and hold, wholesale, become a private lender, buy tax liens and invest in notes. No matter the personal objectives and goals, one fact is certain: flipping the switch to a new mindset is the first and most practical step for agents to reveal nearly unlimited possibilities for generational wealth by leveraging their knowledge to be the investor.

Lorraine Beato is a Metro- Atlanta, Georgia REALTOR® specializing in single family residential homes, investment acquisitions and upscale renovations. A former appraiser, she is a respected industry consultant and speaks frequently on property investment. Published in Think Realty and Self Directed Investor, among other publications, Lorraine founded the Atlanta chapter of WREN (Women’s Real Estate Network) and is a member the National Association of REALTORS®, the Georgia Association of REALTORS®, and is a Lifetime Million Dollar Member of the North Atlanta Metro Association of REALTORS®. Friend, follow and find Lorraine on Twitter, Facebook, Instagram, LinkedIn or the web or email her at lorrainebeato@gmail.com.