Many successful professionals aren’t limited by talent or drive. They’re limited by time. Your maximum billable hours, or deal capacity, is limited by the hours in the day. As a result, your income can only grow by the amount of additional time you are able to devote to new opportunities.
Unless…you are able to introduce technology efficiencies or build a team. Rental Beast can help with the tech! In this article, we also want to unpack how real estate agents use rentals to build teams and expand their business.
Team Building the Traditional Way
As an agent considering a building a team, your goal is likely to create more time to focus on the highest value tasks. In real estate, that usually means working with buyers and sellers. In order for you to focus on closing more of these deals, you need a support system that can facilitate open house prep, follow-up, client communication, inspection tasks, press, and the like. This usually means bringing on aspiring, new, or junior agent, and is a pretty standard approach to team building in our industry.
The other fairly common approach is best described as “merging.” This happens when two or more established agents or teams join forces.
Team Building with Rentals
The underlying concept is the same… bring on junior team members to free up your time to work on higher value tasks. However, you should be thinking about how you and your team members are all focused on the best use of time!
With that in mind, here is why rentals should be a cornerstone of growing your team:
1. Rentals help your team grow, while reducing turnover
Less experienced agents don’t need a track record to close rental deals. The transactions are much less complicated and will translate into some early “wins” for your junior team. These deals allow new agents to build the experience and confidence needed to become more valuable contributors. This is good for your bottom line and reducing employee turnover.
2. Rentals offer access to high value relationships
What may start as a typical deal for your junior team member can quickly become a situation that requires your expertise! A few big opportunities here:
- Renters are future buyers. Our agents report converting renters into buyers around 30% of the time, if the agent has a structured incubation plan.
- Private landlords. “Mom and Pop” owners represent around 50% of the rental inventory. When representing a renter, it is very common to end up working with an unrepresented owner. This is a great opportunity to help this owner expand (or sell off) their portfolio or their primary residence.
3. Rentals help remove some of the financial pressure of leading a team
You want your junior team members to close deals so they aren’t completely reliant on you. If they are producing revenue, this gives you much more flexibility in how you compensate your team!
All of the above is doubly true for accomplished agents who already have landlord relationships. If you are anything like the agents we hear about, you are probably “tossing aside” hundreds (perhaps thousands) of renter leads per year. These leads could be gold in the hands of a junior team member. If something more interesting develops (a new landlord relationship or a renter who turns into a buyer), you’re positioned to help!
If you need help educating and training a new team member, all Boot Camps, Webinars, and Tutorials are available for free in Rental Beast University. Click the Rental Beast University link for more information.
Compensating Your Team
Most agents are independent contractors. They get paid only when they close a deal. However, that may not necessarily be true of members of an agent’s team. As an agent considers building a team, there are all sorts of compensation structures: salary (or hourly pay), commission only, or hybrids. It will depend on the relevant local circumstances. In the event that a commission structure is being considered, which will likely be very helpful if a team lead is trying to lower their overall risk, here are a few things to consider:
- Varying payout methods. Agents may want to pay junior team members out on different deal types. For example, if the junior team member closes a rental deal, perhaps they keep the vast majority of the commission. If a renter turns into a buyer, that may be paid out differently (this process will likely involve more help from the team leader). Finally, if the junior team member is able to help convert a landlord into a client, that may be paid at a slightly different rate (that will likely require the most help from the team leader).
- Milestone accelerators. Another dimension of the comp structure is changing payouts once certain milestones are hit. For example, a junior member may get an increased bonus if they hit a certain number of deals or revenue during a period. This can also be based on total team revenue to keep everyone focused on what is most important for the group!
It probably goes without saying, but payouts are powerful motivators of behavior, so it’s important to carefully weigh what a team is being incentivized to prioritize.