February 10, 2020
Somewhere during their 75-hour real estate pre-licensing class, one or more of our students asks if there are any books we recommend once they get their real estate license. There are many books that we suggest that are specifically written for new real estate agents, but one of my favorite books to get them in the right mindset for their entire life goal is Robert Kiyosaki’s Cashflow Quadrant: Rich Dad’s Guide to Freedom.
In my opinion, it is essential reading before you ever make your first listing appointment or open house commitment.
The overall concept.
Kiyosaki makes the point that most workers fall into one of four quadrants and gives us the road map to focus on the quadrant that can give us the greatest financial freedom along with a much less stressful career. He posits that workers generally fall into one of four quadrants: he calls it the Cashflow Quadrant. He calls those quadrants E, B, S and I.
The E Quadrant.
“E” stands for Employee, and the author suggests that people in this quadrant have an employee attitude towards life. They like the security of a regular paycheck, paid sick days and the other employer-provided benefits. They shy away from entrepreneurial aspirations in favor of the less risk they perceive in a steady, predictable job.
Thus a person in the E Quadrant will only have an income that is decided by a boss, and his or her entire career is in the hands of the company for whom he or she works. Most who aspire to be real estate agents do not fit well into the E Quadrant.
The B Quadrant.
The “B” could very well stand for Big Business. People in this section tend to be senior management with an executive outlook on their careers. They frequently seek out and hire good people to whom they delegate the day-to-day running of their companies.
B Quadrant people recognize how important systems and structure are to the success of their business and few things are more important to them than being seen as leaders of successful, profitable businesses.
The S Quadrant.
Many real estate agents fall into this category. “S” stands for self-employed, and except for a tiny minority of licensees who work for the very few brokers who pay their agents salaries, all real estate agents are self-employed. S Quadrant people are the opposite to those in the E Quadrant: they don’t like taking orders, they don’t want to be told when and how to work, and they don’t want to be tied down to doing the same routine work month after month. On the other hand, they expect to have to work evenings and weekends.
The good news for people in the self-employed quadrant is that they enjoy the freedom of a flexible work life, an entrepreneurial mindset, and the ability to set career and income ambitions to match their individual goals. The bad news is that once these folks set up career camp in the S Quadrant, they limit themselves to their own abilities. They typically adopt the “I am awesome” syndrome which involves taking on all the tasks themselves and this limits the ability for them to scale their business to levels that are multiples of where it is today.
The I Quadrant.
To be truly successful, where unlimited income potential without the stress of having all the work and risk falling on their shoulders alone, REALTORS® should aim to be in the I Quadrant. Kiyosaki describes the I Quadrant as being where the investor lives. While folks in the E Quadrant work for the company, those in the I Quadrant have the company working for them.
I Quadrant people build their practice by establishing systems and by hiring & training good people to gradually replace them. An agent may start as a solo practitioner, then after building a book of business to a certain level, she hires an admin assistant to take care of the “$20 a hour work” that frees up the agent to continue working with clients on what may be worth $200 an hour.
As she builds her business, she adds a buyer’s agent, then a listing agent, then a couple more, then a transaction coordinator, and so on. By having a strategic plan with clear benchmarks, the I Quadrant person uses this leverage to get to point where she is essentially the CEO of her real estate practice. While it is then a smoothly running operation, the leader can look for expansion opportunities, such as to replicate her enterprise in another city.
I should stress that none of these quadrants are bad. Neither is any one of them necessarily the best for everybody.
David C. Forward is a licensed real estate broker and instructor and was first licensed as a Realtor® 31 years ago. During his career, David and his business partner sold more than 450 homes in South Jersey. He is now School Director of Garden Real Estate Academy, has won numerous awards for real estate sales, is a much-requested public speaker who has addressed audiences on six continents and is the author of 15 books. David can be reached at David@GSREacademy.com