Real Estate Investing Vs. Building an Insurance Agency

So, we were recently doing a zoom video and one of the guys asked me, “How come you’re not investing more in real estate?” When I first started my career in the insurance industry, I was a single father, I had custody of my kids and I was worried about making money in that present moment. Things like paying the bills, putting a roof over your head, putting food on the table can’t wait.

So, today I am going to explain to you why as a first business, why I chose, to build an agency industry first before ever thinking about diversifying any of my investment to other things like real estate. So let’s look at a comparison between investing in real estate and building an insurance agency.

Real Estate

There are pros and cons to everything and that applies to real estate as well.

The pros are that you can start making cash flow with your properties in the form of rent or some other ways. Although you have to keep in mind that you need to pay first your mortgage, taxes, insurance, and maintenance. What remains is your net income and that becomes your cash flow. The second benefit is tax benefit and the third one is leverage where you can put down the total value of the property as your asset.

The cons are that you need a large investment. And that is just the downpayment on the property. The second drawback is that if you screw up, you may be troubled by your tenants, your city, the municipality, and more. The third one is that money that is put into real estate become illiquid. So, if there is a sudden need for cash, you will have to wait quite a while to liquidate your properties.

Insurance Agency

The first pro here is that there are a lot more people who are your potential clients. This is because buying a life insurance policy is really easy and people are often looking to buying to protect themselves and their families. The second benefit is that you don’t need a huge sum of money to get started. It is all sweat equity. It is all about the grind and the work you put in. The third one is that it is really simple!

Of course, there are cons here as well. You could have to deal with chargebacks if the client changes their mind. You might have to deal with rejection. And, so, your income may go up or down each month. However, if you are able to sell even a handful of policies a month, you make a decent income. On top of that, if you have sales agents under you and all of them sell a handful of policies a month, you can make a healthy amount as commission!

The choice for me when I was starting out was clear. Since I needed to make money immediately, and I didn’t have a huge capital to invest, the insurance industry was an obvious choice.