S.E.C. Real Estate Observer

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Editor’s Note: This article first appeared in the June 1975 issue of the Real Estate Observer.

Prior to “making a million,” we have to take the first step – set an immediate goal of securing $1,000 per month cash flow. As this is an “after-tax” goal and after paying 40% to your broker, we are looking at a gross income (on a monthly basis) of approximately $2,250.

Step One:
Let’s look at $2,250 several different ways –
A) $2,250 is $2,250 per month
B) $4,500 every two months
C) $6,750 every quarter
D) $13,500 per one-half year

Let’s not calculate further as you will want to change your goal in six months.

Step Two:
Also consider the following (considering A through D)
A) $2,250 is approximately a 3% fee on a $75,000 transaction
B) $4,500 is approximately a 3% fee on a $150,000 transaction
C) $6,750 is approximately a 3% fee on a $225,000 transaction
D) $13,500 is approximately a 3% fee on a $450,000 transaction

Step Three:
Looking at this goal from another position – Land transactions (lot parcels, etc.) pay a 10% fee. Thus, if you wanted to secure $2,250 per month, $4,500 every two months, $6,750 every quarter or $13,500 every six months, you will have to work on those transactions with a 10% fee=$45,000 per month, $90,000 every two months, $135,000 every quarter or $270,000 every six months.

Things to Think About:

1. Land and lots are harder to sell or exchange in this economy. However, look at the construction still going on in every community.

2. In order to reach your goal, you only have to sell $270,000 of property with 10% fees rather than $450,000 with 6% fees.

3. Most transactions take ninety days to close; thus, you will have to implement the plan immediately.

4. This entire calculation is based on the fact that all transactions are in cooperation with other offices. That is why we used a 3% fee. If you sell it yourself, you have a “step up” in the program.

5. All of your work should be geared 100% toward your goal. Any other work is “missionary” work. Thus, take on those projects “only on your terms.”

6. The difference between those who make their goal and those who don’t make their goal is most don’t try. An attempt must be made with a 100% commitment.