I started Blue Steel Real Estate last week. It has been an exciting and slightly stressful process. We opened earlier than we thought we would open, but everything has worked out extremely well, and I am glad things happened the way that they did. On this episode of the InvestFourMore Podcast, I talk about the move, the process, and how everything has gone so far.
Why did we have to move early?
I was planning to move on June 1st, but my broker asked me to leave early. I did not know this, but it appears to be common practice for brokers to fire agents when they find out they are leaving the company. I have talked to a few other brokers who started a new office, and they had the same thing happen to them. I was given 10 days to leave the office, which ended up being April 6th. We managed to get everything set up with the Real Estate Commission in Colorado in those ten days, and we opened on April 6th.
Luckily, I had extra space in the commercial building I just purchased for my temporary office. I am remodeling my permanent space, but it will not be ready for at least another month. It was quite the process getting everything moved over, getting a printer, and everything else needed for an office. I actually worked for a few days without internet! We had a hotspot tethered off a phone. You can see both units in the video below:
Why am I starting my own real estate brokerage?
I did an entire podcast on why I started my own brokerage. Because I bought my own building it makes a lot of sense to have my own office. The numbers on the building make sense even with two spaces vacant. My partner and I wanted to rent the vacant units but knew they would need a little bit of work first, or we would have to provide a lot of tenant improvements. I was able to move in at a reduced lease rate because I needed minimal tenant improvement completed. I could move in right away (one space had been vacant for 6 years), and I can keep an eye on the building. I can save a lot of money over other brokerages because I am paying myself rent. I will actually be paying less money for 4,500-square-feet of office space versus what I was paying my broker for three offices.
It has been a little crazy with the move, but in the end, I am glad we had to leave early. It forced us to start our company sooner, and it has been a really fun experience. I cannot wait until the new office is ready and we can move into our permanent home!
[0:00:14.0] MF: Welcome to the InvestFourMore Real Estate Podcast. My name is Mark Ferguson and I am your host. I’m an active real estate investor in today’s market, having done over 140 flips. I flip from 15 to 30 houses a year. I buy residential and commercial rental properties. I’m an agent with a team behind me who have sold thousands of houses over the years.
On this show, I talk about myself, my career, and advice, as well as interview other amazing agents, wholesalers, landlords, flippers and the companies that help those people succeed. Before we get started, if you're interested in help from me, I've got discounts on my coaching products just for podcast listeners. Head over to investfourmore.com/discount. That's investfourmore, investF-O-U-R-M-O-R-E.com/discount and you'll see coupon codes for my coaching products. I have a video training series on flipping, on getting great deals, training for agents, training for rental properties as well, and many of those come with personal coaching from me.
I hope you enjoy it. I hope you enjoy the show, and let's get started.
[0:01:34.1] MF: Hey, it's Mark and we're back with another podcast. I have been taking a little bit time off, because we just started a new real estate office. That's what I'm going to talk about today. You may have noticed we didn't do a podcast last week and the reason was I have been swamped. It's been a little crazy here lately. Just decided to skip that week, but we'll keep doing the podcast going forward.
Yes, we did start a brand new real estate office. We moved in last Friday. We got approved by the real estate commission last Friday, and we are officially open for business as Blue Steel Real Estate. I'm going to talk about that move, everything that's been going on with our team, the office, and give you some insight into that entire process.
I did a podcast a couple months ago about why I wanted to start a real estate broker, so you can for sure check that out to see some of the reasoning behind it. Now that has finally come to fruition a little faster than we thought it would. I first made a bunch of goals at the beginning of this year. It's been a crazy year. It seems like you always want things to happen fast and go quickly and sometimes they go really fast and really quickly.
One of the goals, well a few the goals I had was to buy a large commercial property and I ended up doing that in February. We bought a 68,000 square foot building, had a grocery store, a restaurant, a little office and a coffee shop in it. Along with that building had two vacant spaces. My plan was to move into one of those spaces, fix it up, start my own real estate brokerage. My plan to do that was June 1st.
We're moving along. I thought I'd be nice to tell my broker, “Hey, we're moving out. I'm starting my own office. Just want to give you a heads up,” since we do occupy three offices in my old real estate office where we're at before. I knew that'd be a pretty big hit to my broker who was the owner as well to lose three offices and an entire real estate team, so I tried to give him as much warning as I could.
Things I thought were moving along okay, and then all of a sudden he asked us to leave early. He asked us to leave April 6th. I got about 10 days warning and we managed to move out, get everything going and approved with the state, and we opened up for business on April 6th.
Now we were not able to move into our main permanent building that is still being renovated, but we did move into the other vacant unit that was in the building. I bought this building with a partner who's a super cool guy. We get along really well. We're both easygoing, that's one reason why I partnered with him.
He is pretty much the only partner I've had on anything, since I bought my dad out and when my dad and I used to partner on fix and flips, dad is the last partner I had. He was cool. He's like, “Hey, just move in there temporarily. He’s not even charging me rent. I would be paying a lot of that rent to myself, so it wouldn't be a big deal. Super cool guy, and he is very understandable about our situation.
This unit is vacant with no tenants planning to move in in the immediate future, so makes sense for us to be in here a little bit. We can clean the place up a little, fix it up just a little bit while we're here, so that's an advantage as well. Then we have a place to stay, a place to get some work done, while the other place is being renovated.
It is nice as well, because I can keep track of the other unit while we're here. It is literally 40-feet away from me, so I can see when the guys are working. I can pop over there whenever I want, if there's any questions, any concerns, I can run over there really quick, super easy for me to do. It also is a little tricky, because I don't have internet yet, which is very frustrating.
We talked to Comcast to get internet running about a week and a half ago and they promised there'd be no problems, no issues, they’d get it done right away, and delay after delay after delay, we still don't have internet, it might not have until Thursday. I've been running off a hotspot off my phone, which is not exactly ideal to run a real estate office from.
That's been a little bit frustrating. Had to cancel some meetings, some calls, different things, because of that. But you work through those growing pains and figure things out. Besides that, we've got ourselves set up with some desks, our laptops, we bought a printer, we've got a Keurig so we can make coffee, we've got snacks, we have two bathrooms in here, so we are set and ready to go for the next month or two until the other unit is ready.
Along with having to physically move, do that types of thing with the brokerage, I thought I would talk about just what it takes to start a brokerage, what it's been like for us so far, and what our plans are for the future.
I told you before in another podcast, like I mentioned why I wanted to start a brokerage. This one, I'm going to talk about, more about what you have to do to get it going and done. It is not just an easy process. Every state has different requirements for starting a brokerage. How long if you licensed, all types of the training, the education, all of that is different every state. What I have to go through in Colorado is not what everybody else has to go through if you're in different states, so please check those requirements, if you're thinking about making a switch or jumping into to being your own broker owner.
All right, so to start, well basically, every real estate agent has to hang their license with a broker if they're not a broker. Now in Colorado technically, everyone who sells real estate is a broker, but they call beginners associate brokers, so they don't have an actual broker's license and as managing brokers or independent brokers.
Basically, an associate broker is a real estate agent. They're not a broker, but Colorado calls them that for some reason. To make it easier to say real estate agent versus broker, a broker is someone that has a broker's license, has their own office is basically what most people think of as a real estate broker.
Now I've had my independent brokers license for about seven, eight years and I actually got it because my sister was a property manager. She was a licensed broker and she forgot to do some training, or forgot to renew her license one year, and I stepped in, got my independent broker’s license and ran her company for a couple months while she got her license put back in place, got that all figured out.
For me to go from a regular real estate agent to an independent broker, all I had to do was pass the state test again. I crammed for about three days, studied like crazy, went and took the test, passed it with one question to spare, applied with the real estate commission, boom, I was an independent broker, I was allowed to have my own office, but I could not manage any other agents. It was just me. That's all I could do is just have my own office with me as a sole licensed person within that office.
I've had that license for seven or eight years. Been working on another broker with my team for that time, never really used that part of my license, but I had it. Then last year, I started thinking much more seriously about becoming a managing broker starting my own office. I researched what I had to do, what the process was to become a managing broker.
What I had to do was take a 12-hour class and what I thought I had to do was pass the test again. I took my 12-hour class, took it online, it really did not take that long if you take it online, but 12 credit hours, pass that, went in, took my tests, pass my tests again, then I went to the real estate commission, turned in all my information and said, “Hey, I want to be a managing broker now. I passed my test. I did my classes. Can I get that designation?”
They called me up and said, “Why did you send this to us?” I'm like, “Well, I want to be a managing broker.” They said, “Well, you can't be a managing broker, because you don't have an office to manage. We only make you a managing broker if you are in charge of an office. I could not just become a managing broker without designation. I had to actually have an office to manage.
I missed a few things are, a few steps. Then they dropped the big bombshell. I mean, like “Why did you take the test again?” I'm like, “Well, I thought I had to take the test.” They’re like, “No, if you're a real estate agent becoming a broker, you'd have to take the test again. But you already were a broker, so you didn't need to take a test.”
I studied for the tests, got all stressed about it, went and took it for no reason, whatsoever. That was a pretty funny thing that happened to me and something I joke about. Hey, I guess I got some more education from taking that test.
I had my classes completed last year. This year rolls along and I get this property under contract. I know for sure I want to start my business, tell my broker we’re in the process of getting this remodeled, we're in the process of getting everything together we need for the office, in the process of getting the name picked out, which we finalized.
I turned in my information to the state to get our S Corp set up for the business, to get a tax ID for the business, and that's when I was notified I had basically 10 days to get everything started. I turned in all of my information to the real estate commission to be an employing broker, gave them my certificate showing I passed the class, had to pay a fee, and had to tell them that I had an office to go to.
It took them about five days and they approved me. Everything went very smooth this time. Had it all lined up right, since I had an office to go to. I got my license changed from independent broker to ER, which is employing broker. Once I had that done, then we had to send in the application for the company, to the real estate commission.
We sent that application to the company and they approved that in about two days. Got all that done right in the nick of time to start our office, and I was an employing broker with the state of Colorado at our new office Blue Steel Real Estate. It's pretty exciting. Pretty cool to see that happen. A little stressful and nerve-wracking at the same time, but it's been pretty fun.
Now that was the technical side of what we have to do to start our brokerage with the real estate commission. Besides that, there's a lot that goes on behind the scenes that you have to do to set up an office. For one thing, now you don't have to do it to get approved with the real estate commission, but the real estate commission requires a lot of different things from a broker. You've got to have an office policy manual, a subcontractor agreement for your agents, different forums and addenda to use, you've got to be set up in your MLS system with the new office, you've got to have O&E insurance, which all agents have to have to protect yourself against lawsuits and liability for the office and your agents; should probably have some regular liability insurance as well on top of that.
Maybe you need renter's insurance for your belongings in the building and things of that sort, all types of things you have to do. It can be a bit overwhelming. Luckily, after doing some research I found there's a law firm in Colorado, it's actually Frascona Joiner and Goodman, I believe what they're called, really good law firm.
Oliver Frascona helped started a while back, really entertaining guy, taught a lot of different classes and different things throughout Colorado. Most agents who have been around for a little bit of time knew him, loved him, super entertaining, super funny and unfortunately he died in a plane crash a few years ago, but his office is still around, still really good office and they have a start-up kit is what I would call it for new offices, where they have the brokers manual, the subcontractor agreement, the forms and addendas, all kinds of stuff that you can buy from them, they'll help you set it up, make sure everything's legit and legal and is really affordable. I was surprised how affordable it was.
I was so happy when I found that. It made my life so much easier. I was just dreading like, “Oh, my God. I have to make my own broker manual.” That was part of the class I took for getting my managing broker was figuring out how to create your own broker manual, but it still was a daunting task I had coming up.
When I heard that they'll help you do that that was just amazing. I was so happy. I'm sure there is places like that, they'll help new offices get started in most areas of the country. Just remember, you don't have to do everything yourself. Look for people to help you when you're doing something like this, so it's not so overwhelming, so you don't miss something, so you don't mess something up.
Like I said, the real estate commission doesn’t make you have that stuff when you apply with them, but they require it, so if they ever audit you and you don't have those things, you can get in serious trouble. That's what a lot of real estate is. It's not like you have to have everything perfect and do everything perfect all the time to sell houses, but if you get audited and have not been doing things correctly, that's when you can really get into trouble.
It’s a self-policing making, sure all the forms, the contracts, the policies all of that is done right and there's a chance nobody will ever check it out, or look at it, but there's also a chance you will get audited and everything will be looked at. If you do do stuff wrong, you can get fined, lose your license, go on probation, all types of things can happen. You need really need to make sure things are done right, correctly. That's a lot of what that class I took was about was trust accounts, property management, handling agents, all types of things.
As the managing broker, I am responsible for all of my agents. If one of my agents messes up, commits fraud, does something really stupid, or even not on purpose innocently does something wrong, that is on me as well, because it is my job to oversee my agents, make sure they're doing things correctly, make sure they're not really messing up contracts, or committing fraud.
I can't watch everything, but that's why you have your policies in place to make sure things are checked, things are turned in, and some oversight to make sure things are done correctly. There's a lot.
Besides making sure the policies are in place, all the paperwork for your office, you've got to set up the office. Just we are doing a little temporary business year, we went and bought a little Keurig, we had to buy a printer, get paper, get paper towels, get a little bit of cleaning supplies, trash cans. We had some desks luckily left over from the other unit that we could use for now, but there's just so many things you need to get that you don't realize until you're really in that business and starting out.
There was a broker John Simmons, I'll say his name he started C3 real estate here in Colorado, tremendous help to me. It's funny, because one of my good friends who's an agent, I was asking him about different fees and structures that agents pay around the area, so I could get an idea of what I was going to charge my agents. He said, “You know what? You should just talk to my broker, John Simmons. He's really cool. I bet he’d talked to you about it.”
I’m like, “Okay.” Think he might be a little tight-lipped about it but, sure. I called him up and he was super cool. Had me meet him at his office, showed me his entire office, told me everything they do, walked me through their entire process, was a complete open book. He was a tremendous resource to me.
Again, that taught me, “Hey, you don't have to reinvent the wheel when you're doing these things, look for people who can help you, talk to people who have done it. Sure not everybody is going to be an open book and tell you how to do things and help you out, but some people will. If you can find those people, they can be a tremendous resource to help you avoid some mistakes and be more successful from the get-go.”
He was a great resource for me and helped me out tremendously in figuring out what I needed. He says they've opened a few offices. .They've created a checklist now, the hundreds of things they need to start an office; staplers, staples, flyers, envelopes, paper, pens, brochures, folders, flyers for different things, chairs, desks, just so many things that go into it. Once we get here we're like, “Hey, we need window blinds. We don't have any blinds here.” It can be a little bright.
It was like, “Yeah, when we get in the new office we’re going to need blinds as well.” Just so many things that come into it, but at the same time well, it can be daunting and stressful. It's not like you can't fix those things once they come up. That's just how we've been doing it.
I think a lot of things I've done in my career, in my life I just jumped into. Some things I planned a lot, other things I just felt like, “Okay, sure. Sounds like a good idea. Let's go do it.” We just jump in there and do it. It can make it more exciting, as you don't always know what's going to happen.
I think it often – you get things done faster and quicker too, because once you're put into a situation, you're forced to make things work right. You don't have any other choice, but to just get to work, do what you need to do and make it work. A lot of times, you get stuck planning for months or years trying to figure out everything you need and make sure it's perfect, when you could have gotten things accomplished much quicker by just jumping into it and doing it and figuring it out as you go.
It has worked out well so far. Like I said, this went even quicker than we thought. Now that I'm here and now that I'm in my own office, I'm really glad that we moved earlier than later, just because it got the ball rolling. It put us in a situation where we're all a little uncomfortable, which is exciting, I think, for me, just to try and, “Hey, how can we fix this? How can we make this cool? What can we do?”
Just breaks the normal routine of things. Just makes things interesting. It's been really cool, even we all we have to move a couple times. Sure we move into our temporary office for a little bit, but it’s really not that much work, because we're not moving a house, not all of our possessions, so it's not too bad.
Being here, being on my own, having my own office it just feels really cool and is putting me in a position where I've got to make things work, got to go faster than we thought we would have to before. It's fun, it's exciting and yeah, it's been a cool experience.
For the future office, like I said we're planning to be in there in a month or two. It will be my team, so I've got agents, assistants, staff who'll come with me. We've got a few people here already and there's a couple agents at my old office. They're transitioning our listings, files, or closing things like that. Once we're all set up in the permanent location, it'll just be my team to start with. I’ll have offices for everybody and a lot more offices for new agents, because a big space.
Then once we get set up, once we get things rolling, established, then I will be looking to add some agents to that office and that's where a lot more work can come from me figuring out exactly how the splits will be, what the desks fees will be, what we'll pay for, what we won't pay for, things like that.
I've learned a lot from the office I was in before. I've learned a lot from other offices I've talked to, seeing what they offer and I just have a – it's a huge advantage to own your own building and be able to pay yourself rent, just a huge advantage. Just saves me so much money and it takes all the pressure off of having to make a bunch of money right off the bat, having to sell a bunch of houses, having to get a bunch of agents in here to make money.
I can take things slow, go at my own pace, and it's going to save me money just with my team over here, over being at my old office, because I am paying myself rent. I have a partner as well, he gets half the rent, but still by paying half the rent to myself just saves me a ton of money. These offices back here, it wasn't like we had tenants banging down the door or ready to lease them out right away.
We're not losing a bunch of money by renting it to me instead of someone else. Another tenant also may have wanted us to spend a ton of money on tenant improvement, which would have cost us a lot of money as building owners as well. It worked out really well. A lot of times when you own a big building like this and you have new tenants coming in, they will ask for tenant improvement, which means the landlord is actually paying for them to fix up the units.
The agent who sold me this building keeps trying to get me to have a laundromat come into this temporary space where I'm at now, and they want us to spend $200,000 on tenant improvement before they move in. Then they'll only be paying $3, $2,500 dollars a month, or something. I mean, it would take 10 years for us to make up that rent from the tenant improvement we're spending.
Things like that don't make sense to me. It's just a whole different animal with commercial. Anyway, I mean you don't have to take a deal like that. There are other deals that come along, but that's what just my point is me going in there with minimal tenant improvement, paying rent right away, paying rent to myself just makes a whole lot of sense for us as an office, for me and for my partner and I owning this buildings. Worked out fantastic.
Along with creating a cool space for agents, it's been a lot of fun just creating a cool space for myself. That’s probably one of the really neat things about this process is I've been able to decide what we're doing with the floors. We're trying to keep the concrete floors, so they're different and cool. We're not just putting in boring carpet, or boring laminate. We're painting everything cool colors.
We can add a fireplace, or a fountain. We're painting the ceiling tiles great to make them a little cooler, not the boring white ceiling tiles. We're adding in really nice kitchen in there, we're making the bathrooms nice. We'll have some fun stuff and then a pool table, or shuffleboard, or air hockey, something, I don't know exactly yet.
I can put a golf simulator in there on the second floor, which I've been time up for a while. My friends and I always play golf every Thursday afternoon. If it's not snowing, if the course is open we're usually playing. In Colorado in the winter, there are times it snows and you can't play.
By having that golf simulator in there, we can all come over, hang out and have fun. It can be something that will attract other agents, maybe clients can use it as well. There's so many things you can do when you have your own office. You're doing your own thing and not relying on other people to make the rules and tell you what to do.
I guess, it all started when I was a kid when I never liked being coached in sports, because I didn't like to follow rules, or have people tell me what to do, and that's continued into adulthood. We're getting closer; about a month away. Hopefully everything goes smoothly. We get the repairs done fairly quickly. We're just doing some across-the-board basic repairs to make it so we can move in, then we'll do some more fun exciting stuff later on as we're in there. Once we get everything established, we'll have a grand opening.
We'll invite everybody we know, have everybody come over including my old office; happy to have them over, and have a lot of fun, and then hopefully we'll start building ourselves up as one of the premiere brokerages in the area. I think we can do that. I think it'll be a lot of fun. it'll be exciting, and it'll be really awesome to start this new venture, see where it goes, and hopefully have a lot of success with it.
All right, so about all I've got for this podcast. I wrote an article earlier this week as well. If you want to check out on the blog investfourmore.com that talks about starting my own brokerage, some of the things that really bothered me about my old brokerage compared to having this one. I go into a lot of detail on that, and a lot of things we need as well, which I did here too but slightly different. If you want to check out that article, it's got some more insight on a few different things.
Then yeah, we’ll have some more podcasts, of course more articles coming up. The YouTube channel is doing amazing, if you guys want to check out it’s Mark Ferguson on YouTube or InvestFourMore, has some tremendous success with our fix and flip videos, have updates on the office; I'll be posting one of those this week as well, where you can see the vacant, or not vacant, they're both occupied, but the permanent unit, the temporary unit. You can see what we're doing with the place. I'm doing a lot of those types of videos, so be sure to check out that as well.
Yeah, if you guys have any questions or comments, please leave a comment below from the blog. You can e-mail me firstname.lastname@example.org. Happy to help. Yeah, we'll keep you guys posted on all the exciting stuff and everything coming up here soon.