You know that guy who told you to get into real estate because the money is “SO good” and “SO easy?”
You’ll have time to catch up with him later, hopefully.
In the meantime, since the money doesn’t flow as promised (at least not at this point), you’ll be wanting to hang on tightly to the bucks you do have.
And, since Easy Agent Pro wants to see you succeed, we’re about to offer up some budgeting tips for real estate professionals to do just that.
The future looks peachy, by the way
Can you imagine starting a real estate career back in 2008? Pity the poor rookie with a spanking new license and absolutely no clue as to what to do next. Finding out the real estate market was tanking must have really sucked.
One of the best things you have going for your early career is our amazing economy. In fact, our economy is in the longest expansion period in history.
The reality is, you picked a fine time to jump into real estate sales
Sure, our economy is way past overdue for a recessionary period and, it may just come to pass this year. But the oddsmakers are saying it won’t impact the housing market as it did during the last recession.
This doesn’t mean your buddy was right, however. The money won’t flow like manna from heaven unless you are either really lucky or you work very, very hard.
We do hope one of those comes to pass. But, let’s get to protecting your finances until then.
You do have a personal budget, right?
Without a consistent paycheck, your most pressing concerns will center around eating, shelter, staying warm and transportation.
And that’s where we’ll start with these budgeting tips for real estate professionals. Once we’re done, you’ll have a clear picture of where you stand right now, how much money you need to bring in and how much, if any, you can devote to business expenses.
Creating the budget is just the first step. Keeping to it, diligently, is beyond tough, but if you hope to be slinging property by this time next year, adhering to your budget is mandatory.
To speed up the process, consider using Dave Ramsey’s Every Dollar or Mint from Intuit.
Once your financial situation is in front of you the next best step is to look for ways to cut spending. Logical places to cut, or look for less expensive options, include:
- Cell phone service – if you’re being charged for services you don’t need or use, find a cheaper plan.
- Gym membership — While we agree that a good workout can calm the mind as well as the body, you may just need to lose the gym membership until you’re bringing in more money. Start jogging, work out at home or play tennis instead.
- Cut the cord – Cable TV is beyond ridiculously expensive. Less expensive and more enjoyable alternatives include Amazon Fire TV Cube or Stick, Roku Streaming Stick, Google Chromecast and Apple TV.
- Unnecessary conveniences – You know that stuff you buy because it’s quicker or easier than the DIY version? Takeaway coffee is an oft-mentioned substance to erase from your daily purchases, but consider brown bagging instead of fast food or restaurant visits for lunch, firing the pool guy or gardener and taking on those tasks yourself
- Quit smoking – ‘Nuff said
- Vow to not pay full price for anything. If you can’t get it at a discount, either with coupons, cash back or buying on sale, don’t buy it. Find discounts at Groupon.com, LivingSocial.com, Coupons.com and Savings.com.
Don’t forget to build into your budget some emergency savings.
Business budgeting tips for real estate professionals
Wanna be your tax preparer’s favorite client? Open a business checking account and devote one credit card to paying your business expenses only. Not only does the IRS demand that you keep personal and business expenses separate, so might your accountant or tax preparer.
As a rookie, you won’t have many business expenses, but it’s important to have even a small budget (especially for listings) for when your first client rolls around.
Consider creating the following expense categories:
- Advertising your business (Facebook ads, direct mail, newsletters, etc)
- Business cards (if your broker doesn’t supply them)
- Closing gifts
- Taxes (Since you have no idea how much you’ll earn this year, plan on saving about 15 percent of each commission check – Here are some tax tips you can use for your business).
- Wardrobe
- Website expenses
- Professional fees (MLS, association dues, lockbox expenses, continuing education)
As long as you remain aware of how much you’re spending and follow these budgeting tips for real estate professionals faithfully, you won’t starve.
“Expenses should create income. If an expense doesn’t create income, it should be eliminated,” Tom Wheelwright, CPA told Inman.com’s Dani Vanderboegh.
If you don’t truly need to make a particular purchase, don’t. It’s bad for your business.
Just getting started? Here are 10 of the best real estate websites and what you can learn from how they operate
How much should you spend on ads? It depends – here’s how you can determine what your budget should look like: