I think that all agents should just take advantage of that opportunity because it does not exist anywhere else.
I watched my dad after 40 years in the business pretty much pass away broke.
Real is actually helping you build a business.
Welcome back everyone. Leo here and today we're diving into something that could completely reshape how real estate agents think about growth. Steve and Tamir are unpacking the story behind Real Wallet Capital. How it was born out of a vision for agents to leverage their own success, access smart credit, and build real wealth. From solving the old commission advance headache to opening doors for investment and marketing. This conversation is packed with insights on turning productivity into possibility. Let's get into it.
Host, so I don't think you should introduce me and I don't think I should introduce you. We're both hosts. So, good call.
Yeah. Just excited to be here today with you and talking about Real Capital which is an exciting product that we just launched actually.
It is a game changer and I think that you're one of the people that are most enthusiastic about it. So no better person to talk to about this with you than you. But maybe before talking about Real Capital we should maybe spend a minute understanding the concept of embedded finance and how Real Wallet and Real Capital were born. So, embedded finance is the integration of financial services such as payment, lending, insurance, or investing directly into a non-financial company's platform or product. So, think about companies like Uber, for example, Uber wanting to offer their agents, sorry, their drivers. I'm so used to talking about agents, offering their drivers instant payments. You know, when you take a ride, typically the driver gets the money a few days or weeks after you actually take the ride. So they have an embedded finance product that allows the drivers to get paid instantaneously. Another example is a company called Toast and I don't know if you're familiar with them. Toast delivers or develops point of sale products for restaurants. So they control all of the ordering and like the backbone operations of restaurants. And at some point they started offering restaurants lines of credits because they have visibility into their receivables. So they're comfortable offering the restaurants some money up front until the credit cards company actually pays the restaurants. So those are types of embedded finance solutions that appeared.
And at some point at Real, we realized that we have so much visibility into everything that our agents do, all of the assets that they're building on our platform. We know exactly how many transactions you close since being with Real. We know how many pending transactions you have. We have visibility into your equity in the company, your revenue share. If you're part of the Tyler JV, we know exactly how much money you're making there. So, why not offer our agents lines of credits based on their business potential and not necessarily about a single transaction that is about to close. So, this is how Real Capital was born. And obviously, when we think about products, we start with the agent. Is this going to be beneficial for our agents? And I think that this one is just a no-brainer. And I'd love to hear your take on how did it sound initially because this is something that has never been tried before in the industry. Nobody offered that and for me it was like, okay, will this resonate with agents? Will they accept it or not? So would love to hear your take.
So being in the business for, let's call it, 60 years. My grandmother was in the business, my parents were in the business, and I've been in the business. And what Real has done with Real Capital has solved the biggest problem for real estate agents, which is becoming bankable. Looking at your stock and all the things that we do inside Real, basically having a score and a line of credit, which some people might lean into. Yes, it's great because we have a business line of credit that we can use for different things, and I look at it a little different. It's a way to actually take what Real has provided and never miss an opportunity to invest in something greater. Right? So, when I look at it, it's all the opportunities that I teach and coach in the investment side where agents don't have the capital for a down payment to buy a property. But with Real Capital, they now have a business setting because of their production, because of their stock, because of their assets that they can borrow against to further their wealth. So, I'm really excited about the product and what we do.
So, you touched on using Real Capital for a down payment for a property, for example, but let's face it, a lot of agents do somewhat of an average production. So, I would assume that those agents will have a line of credit of a few thousand, maybe more than that, maybe less than that. What do you think is the benefit for those agents? Because when we thought about the program, we thought about, you know, agents can use it to expand their business, invest in marketing, things like that. But do you see a different use for agents than, you know, investing properties or...
I think as long as they're using it to push their business forward. So, I would look at it from investment capital. So now we have this investment bank, which is our brokerage, that's willing to push me forward. And where can I invest into my technology? What can further enhance my business with that technology for a long-term payout that I can go and get from my brokerage, in that financial and Real Capital, and really push my business? And I watched it all my life where you do want to push it but there's something financially holding you back, or maybe it's a big ticket item that you could save money by paying all upfront. There's a lot of different opportunities that open it up when the agents start to realize that what Real Capital is is a way for them to get out of the entrepreneurial roller coaster and start to really look at their business and where they can invest in making it better rather than just using it as a fallback plan.
I just lost connection to my AirPods. So, you know, we'll go back to the benefits of using Real Capital, but maybe touching on the opposite end of the spectrum, and that is why would an agent not use Real Capital? Any blockers that you can identify, any things that you know may prevent an agent from using it?
I think the only preventative item that's going to keep somebody from using it is the fear of leverage and not understanding how to safely leverage their business to move it forward. And that has to do with, you know, being responsible financially and money. But I think that if we're talking about business as a whole, conceptually or philosophically, businesses need leverage in order to grow. It's very difficult to grow without leverage, unless you're generating massive cash flow. And if you're generating massive cash flow, it means that you're running a fast-moving business or a fast-growing business, which also means that you need capital to grow. So I think that it has to do with the individual and the way they think. But if you really want to build a business, you do need to leverage somehow. I was just thinking, you know, you ask where the real leverage point is for the agent. So let's just take this market. You know, it's different timing for me, but let's take the average agent that I coach right now, and everybody's struggling and they're trying to get from point A to point B. So where this really comes in is taking away from the really expensive commission advances and giving them some breathing room in order to get from one transaction to the next until they build that pipeline. So I think it very much is, and I came from the era of watching my dad do commission advances all the time to keep the business moving until he finally got it to a stage that it was. So it also gives a resource for them to go to that's not a banking institution that really can see what they're doing inside the business, which is awesome.
Yeah, you actually touched on an interesting point which is commission advances. And I know that a lot of agents do not want to use commission advances. And this product, Real Capital, is nowhere near to a commission advance because at the end of the day, it's much more like a bank loan, but as you said, banks cannot underwrite agents' businesses because they just cannot understand the agent's business and they don't have visibility. And it doesn't matter if the agent tells them, hey, I have three deals under contract. They don't know how to deal with that. So, it's not a commission advance. It's actually us looking at the potential of your business, everything that you've done in the past, everything that you are about to do in the future, how we perceive you financially or your business potential, and then underwriting you for a line of credit, which is very different from a commission advance that's tied to one specific transaction and also has a huge interest attached to it. So, two very different products and we need to remember that.
I don't think most agents factor in where it comes from. They don't factor in on commission advance the amount of interest that's paid when they take something in short term. They don't work it backwards and go, 'Oh, I just paid 33% which is like a payday loan at the end of the day.' And I know because I saw it.
Yeah. And a lot of agents, unfortunately, they need to use a commission advance company because of the volatility in cash flow in our business. If you close a transaction, great, you get paid, but you can remain without any transaction closing for months and you still need to somehow bridge the gap of cash flow. And this is exactly what Real Capital can help you do. So again, it's not a commission advance, but it's a great way for agents to either bridge the gap of the volatile cash flow in real estate or help build their business or continue and build wealth for themselves and their families through investing in properties and other things, which is pretty awesome.
I think what's really intriguing from my end on it as I'm coaching agents and showing them from the very beginning is how much their production matters inside the business right now. Because with Real, if you have agent attraction and you have stock and you're hitting your elite, Real is actually helping you build a business because they're giving you those abilities to move forward with the credit line, right? So, if you have that credit line, you keep pushing and keep moving. There's so many benefits to having that productivity, which now creates a line of business that you can utilize to move forward on different things.
Is there any advice that you would give the agents that you're coaching when it comes to Real Capital or the money that they can get through those lines of credit?
