Updated: Oct 7
Most people think of retirement as an age, rather than an event that can take place at any time. Today host Renee Williams and KW MAPS Coach, Chris Lengquist dive deep into ways real estate professionals can exit production with passive income sooner, rather than later.
Mentioned in this episode:
Financial Peace by Dave Ramsey
Mo Anderson, Co-Founder & Vice Chairman Keller Williams Realty
Gary Keller, Co-Founder & Chairman Keller Williams Realty
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Real Estate Agent Retirement At Any Age With Chris Lengquist
We have with us a very special guest. His name is Chris Lengquist, and Chris is a KW MAPS Coach. Everybody with Keller Williams will be familiar with this concept, but if you are not with Keller Williams, please stay with me. You are going to want to hear the information that Chris shares. It is also super important that you stay all the way until the end of the episode because Chris actually does a coaching session with me, very impromptu but great information that he shared with me. I hope that you and the audience can glean some encouragement and some great information from that coaching he did with me as well. Let's learn a little bit more about Chris and his bio.
Chris Lengquist is the broker and Owner at AD Astra Realty. Chris was licensed in Oklahoma in 2002 and in Kansas and Missouri in 2004. Since the beginning, Chris has had an emphasis on working with real estate investors to maximize their real estate investments through selective acquisition, great property management, and knowing when to sell or exchange, which is hugely important.
Chris works with traditional buyers and sellers as well but he definitely gets his kicks out of helping people to build a retirement worth having, which is what we all want. We're going to get into a great conversation with Chris. Be sure to stay until the end for the outtakes and his coaching session with me. Here we go. Let's start with Chris now.
With us is Chris Lengquist. He is Owner and broker at AD Astra Realty. He’s the Owner and coach of Chris Lengquist Coaching, and is affiliated with MAPS Coaching. He's an investor with Keller Williams Realty Diamond Partners, Inc. and is a real estate investor. Welcome to the show, Chris.
Thank you for inviting me. I appreciate that.
Thanks for being on with us. Tell us a little bit about you, how you started, and how you landed in coaching and real estate investing.
The Reader's Digest version is I grew up in Kansas City. My wife and I got married and went off to Vegas, Cupid’s Wedding Chapel if anybody else's got married there. We went to DC and spent fifteen years there. We had a child and we’re always broke, and then we decided, “Let's move back to the Midwest but not too close to either side of parents.” That's a whole story in itself.
We went to Tulsa. When I got to Tulsa, I quickly figured out that my profession of photography was not going to pay the bills. Everybody went to Walmart for pictures, not custom pictures and sports pictures. I said, “I've been taking pictures for realtors. I could do what they do. They don't seem that much sharper than me.” The ego won on me at the time. I went and got my real estate license in 2002 with a small brokerage called Scott Douglas Realty.
That Memorial Day weekend, I was sitting in an open house while the neighbor mowed the lawn. I wasn't a full suit and tie but I had gotten my business started. That's how I got started. In 2004, my mom was going through breast cancer for the third time, so we moved back to Kansas City. In Oklahoma, we had another baby and adopted too.
When I got to Kansas City, I hung my license with Keller Williams Realty. With Keller Williams, I've been on the ALCs several or many times. I was a team leader of some success there for a while in Olathe, and then they asked me to be a MAPS coach. That's how I got into coaching. Here it is, many years later, I'm in real estate and I own a property management brokerage. We manage over 700 homes in Kansas City. The best part is I spend about 4 to 5 hours a week supervising it. That's about it.
It's a great career and a great start. What you're doing now to me is hugely interesting. When I did the research on you, I went to your website, which is ChrisLengquist.com. Going there, I saw a fantastic article that you had written about Real Estate Agent Retirement. I'm going to read one little sentence that caught my eye. It said, “Ask yourself, ‘When is the last time I went to a real estate agent retirement party?’ The answer may scare you.”
The fact that you picked up that not a lot of agents formally retire is something that I noticed in the industry as well, which is why we're both here. It seems like we both have a passion for helping real estate agents, team leaders, and brokers figure out what's next, how to exit production, and then what to do once you exit.
You have a list that you put in that article that you wrote. What I'd like to do is read the list that you have. It says, “Here are the options for you to consider in retirement, traditional or Roth IRA, health savings account, solo 401(k), rental property, equity in your own brokerage or income later through referral fees.” Can you tell us more about how and why you picked these items?
First of all, there's a lot more that you could pick from. There are all sorts of things you could be doing. I'm not saying that it's limited to these. All I'm trying to get people to do is start thinking about what does retirement looks like. One of the crazy things and I used to do this as well until I coached, ask me the question, “When will you stop thinking about retirement as an age and start thinking about it as an event?”
For instance, when I ask most people when they want to retire, they'll say 65, 70, 55, 40. It's always a number that ends at a five. It's crazy. What I began to ask is, “Let me ask you this. When will college be paid for your youngest kid? What if you had enough money, income, and diversity in your assets that you could retire then? How old would you be would be?” “I would be 51.” “Why do we have to wait until 60?” Think about retirement as event.
Having at least 3 legs on a stool, 4 is better, and 5 is great. I don't know how many more you need behind that. The first leg is always going to be Social Security. People say that Social Security may not be there. There wouldn't be a Civil War in this country if they stopped Social Security. They'll raise the taxes on the young, on the rich, and on the middle class, where all the money is anyway. They’re not getting rid of Social Security. That's one leg of the stool. What are you going to do about the rest of it?
I'm passionate about real estate retirement. I'm passionate about real estate agents and their money, to begin with. As a team leader for three and a half years, I watched somebody come in, left a job, and making more in real estate on their 1st or 2nd year than they've ever made. They go out and they buy a $70,000 truck, an SUV or something like that. I start banging my head on the desk because they haven't listened to anything that we've talked about.
First of all, I'm hoping that a sheriff isn't coming in saying that they haven't paid their taxes and now we've got to garnish them out of their next commission checks. Have they taken care of their taxes first? Have they proved that they can make that money the second time? Have they started living on less than their earnings so that they can have a retirement? I'm not even sure where I'm going with this. I can get all worked up about agent finances and making sure that they have their money coming in smartly. When did you get licensed?
I got licensed first in 2012 because I was an investor. I wasn't selling property. I had a full-time corporate job. My husband and I wanted to buy some real estate. I didn't want to have to ask an agent to show me every time. I thought, “I'll get a license so we can buy our own stuff.” First, I signed up with KW because I thought I wanted to work with clients. I then realized, “I'm going to keep my corporate job.” I went with an Indie broker who charged $199 per closing, no training, no help, nothing.
Stop thinking about retirement as an age and start thinking about it as an event.
You get what you pay for.
I figured out how to negotiate contracts. We figured out how to work through repairs. We figured out how to get through the closing process. We bought several properties over the last several years.
My biggest fear as an agent, as somebody who's been in leadership and still is, and as a coach, is that you started your real estate career when the rebound began to happen from The Great Recession.
I was a loan officer from 2004 through 2008. I was selling those subprime loans. I then decided to get the license after. That’s right when the rebound was happening.
You're one of the people that I turned around. I was making great money in 2006. I was making even more money in 2007. I was making even more money in 2008 and 2009. I had a 31% reduction in my income. The only thing that saved me is I wasn't living over my means. I was sitting and watching friends and associates disappear. They all had to go back and find jobs. I remember looking at CareerBuilder. Remember CareerBuilder going on there?
I'm a college dropout. I've been self-employed most of my life. Nobody wanted to hire me for the hours I wanted to hire at the multiple six figures that I was used to making. What else was I going to do? I had to figure this out. When I watch agents set themselves up for that, there's no room for a burp in the business. We're on the longest economic expansion in American history except for that month's COVID thing and still going on. If you throw out because of COVID, we would still be on the longest economic expansion.
I was coaching in a market in Florida where the appreciation is 21%. You have agents down there all over the place thinking they're making 20% more money and that they're doing 20% better. If you look at their units, they're flat. They're riding the market, which is okay. Take the money. “What if something happens?” That's the real question.
During these great times, if you're not putting money away for retirement, start with an IRA. Somehow, figure out $500 a month and put that away. That's not even a truck payment nowadays from what I hear. I don't do payments anymore. Put $500 away in an IRA and get started somewhere now. We can then start talking about rental properties and other ways to make money. We can start talking about how to refer when you retire. There's a great book called The Golden Handoff. I've heard you refer to it before on this show.
Yes. Nick Krautter was on the show. He was episode number 4.
I remember listening to that going down I-35 to our little cabin down there. Figure out how to manage your money now so that your money will take care of you later. If there's anything I'm passionate about, that's it right there.
Can you tell me about your property? You're an investor. What are you doing property-wise? Are there certain types of properties that are the best fit for agents if they want to have passive income later?
That comes down to a one-on-one conversation about what the goals are and what your age is. When I'm sitting down with somebody who's 23, 24 years old and they're buying their first house, that conversation is going to look a lot different than the typical 55-year-old engineer that comes to me. The 23 to 25-year-old, I'm going to like, “Why don't we get a duplex?”
We'll keep buying duplexes every two years until the mortgage company screams or you get married and your spouse screams. You go buy a single-family home. You've got 2, 3, 4 investment duplexes by the time you're 30, 31, 32 years old. That's what my son and his wife had been doing, they bought a house with the idea they’d run it. They're in their second home. They've already got a rental property. They're way ahead of the game than I was.
If somebody comes to me at 55, I'm going to be talking a lot more about, “Are we looking for cashflow? Are we looking for appreciation?” There are many variables that go into that. I go into a lot of them on that one blog I do, KCInvestmentProperty.WordPress.com. You’ve got to figure out what your goals are first, “Who do I see myself being when I retire? Who do I see myself being in the next ten years?” Work backward from there and figure out what is going to be the best for you.
For some people, they're all about cashflow, but then they don't want to fix the properties. They come up with all this deferred maintenance, and then they want to complain to me and I'm like, “Do you remember that report I send you every year that you denied the repairs on? It’s pay me now or pay me later. Now it's going to cost you more.”
You bought it for cashflow, which means it's in a neighborhood that never appreciated as much as everything else. That cashflow was your reward versus maybe buying an up-and-coming tony area where your cashflow is this much. When you go to sell it, you're going to make a whole bunch on equity. It depends on what your goal is in 5 years, 10 years and 30 years.
Let's say our audience is Gen X and Baby Boomers. We are all over 45-plus, 50-plus, that's where we are. Talking to this audience, is there a formula that we should be considering as far as our investment strategy? Is there a pie where it should be split up into certain types of vehicles that we should be considering?
I'm conservative. Some of my clients don't listen to me. They're still my clients but they're a lot more daring than I am. First of all, max out an IRA, a 401(k) or whatever you've got. That's first and foremost. As you're maxing that out, don't go out and buy a fancier car, a second home, a pontoon or whatever it is until you're putting enough money away to put 25% down on your first investment property. Get that done.
After you get your first investment property, take that cashflow and run it in a separate checking account, keep it completely separate, and let that build up. In the meantime, before you go buy a second investment property, can we make sure you're debt-free on everything except maybe your house or including your house? Keep the income going.
Right now we're on the longest economic expansion in American history, and it's still going on.
We want to max out our safe and secure items, our traditional or our Roth IRA, our solo 401(k). We want to max those out. We want to make sure that we're investing in some property, maybe a duplex, a triplex, something small.
It might be different depending on who the person is, where they live, the market and things like that.
Next is we want to knock down the debt we have, not including our primary residence but we want to make sure that we're getting rid of our consumer debt that we're paying off credit cards, paying off anything that's out there lingering. Take care of those things. Once we have those items under control, are we then ready to look at other vehicles for income like having equity in our brokerage? Is that something that we should consider? Do you consider profit share with KW? I know eXp has a revenue share. People have options.
The eXp, the Keller Williams, those profit shares, revenue shares, that's icing on a cake. You're already working, go get it. Why would you turn that down? Why would you ignore that? The profit share is part of my income but it's not one of the legs of the stool that I'm trying to depend on. It keeps adding to my fidelity account. I learned long ago, don't take the profit share and put it in your business account or your personal account. It goes into a fidelity account. Every time it reaches X, I buy another stock or another lot of mutual funds. That's how I do that.
If you're a moving and shaking agent and you have a lot of influence and a lot of reputation in your community, why wouldn't you go to your broker? Agents spend so much time talking about splits. They think this long when they should be thinking this long. Maybe your broker would be willing. Maybe your broker is at a point in their life where they're starting to look, “In 5, 10 years, I want out. Who's going to take this over?” Maybe there's a schedule you can go to.
I've even worked with team leaders in the Keller Williams system who have been able to become major investors in market centers without a single dime by putting in the sweat equity. There are ways that you can structure the acquisition of those other things. To me, those aren’t after, those are during while you're saving for your 1st or 2nd investment property.
Let's be clear, debt is a thief. I was raised by my single mom. What she taught me about money lasted for most of my young adulthood, is nothing that you can't buy now on debt for later. I owed everybody everything. I was broke. I've been in financial ruin. I've mismanaged money over and over again. My financial prowess was born out of pain.
You and me, both.
You've got to figure out how to get out of that debt, first of all. I may not agree with everything Dave Ramsey says but get out of debt. Take the program. Don't argue with it. That would be one of my things. How do you think about retirement? People go, “I got to make excellent retirement.” What are your expenses going to be? They then start listing their mortgage and their car payment. I’m like, “You don't need to make X if you didn't have all of this. Go get rid of this.”
It's so simple but it's hard to do and practice. You have to have some level of self-discipline, delayed gratification and budgeting. I sound like a broken record because these are all things that I've hated forever in my life. I've learned to appreciate the value of money because I'm getting to later where I want passive income and money that I don't have to work for every day.