When exactly will you quit working as a broker?

Do you mean to say you started working as a broker without a clear plan for where it was going, and when and how you were going to get out?

You’re not planning on working for the rest of your life… are you?

Here is why you must consider — and carefully plan — when and how you will quit brokerage.

An Exit Strategy

We are all creatures of habit. Once we have a routine that works, we’ll happily stick to it without questioning it or even considering any alternatives in most cases.

This is just as true about how you brush your teeth as it is about how you make money.

And to make things worse, we often don’t consciously design those habits!

I can’t tell you how many of my clients have told me that they just “fell into” brokerage… often without a clear picture or vision of a clear outcome (other than to make money) or an inkling of an exit strategy.

And now that they are earning a comfortable living as a commercial real estate broker, they don’t even stop to think about the end game.

This is fine if you’re planning on working for the rest of your life.

But if you plan on retiring young and enjoying life, you must have a viable exit strategy.

Up, Down, Or Gone Forever?

What would happen to your income if you were to quit brokerage today? I don’t mean quitting brokerage and getting a job or doing something else…

I mean quitting all active work.

Would your income increase, decrease, or stay the same?

For most commercial real estate brokers, their income would disappear all together as soon as they quit working.

So ideally, your exit strategy should ensure that you earn enough income to replace what you earn today as a commercial broker.

I’m assuming that you don’t buy into the myth that your 401K will supply you a comfortable retirement income.

I know that might fly in the face of conventional wisdom…

But consider that all those people who invested their retirement money in GM stocks were thinking their 401Ks were going to set them up for a cushy retirement… and we know what happened to them!

And even if you are lucky enough to have a retirement fund left, Uncle Sam will be sure to tax every penny you take out…

That doesn’t sound like a smart choice to me — especially when there are better ways of setting yourself up to retire young and wealthy!

Different Kinds Of Money

The problem with typical retirement funds like 401Ks and social security is that your disbursements from them are taxed as ordinary income — 30-50% for most people.

Yes, there are ways you can reduce that percentage… but getting taxed at those rates is still way too high in my book.

Passive income (like the income from passive investments and royalties), on the other hand, is taxed far less… often even as low as 0%!

Now, I’m not an accountant or a CPA, but a 0% tax liability sounds much better to me than 30%.

So ideally, your exit strategy should ensure that you replace your ordinary income with passive income.

Your Very Own Acres Of Diamonds

Ask any 10 wealthy people, and I guarantee at least 50% of them made (and continue to make) their money in real estate!

As a commercial real estate broker, you’re sitting on a goldmine…

I know you know this… but let me ask the question anyway:

Of all the investment opportunities that cross your desk every single day, how many have you gotten involved with personally?

As a commercial real estate broker, you have the knowledge, the relationships, and the opportunity.

What are you waiting for?

What’s Your Exit Strategy?

Take a moment right now, and begin planning your exit strategy.

Consider these suggestions and guidelines to help you get started:

• What is your target net income? In other words, how much net income does your exit strategy need to guarantee?
• What is your timeline for reaching that income level?
• Working backwards from your target net income and timeline, what milestones must you reach and when in order to be on course?
• What resources do you have access to to make this happen?
• What mix of vehicles will you use to generate your target income level? Will you use real estate? Royalty income? Inventions, patents, or other intellectual property you can license to others?

Of course, once you have a clear idea of what your exit strategy must accomplish and when, you’ll need the right systems and plans to make it happen.

And above all, you must make a long-term commitment to continuously discover and considering new and better alternatives (i.e., avoid getting stuck in any particular habit) by educating yourself at every turn.

What are your thoughts on this topic? Leave me a comment and let me know…