Context: I am 30 years old and have been a commercial real estate agent for 2 years. I have a strong background in sales and joined a very reputable commercial firm that is owned by my best friend’s family. I am at a point now where I am looking for advice as to whether I should stay with the current company or go out on my own. I am not too interested in joining a competitor.
In 2017 I grossed over $460,000 in commissions and I received 55% ($253,000) as take-home pay. $91,000 of the gross commissions was a referral by the company’s CEO. $210,000 went to the house this year.
In 2018 I grossed $1,250,000 and I received 62% ($775,000) as take-home pay. $232,800 of the gross was internal referrals. $471,500 went to the house this year!
I am currently re-negotiating my split structure and the company will not go above 70% to me / 30% to them at $1,000,000 in gross commissions. The net to me breakdown is as follows:
55% - $0-$100k
60% - $100k-200k
65% - $200k-400k
70% - $400k-600k
75% - $600k+
I receive a 3.5% bonus on top of the 75% threshold once I hit $1.0M in gross commissions.
It’s important to note that the company pays for my admin, my office, computer, phone, marketing, etc. I have zero true out of pocket expenses.
Ultimately, the question is, at $1.0M in gross commissions, is paying the house $300,000 too much? I know I also have to look at the post-tax money aspect too… I am just having a very difficult time paying the house so much money for business that I am mostly generating!
What if I am able to go out on my own and do $1.0M in gross and my costs are only $50k-$100k? I could be leaving $200k+ per year on the table…
I also have to weigh the long term intangibles too though, I understand that…
Appreciate the advice!