What is a real estate principal?
A real estate principal is in charge of the operations of an agency, whether they own it or manage it on behalf of someone else.
Also known as a licensed agent or licensee, a principal is vital to an agency because it can't legally operate without one.
What does a principal do?
A real estate principal is essentially the boss of an agency. They will generally oversee the management of the business - keeping an eye on hiring and supporting staff, the business financial accounts, trust accounts, rent rolls (the agency's portfolio of rental properties) sales figures and dealing with potential issues.
A principal can also do everything a sales agent or property manager can do, such as sell and rent properties, conduct open homes for sale or rental purposes or even manage an apartment complex.
In fact, many principals were often originally real estate agents or property managers who decided to branch out on their own and set up their own agency.
Moving from being an agent to a principal
Dan Lee was a successful sales agent who essentially felt like he'd outgrown his role in the real estate agency he worked for.
With a partner, he started Plum Property in 2016 as a real estate principal and began the business with two other staff in his own apartment.
Lee now oversees a business with 35 staff and one of the keys to its success is Lee continues his role as a sales agent. In fact, he handles so many sales he has his own team of staff to help him.
From being a property management agent to owning a business
Tammy Vitale is another example of someone who wanted to branch out on her own.
As a property investor, Vitale was a natural-born property manager and, on entering the real estate industry, started as an assistant property manager before being promoted to property manager and then as a department head.
Tired of growing property management departments for other people, she decided to branch out into her own business with husband Armando and become a real estate principal.
While Vitale and her husband have enjoyed the experience, she says going into business is not ideal for everyone.
"It's not for everyone, and it's not going to be easy - but anything worthwhile is sometimes hard," says Vitale.
"You are now totally responsible to make it work so you can cover your costs and earn an income."
However, Vitale says the initial struggles are worth the perks of being your own boss.
"Working for myself allows me ultimate flexibility and no restrictions on my earnings," says Vitale. "If I work long hours, it's for me, not someone else and my hard work will be rewarded to me."
Want to become a real estate principal? Enrol in our Full Licence course today.