How To Build a Real Estate Team That’s Financially Healthy

By Andy Mulholland

He has a background in leading a top real estate team for over a decade and an understanding of the critical role of clear financials, Andy, along with his wife Ellyn, a seasoned real estate CFO, co-founded Simple-Numbers.

Is your team actually profitable, or does it just look that way on paper? Your team can show a strong profit margin and still be in trouble if you’re the one producing most of the revenue. I see this confusion all the time in real estate. It’s easy to compare your profit to what you hear from someone on stage and assume you’re doing fine, when you might be measuring the wrong thing.

To see if your business is truly healthy, here’s what you can focus on when stepping out of production entirely.

Look at your team like an investor would. When looking at a real estate team’s economic model, use the same lens an investor would when buying the business. You could ask, “What would this look like if the owner were completely out of production?” That question forces you to separate the business from personal sales, and it shows if the model can stand on its own.

Whether you plan to step out of production someday is not the main point, because the real goal is to build a structure that could support it if you choose to.

Build around a real margin target. For most teams, the common benchmark is 20% to 25% net profit with the owner 100% out of production. Hitting 25% can be tough, and sometimes a margin closer to 15% to 20% is more realistic, but the model should still be built around being close to 20%.

That level of margin is what gives you room for growth, stability, and real leverage, because the business isn’t surviving only because the owner is carrying the production.

Why can “ net profit “ be misleading? This is where a lot of owners get misled. Someone might say they’re running at 30% net profit, then another owner looks at their own 27% and thinks they’re in great shape. The issue is that many of these numbers are calculated while the owner is still doing most of the sales, which inflates the margin because the owner’s production isn’t treated as a real cost.

If you’re doing the majority of the production, your business may look profitable, but that profitability can disappear the moment you account for what it would cost to replace you.

Adjusted net profit tells your business’s health. A clear example of this is how a team showing a 27% net profit looked healthy, but the owner was still handling 80% of the production. They assumed 27% was close enough to the 30% target their coach suggested.

Once we calculated adjusted net profit, which treats the owner’s production as a real cost, the team wasn’t healthy at all and was actually running at a significant negative. This shows why adjusted net profit matters because it reveals what the business truly earns.

When a team model doesn’t make sense. If your team can’t get close to that 20% benchmark once you calculate adjusted net profit, and you’re sitting around 5% to 8% net, you need to reconsider the model. In that situation, you may be better off staying a high-production agent with a strong support system, such as quality staff and maybe showing assistants. That setup often produces more income in less time than trying to run a full team on thin margins.

The key idea is that a low-margin team can create more complexity and risk without delivering the financial reward that team ownership is supposed to provide.

When you understand your model’s true health, you can see what’s actually working and what needs to change. That makes it possible to build a business that stays profitable even when you’re not the one producing.

If you have questions, schedule a discovery call, and we can look at your adjusted net profit together, so you know whether you’re running a profitable team with healthy numbers or simply carrying the business with your own production.