eXp Commercial - Can Your Brokerage Compete?

February 24, 2022

 Expert CRE Secrets Podcast

Brett Swarts is considered one of the most well-rounded Capital Gains Tax Deferral Experts and informative speakers in the nation. His audiences are challenged to create and develop a tax-deferred transformational exit wealth plan using The Deferred Sales Trust™ (“DST”) so they can create and preserve more wealth. Brett is the Founder of Capital Gains Tax Solutions and host of the Capital Gains Tax Solutions podcast. Each year, he equips hundreds of high-net-worth business professionals with the DST tool to help their high-net-worth clients break out of capital gains tax jail.


Mr. Swarts is passionate about educating high net worth individuals in capital gains tax deferral with a Deferred Sales Trust, how to divest from a business, cryptocurrency, highly appreciated stock, primary residence, or investment real estate to gain freedom from feeling hostage to capital gains tax or a 1031 exchange, then invest back into a new business venture or investment real estate at any time [all capital gains tax deferred] which he calls optimal timing.

His experience includes numerous Deferred Sales Trusts, Delaware Statutory Trusts, 1031 exchanges, and $200,000,000 in closed commercial real estate brokerage and Deferred Sales Trust transactions. He’s an active commercial real estate broker and investor with brokerage experience and ownership in multifamily, senior housing, retail, medical office, and mixed-use properties. He is a licensed California Real Estate Broker who has held series 22 and 63 licenses.


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eXp Commercial - Can Your Brokerage Compete?

Brett Swarts:

In this episode, I'm covering all things eXp Commercial, made simple as well as can your brokerage compete. I just got back from Tony Robbin’s whole week mastermind in Dallas, Texas, about 6000 M&A Business Brokers, and Real Estate Agents, Commercial Real Estate Brokers came together to share ideas about building their businesses, building more loyalty with the team and so much more. I'm going to dive into some of those insights as well as just share with you a bit about all things eXp Commercial, quick background, I'm a multifamily broker. I started out at Marcus & Millichap in 2006. I grew up in the real estate business. I love cash flow producing real estate, I love buying real estate helping clients buy and sell multifamily properties. I'm also the founder of Capital GainsTax Solutions, you might see that in the background here, where we help people defer tax, not using the 1031 Exchange, which for cryptocurrency can save a failed 1031 Exchange. You can learn more about that at capitalgainstaxsolutions.com, but we are talking and we are passionate about all things, growing your business and growing your team, and so let's just start with what is eXp, and kind of where the journey has come. I'm going to go ahead and share my screen here, and you should be able to see this now and let me see if I can figure this thing out.


This is all things eXp Commercial, and the goal is to get more from your commercial real estate brokerage. What is your broker's doing for you? What I like to say is are you on the left side of the quadrant or the right side of the quadrant. If you've read Rich Dad, Poor Dad, Robert Kiyosaki, he talks about being an employee, being self-employed, being a business owner and being an investor, and eXp, I believe has figured out a way to basically move you over to the right side of the quadrant, a business owner and an investor by stock ownership revenue share, and in aligning with others who are part owners of a company without having to have massive overhead, all kinds of expenses and a lot of risks. They've done that through technology, and they've done that through innovation and leadership. First of all, eXp Commercial is built on the back of eXp Residential, which went from a penny stock to over $150 a share over 11 year period. In fact, it's known as the fastest real estate brokerage in the history of real estate brokerage, and so eXp Commercial is built on that foundation, and it's focusing like a laser on commercial real estate brokers, business brokerage, and also mergers and acquisition, acquisition. Advisors there, and its core values are here. But what I really want to focus on is that it's a leadership company.


It's a technology company. It's a real estate company, but you can't put eXp in a box. It's truly something that's special, and how they figured out how to maximize value for you and me as the commercial real estate professional as the M&A Advisor is the business broker, and that's a powerful thing, when you can win when you can align financially and strategically your team, your profits, your marketing, technology, and so much more, and let's dive back into the presentation here, and keep this going. I want you to think about the unique model of old-school Brick and Mortar. Old school Brick and mortar, you have, let's say the blockbuster versus the Netflix, but he eXpis figured out a way to scale as Netflix did versus block push like Amazon did a Circuit City, and it's figured out how to do that by cutting out a lot of the overhead. A lot of them, in fact, they're 100% virtual, and they don't have huge, huge expenses, and what they've done with that savings is they pass it on to the agent, and so I just hit an old way and there's a new way to do things old way was blockbuster new ways Netflix.


I use the same thing with Capital Gains Tax Solutions, which is the old way was a 103 Exchange the new ways the deferred Sales Trust circuit city, Amazon, and eXp is kind of like an Amazon of the traditional real estate brokerage and that they are innovating and creating more and more things. You remember Amazon in the beginning, they just did use books, and then through innovation, technology, and growth, they're the biggest company, they have an apple in the world. It's one brokerage, and it's not a franchise, and it's important to understand that it's an international company. But you're not having to put a bunch of money in or buy into, you can't buy your way into eXp Commercial, but you can build your way in through amazing service to your client’s great representation, and creating loyalty and coaching, and bringing others on to do the same. I remember being at Marcus & Millichap and feeling like every time I train somebody that there's a potential that they could I would help hold back a little bit. Because in the past, I'd be burned because some people would either, get a new position at CB Richard Ellis or JLL or Cushman & Wakefield or they'd even compete in the same office, and it was a weird dynamic because the model was stacked against us and that 50% of most commissions in the least the first 100,000 of gross commissions, were going to be paid to Marcus & Millichap or the big brokerage.


That's great because I had amazing training. I have everything great to say about Marcus & Millichap. I love the company. I have a lot of good friends that are still working there. But financially and strategically, it's built for building Marcus and Millichap not building it all for us and I say us as the eXp Family. The typical franchise or typical brokerage has costly overhead as desk fees as franchise fees. It's locally confined, it's a smaller referral network like it's just Sacramento or it's just, Miami, Florida. This is just in the Los Angeles area. It's not global, right. It's inconsistent growth incentives, minimal opportunities for ownership, and limit and in fact, they don't necessarily give stock or rev share anything like that, and also limited technology and support few tools and support resources are in the eXp Models, cloud campus environment, no desk fees and work from anywhere, live training over 50 hours of live hourly 50 hours a week of live training, real-time support multiple brokers at a click of a button. International collaboration, they have over 17 countries now, and then powerful equity opportunities and revenue share and stock equity programs. This is again, eXp has already proven the model is now the fastest-growing real estate brand in North America and has over 60,000 real estate professionals.


We think it's the fastest growing in the world can't quite check that for sure. But that's what we're seeing, and then, in fact, it's also been named by Glassdoor, one of the top places to work, and I can say after being with eXp for over a year, it's lived up to all the hype. In fact, it's exceeded the expectations for me and my team, and I've never been more excited about a company, about leadership about the future of the brokerage world, and so we're growing we have multiple team members across the nation, and we're growing and we're taking all of the fundamentals of real estate brokerage of adding value to clients of solving problems, and what's neat about it is we get different people from different markets, different perspectives, and we bring that together and like a mastermind, for example, part of my business team, the number one Keller Williams agent in the world seven different times, as a part of my mastermind team I get to learn and glean wisdom from he sold over 7000 transactions. Now he's in residential, it's different than commercial. But guess what I can learn a lot from him. In fact, it's good to get other ideas from different industries in different approaches.


Another one of my business partners, he opened up 20 Keller Williams offices, one of the fastest-growing in the history of Keller Williams. Another one sold over 500 homes and Keller Williams in the other part about that too, is the referrals that come from these agents to commercial real estate professionals. Think about having a lot of boots on the ground sending you direct referrals, because you're in line strategically and financially with a revenue share model and the stock ownership of the company. It truly feels like on the right side of the quadrant versus kind of like sink or swims every man and woman for themselves on the left side of the quadrant. Again, Rich Dad Poor Dad analogy. If you haven't read that book, read that book and understand the value of that. That is a little bit more about my story. I'm going to continue to go through this presentation here, and then also we're going to dive into some tools as well. But part of having no desk fees, royalty fees, or franchise fees. You also have an amazing commission cap. Only at 20, and only a $20,000 cap.


You sell your deal for a $100,000 gross commission. You're paying $20,000 for the entire year after that 100% of the Commission for the remainder of the year. of the year anniversary year is uncapped. You can make a million dollars in gross commissions and pay 20,000 to eXp. Now there are some transaction fees, some small ones. But I mean, I'm telling you in 2016 and 17, I paid hundreds of 1000s of dollars to my broker, we were on at 20, and I was doing some big deals, and guess what that was at 20. There was there, there was no cap, and this one, there is a cap. Standard costs are 250 a month for tech cloud fee, which includes a number of tools, which actually I'm going to jump into some of those tools right now, which are pretty amazing. One of them is called Sky Slope, and Sky Slope allows you to make sure I'm sharing my screen. Sky Slope allows you to select things transaction coordination. How to manage your listings your transaction coordinator can be in here. It's a really neat, cool tool called Sky Slope, all of the documents, all the signatures, anything that is going to be needed for closing the deals. Another thing is called Agent Hub, and Agent Hub is an amazing CRM and also marketing automation system, with follow-up emails, texts, emails, as well as pipelines. As well as all things that aren't your conversations, your emails, your text messages, it has the dashboard, basically scheduling, you can eliminate a lot of things, you can build funnels, you can build, you can build home pages or landing pages, you can do just about anything.


eXp Commercial - Can Your Brokerage Compete?: “Real estate investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth.” -Robert Kiyosaki

Brett Swarts:

I'm going to replace my Click Funnels, I'm going to replace my CRM, I'm going to replace, I used to use kind of HubSpot and a couple of other ones, but it's an amazing CRM on steroids. I'm going to replace I used to have Active Campaign or MailChimp, you can place all in one, and this thing generally costs us a couple of $1,000 a month, by yourself, it's included in the tech fee, along with Sky Slope, along with a build-out, and for those who don't, who build-out, build-out is one of the tops if not the top way to build marketing packages and automate your listings, okay, and they have what's called build out a lead, that's a part of the eXp commercial package. This is also a CRM, I would use the other CRM a little bit more because it's, it does so much more. But you can also use this as a CRM and if you're used to this. Build out also syndicates to the LoopNet’s, Co-stars the CrackSe the brewery does all the different things, you create one listing and then you sync your accounts, and then it'll automatically update to all of them all at once. If you have, you have five or six or 10 different places, your marketing different places, you have one place to do that and build-out, and again, by its by itself, this can be 507 50 a month, it's all included in the $250 per month.


The next one I like to show you is a thing called Reonomy, and Reonomy is on a mission to try to create give you more data, give you more access to deals, and like for example, we're going to do Sacramento Roseville here and property type. We go multifamily, and we're going to go apply, and then we're going to zoom in, let's see if we can find some owner information here on this property right here, and so it's very robust. It has the owner information, it's gonna have the LLC, oftentimes. Here's all the potential phone numbers the email, a lot like Co-Star. Co-Star personally, I'm paying like $450 a month or so, and that's just for like, I Northern California region. Reonomy is National. It has the debt and has the taxes has the occupants. If it's multi families probably not going to have that occupant. But if it's retail or does your office it will, but it has the owner of all the breakdown. This is this can replace I potentially I'm still kind of in the works with this, but I think I think it's gonna replace costar for me altogether. This is pretty remarkable. It's all part of the $250 one per month fee.


Let's talk about a place called eXp workplace. This is like Facebook, on steroids for all things, real estate, and I mean referrals, educational opportunities, very, very amazing. Everyone Connect it's only for eXp member or brokers and M&A Business Brokers, Commercial estate Brokers, but I mean the amount of information and the amount of information sharing and referrals is staggering to think about and also really, really amazing. What else I want to share with you. Here’s kind of a sample breakdown of the commission structure. If you had, if you had your base, you're looking at 8020 split $20,000 cap broker fee and you are going to get again, all of the upsides besides paying some of the transactions. I think there's also a sample down here. This would be, you can kind of look at this. This and I can send this to you, if you send me an email, brett.swarts@expcommercial.com, I can send you all of these documents, I can even share with you the slide deck.


Let me go back to this next part here. Back to the presentation here. we recovered some of these tools I showed you in real life we have built out Reonomy, Agent Hub, eXp Commercial, and then the other thing too, is we do have virtual office space to Regis. If you're like, I want to get an office, that's fine to work from home, we have a membership that's included in that, and then there's also an apprentice advisory program icon program, and you have the equity award, as you sell, you get stuck, like your team or you have your team join, and new a new team member and they sell you get stock, unlimited revenue share. I'm talking about people who are making hundreds of 1000’s to up to a million dollars per month on revenue share through just sharing the opportunity of eXp, and I hope you're seeing some of the value here on all of these things. They also have all the contracts and forms, and they're constantly innovating, and here are some of the partners as well, that you can look at, it goes on and on. They're building more and more. But let's talk about the equity opportunities a little bit more. Again, in a sustainable Equity Plan, you earned shares on your first transaction, you're in shares when you fully cap, it means that $20,000 a year in shares, when an agent you sponsor closes their first transaction, what sponsoring is kind of like bringing somebody in introducing them to the opportunity, sharing your ideas.


I like to mentor coaching train the people that I sponsor, they're part of my team, part of my business family, and that's a way to grow you, they reward you for that. Then you can also get the Icon Award, you get up to $20,000 in stock upon the achievement of certain production and cultural goals within your anniversary. What does that mean? Well, it’s commercial, it's basically $500,000 of gross commissions, you're gonna get all of your 20,000 back in stock. Plus you want they're gonna want encourage you to do some training and coaching to help other people out. It's all about eXp, of sharing, collaborating, building a culture where we're empowering everybody to live their best and do their best for clients. Also, an agent equity program where you can be enrolled to be paid 5% of every transaction commission with stock at a 10% discount. This is huge me alone in 2016 and 17, when I some huge ears had I had this and I actually got introduced to eXp Commercial. Back when back during that time, and I dismissed it. I didn't underwrite the model. I didn't look at it, and it's to my detriment, that stock alone now was much lower than it is today. But it would be worth like $750,000. Like, it's crazy to think about, and that's not even recruiting anybody or sponsor anybody that's simply just selling deals and applying the 5%, which I would have, that's a great thing to do on a 10% discount to buying the stock at a discount and then where the stock would be today it's really remarkable to think about that.


That's just another income stream not just relying 100% on Commission's or having to rely on I have to go buy this commercial building or I know Marcus & Millichap we always wanted to be on the other side of the phone, it was what's gonna take to get to buy a $5 million property, and have it pay us 5, 6, 7 percent cap rate per year that could replace our income and be done, be retired, takes a lot to get there, especially in this marketplace where prices are so overpriced, let it on all the debt, all the liability, all the toilets, the trash, all of the stuff that takes to get there has a great model, coach, and train and build-up, somewhere between 30 and 50 commercial agents on your team, do the things you've always done, and you're probably saying, Well, I'm not a recruiter, you probably are just thinking about it like that. We don't necessarily think of it just like recruiting when we're thinking about sharing an amazing deal. If you found a multifamily property for a 7% cap rate, the proform of 9% cap rate, you would cold call and bring everyone in on the deal need to buy the deal. Same thing here, if you could show and share a model with somebody that way exceeds that model on that return. Would you share it and that's all the eXp commercial is about our experiences sharing the opportunity for those who are entrepreneurial or business-minded who are wanting to grow collectively with us, and so that is I'm continuing on here. That is the opportunity.


With that revenue share, the founder was a tech entrepreneur and also a real estate professional, and he knew that had to be a better way to 1000 everything crashed. He's like there's got to be a better way to do this to cut a lot of the expense. Instead of doing something that’s called profit sharing, which is after expenses, he said Why don't we do it top line, let's do revenue sharing. Let's make our owners, our agents, owners of the company. He kind of flipped the thing upside down and said, I think this could really work, and so eXp commercial agents can receive revenue share income from the sale activities of the productive agents, they sponsor into the company, very important to understand the productive agents. They have to produce if they're not selling, if not helping them sell and produce, guess what, nobody gets paid on the revenue share. It's about producing productive agents. Agents earn based upon Adjusted Gross Income AGCI commission income from the sales transactions closed by a personally sponsored capping agent and productive agents and their overall group. What's a capping agent? They close $100,000 gross commissions, they've capped at $20,000. Now, can you get a half cap? Can you get a full cap? Yeah. Can you get a quarter cap? Yeah. They're going to share with you that 20,000 is taken away from that person? Nope. Doesn't take away from that person.


You just share that in that revenue. It's calculated each month, the AGCI. eXp Commercial pays out and retains 50% of the company dollar, the other 50% goes back to here's a revenue share chart. You have tier one to seven, and you have these numbers here. But I want to keep it really simple. 40 at 40 commercial producing Agents, M&A Advisors, it can be residential by the way, eXp Commercial, you're not limited just to commercial brokers. You're also I have an I have one of the top M&A advisors in the nation signing up joining me this week, which is amazing. But you can do residential, commercial, they're not limiting you to a box of just commercial or just more so. commercial real estate brokers, you can do m&a advisors, Business Brokers, and residential agents. As you build that up, you will get paid as they cap, okay, and then they share a percentage of that simple math is if you get 40, and they're producing, and they sign up some folks. It could be somewhere between, let's just say conservatively, 250 to $500,000. of passive recurring income. How many buildings would it take for you to get that? How much time and energies blood sweat and tears and debt would that have to take to get there. As a part of that, they also have a part of the 250 budget covering a lot of stuff, you have what's called eXp world, which is like an avatar fever-like Sim City growing up, this is what this is.


It's a hybrid between meeting in person and being on being at home. It's a cool way to interact. I can give you a free two-week trial of this, by the way, email me brett.swarts@expcommercial.com, and I can give you a free two-week trial. Again, live training, we talked about that, which is really cool. Accelerate program. A six-week program helps new agents learn the basic fundamentals of starting and building a successful real estate career with eXp Commercial. If you're new to the business or wanting to continue to get training, they have all that available. They also have an amazing app called eXp agent, healthcare, where you can cut your healthcare 20, 30, 40% depending on what you're paying now, which is really tremendous because they're taking the power of the people, all of us together and going like Costco, everyone together, if you come together, you're able to negotiate better prices, and that's what he has figured out. You say, how do they reonomy? How did they get built out? How do they get Agent Hub? How do they get all these things eXp world how do they do it and do it for $250 a month? Well, they do that to the collective kind of bargaining power of everyone, and the growth of the company. That's the eXp model, it's here to benefit you right now. Let's keep going here. We talked about that already. We talked about the eXp workplace, here's like your Sky Slope dashboard, which breaks down all the transactions, and then they have all kinds of events that you can check out, by the way, if you want to apply go to expcommercial.com/join-us become a shareholder.


They're going to ask for a sponsor if you've seen this video and if you're open and you're wanting to work with somebody who's dynamic in the commercial real estate brokerage business again, Marcus & Millichap background. Closed, transactions over the last 14 years doing the Deferred Sales trust would love the opportunity to talk with you to see if it can be a good fit. You can call me directly at 916.886.2986 you can also email me at brett.swarts@expcommercial.com or brett@capitalgainstaxsolutions.com I also have a YouTube Channel called eXpert CRE Secrets where you can learn more about this we bring on our partners our team members and we share our stories and our best secrets to commercial real estate brokerage. We mastermind, we grow together we were on a mission to help you build your business and change the commercial real estate brokerage world forever. The M&A Advisor role forever the Business Brokers will forever and the key here is bringing all of our strength. I believe we've all been given certain strengths and certain gifts, and these gifts have been given to us to be a blessing and help to others. If we can combine those take away a lot of the, let's just say the models that take that don't leave enough for or as much for us as agents away.


We can combine and grow together as owners of a company. After all, that being said, I'm curious, can your brokerage compete with that? Can it can and that's really the question you have to ask yourself, can your commercial real estate brokers offer you all of that the stock share, the revenue share the technology, the innovation, the leadership, the culture, the collaboration can offer that, and you might say, I don't know about this culture and collaboration, I'd say I'll invite you to come into a live event. We just had one in Dallas with Tony Robbins, we were having another one in Vegas, we have another one in Cabo that's coming up, reach out to me, and we'll get you a ticket to get out there to check it out. It's powerful to see it and I would just encourage you to not make the mistake that I made, which was not underwriting the model. Not even looking at the numbers. Not speaking with somebody who's focused on this like a laser and then seeing if it can be a good fit for you. Again, I'm Brett Swarts, founder of Capital Gains Tax Solutions, and I so appreciate you watching this video, and please rate review and subscribe and hope to talk to you real soon. Bye now.


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