If you follow Gary Keller’s model below, and by “Gary Keller’s Model” I mean the model he put out after talking to hundreds of the most successful teams in the world. He says unequivicably hire admin first. And on that 1st hire (and every one after) hire like your life depends on it. Make this 1st hire the person that could run your company some day. But before we get ahead of ourselves, let’s talk about why you’d want to hire an admin position before brining on another agent.
First break down all the tasks into $/hr categories.
My guess is that you’ll find you’re doing a whole bunch of $10 and $20 per hour tasks. All of those tasks that are in the $10-20 per hour range, hire them out. You can most likely fill a full time position with just those tasks and they’ll be doing them better than you could. Now you’ve eliminated all the tasks under $50/hr from your schedule. Do the math and look at what your $/hr just did. You probably cut your hours from 80 to 40hrs/week and barely took a pay cut. Or maybe you’re at 60hrs/week and don’t have time to work ON your business. Make this hire and now you’re down to 20hrs/week and you’ve got 20-30hrs/week to put into building your business larger. If you’re doing 50 transactions grossing 450k/year doing it all yourself, you’re easily working 70-80hrs/week. Imagine, you now cut it down to 30hrs/week and you’re now grossing 400k. I think that’s a pretty good trade off. Now let’s say you did the same thing with an agent and paid them a 50% split. You’re closing 25 transactions and they’re closing 25 transactions. You make $225k on your 25 and you make 112k on your agent’s 25 transactions. So you’ve now made $337k working 40hrs, where you could have made 400k working 40hrs. That’s $197/hr vs. $162/hr. It definitely makes more sense to make your 1st hire an admin position rather than an agent.
But what about your 2nd hire. Most people (including how I handled it) would hire an agent next. But imagine this. Your 1st hire was a transaction coordinator. You’ve got all that behind the scenes stuff taken care of. Now you’ve really started focusing on listings. So now you’ve got 50 listings and 25 buyer sides. You hire a listing coordinator. You’ve now got 2 admin spots at 40k/year…so 80k in expenses. Your gross income is around 675k – 80k in expenses. So you’re bringing in 595k in revenue, working about 40hrs/week. Now you’re at $286/hr.
3rd Hire. You’ve now got a TC and Listing Coordinator. Next hire would either be a showing assistant or buyer’s agent. So imagine now your business is starting to boom. You’ve got an amazing TC, Listing Coordinator, and now Showing Assistant. You’ll close 115 transactions this year. You pay your showing assistant 40k for full time showing homes for you. Now your employee expenses are $120k. Your Gross Income is $1,035,000. You’re busy this year working 50hrs/week. Your Revenue is $915,000 after you pay your 3 employees. Aren’t you glad you didn’t hire agents yet? That’s $351/hr.
Now I know there are other expenses in there, so the $/hr will be less, but you get the gist. At this point you’re making tons of money, but your income also depends 100% on what you do and it’s definitely not passive. But at this point you can start leveraging with buyer’s agents and listing agents. Your net income may go down at times, but your $/hr will be going up and you’ll start progressing towards passive income.