So this is the final part of the story about how my dad became an”accidental millionaire”.
To recap briefly, my parents were both self-employed, and while my mom never managed to create an asset of value when she retired, my dad did. The thing is, he never really saw it that way, nor did he set out to accomplish that.
See, my dad was really only interested in not having to deal with employees. So when other real estate agents wanted to hang their licenses under him, he let someone else deal with it all. They had nearly 50 agents before they even started charging a monthly fee and formalized the 100% commission structure for agents.
They had a small office in central Phoenix, and I’d hang out there periodically. Agents would come from all over the valley, and would wait around to use the few computers to access MLS and other services.
I never understood why the office was so small and why they never expanded. One day I started rambling on about all the great stuff they could do to help the agents by getting better computers, adding on more internet services, and so on.
After several minutes, Duane interrupted me and said, “David,do you know who our BEST AGENTS are?”
I said, “Sure, the ‘million-dollar’ sellers, of course!”
Duane said, “Nope. They’re the ones who send in a check for$25 or $50 every month and never poke their heads in the door.” My dad nodded silently in agreement.
I probably looked confused. Then Duane added, “The active sellers are the bane of our existence. We’d be happiest if nobody ever sold anything!”
My dad added, “See, there are no ‘part-timers’ in this business. Either they sell something, or they don’t. Most of the time, nobody sells anything. But they want to keep their options open. So they pay their license fees and send us a check every month, all in hopes that one day they’ll be able to help someone buy or sell a home. It costs more to NOT be readythan it does to be ready but do nothing.”
—–
My dad was looking at retiring and wanted one of us kids to take over the business. But for a variety of reasons, we didn’t want to. So he sold it.
At that time, they had about 700 agents paying an average of $30 a month to keep their licenses active.
The business was valued at right about a million dollars, and my dad sold it and retired. That worked out to about 4 years of cashflow based on the above numbers.
Over the next few years, the new owner opened up a couple of other offices in order to attract more agents, since it made the offices more accessible. This way, he was able to double the number of agents fairly quickly.
All my dad set out to do was set up his own independent real estate brokerage. He worked out of his house, and it wasn’t until they’d “acquired” 50 agents that they finally decided to open an office. NONE OF THIS WAS PLANNED!
To be sure, one thing that helped in this case is that the State regulates licensing — you can’t earn commissions in any kind of real estate transaction unless you have a license. You also have to “hang” that license under a “Designated Broker” who’s put their butt on the line for any legal problems that might arise.
The fact that most Brokers wouldn’t work with anybody who wasn’t interested in being a “full-time” salesperson was a big help in getting people to hang their license with my dad’s firm.
But look at the numbers ….
If you could get 700 people paying $30/mo for something, and maintain that membership at a fairly steady rate for a while, there’s no reason you couldn’t sell it for $1M to asavvy investor.
The funny part is … in my dad’s case, people paid that monthly fee, in large part, for THE PRIVILEGE OF DOING ABSOLUTELY NOTHING!
That’s due to a quirk in licensing requirements and the time it takes to “activate” your license, which can be several weeks. Otherwise, people would just let their license sit inactive with the State until they found a potential client. THEN they’d activate it with a broker. There are also some transfer fees involved, making it more economical to just pay a monthly fee to hang their license somewhere than to try to activate it “on demand”. Which basically amounted to “free money” for my dad and his business.
On the surface, he ran a real estate brokerage. But truth be told, nearly all of his profits came from people who just wanted to “park” their licenses there and never do anything. Like folks who buy an RV and have to pay to have it sit in a storage lot until they have time to get away for a while.
Pretty cool, huh? :)
The thing to take away from this is to start thinking about ways you could set up some kind of a recurring revenue stream where there’s the perception of greater loss if someone stops paying than if they continue to pay. Make it affordable enough to get in and stay in, and provide enough value here and there that they’ll keep paying their bill every month.
Perhaps you could charge a “set-up fee” or “initiation fee” up front that would be incurred each time someone signed-up. Even one hundred dollars would equate to three months payments at about $30 a month. So someone would have to think hard about letting their membership drop and then renewing it later.
This part was implied in my dad’s case by the time and costs incurred with activating or transferring your real estate license with the State. It’s a third-party that imposes these costs, and they’re non-negotiable.
If you have any ideas along these lines, I’d be happy to discuss them with you.
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While you’re pondering your own way of becoming an accidental – or deliberate – millionaire, I’d like to tell you about a new Addon for Rapid Action Profits (RAP) that I feel is anabsolute MUST-HAVE Addon.
(Learn more about RAP here: http://is.gd/4S5Oz )
It’s called the Add-To-Cart Addon, and you can read more about it here:
Honestly, I didn’t even understand correctly what it was for when I bought it. I started to play with it and after some confusing Q&A with the author, Mike Myers, it finally dawned on me what it does. I used it, and then suggested he add alittle feature that he just implemented — and that’s what I believe makes this a MUST-HAVE Addon.
The single most problematic aspect of setting up a RAP site for most people is the same thing. I’ve seen it over and over … It’s setting up the sales page, and getting the little snippets of PHP set up properly, along with the headers and footers.
If you’ve used RAP, you know EXACTLY what I’m talking about.
Well, the Add-To-Cart Addon makes this a NON-ISSUE!
Here’s the point: with this Addon …
YOU NO LONGER NEED TO SET UP A SALESPAGE TEMPLATE WITHIN RAP!!!
Just imagine … set up RAP to handle product sales, affiliates, and JV partners, then …
Set up the sales page in your WordPress blog!
Grab a payment button from the Add-To-Cart Addon’s Admin panel and paste it into the page on the blog andyou’re good to go.
What makes this work is this little feature Mike just added: you can set up a “Bypass” URL in the addon’s Admin area that will redirect users to your blog instead of the regular RAP Salespage.
And the amazing thing is … your resellers don’t have to do a thing! They just send traffic to the regular RAPproduct URL, and they’ll be forwarded to the page on your blog.
No more RAP Salespage headaches! WOO-HOO!
Grab a copy today and see how long it takes you to set up a site selling any PLR product that uses RAP to handle the back-end part. Maybe 15 minutes?
-David
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