The Real Estate Professional: A Synopsis
Many people are attracted to the opportunities in the real estate business. They enjoy the flexible hours, working with buyers and sellers, the art of the sale, and the thrill of consummating a lucrative transaction. At the same time, this specialized business niche has a few aspects that can be challenging for some. One of these areas revolves around personal and business financial matters, for both agents and brokers alike. Here are a few financial considerations and tips that real estate professionals might like to review.
Money Matters 101 For Real Estate Brokers and Agents
Most real-estate agents earn a large portion of their take-home compensation as commissions, making this business different from many others. Because sales generally do not come on a fixed, regular basis, personal earnings can be difficult to project. For example, you will likely not receive a regular bi-weekly paycheck with taxes deducted. In addition, agents must keep track of a wide variety of expenses incurred as a normal and daily part of this work, so that their tax burden will be legally minimized. Learning to manage your money and finances as an independent contractor, and doing this from the very beginning, will work in your favor and underpin your success.
Work-Related Benefits for Real Estate Agents
Most agents are affiliated with and work out of the office of a real estate broker. In many cases, however, these brokers offer few benefits to the agent. For example, agents generally do not receive retirement savings and insurances from the broker. As a self-employed independent agent, these money matters are often handled by the agent themselves. All of this means that a successful real estate professional must have an acute awareness of their financial situation, clearly identified goals and priorities, and a highly organized method for personal financial accounting.
Some Tips For Agents
The following planning and budgeting tips, gleaned from The Real Estate Express, The Balance Small Business
- Create a budget, for both your business and personal life. Become tuned into the details of cash flow, both in your business and at home. Begin with a budget. Your home budget should account for monthly costs, debt payments, savings goals and distinguish between needs and wants. Your business budget should ideally function a blueprint that outlines and guides the financial activity of your business. Importantly, determine how money moves between your business earnings and personal budget needs.
- Become an expert in money management. Become totally aware of money flows that you have control over, and make wise choices in spending. Account for everything, particularly as it relates to your real estate business. Gas mileage, vehicle maintenance, marketing expenses, computer costs, business meals
andpostage, among many others, are likely all part of your cash flow. Of course, be sure to take advantage of any benefits or freebies that your broker partner may provide, especially if they are generous enough to offer health plans or other big-ticket items.
- Use simple but effective tools. Most folks are comfortable using Excel or other electronic spreadsheets. They are a mainstay for recording money flows into and against your real estate business activities. Other tools, such as Mint, a free app that helps in managing budgets, may provide great value. Another useful free app is Expensify, which tracks receipts, business travel, mileage and work time.
- Partner with professionals as needed. You may wish to develop a financial relationship with key firms, especially those that are particularly tuned into the real estate business. 1099 Advantage (Rosenbaum Financial) is one such company. Among the many financial services they provide is a specialized program for real estate professionals.
The 1099 Advantage Plan: A Model Solution for the Real Estate Industry
Rosenbaum Financial is proud to offer the 1099 Advantage Plan, an outstanding and innovative benefit program designed especially for real estate brokers and professionals. The plan provides an assortment of group benefits including income protection, wealth preservation and more. Prior to the debut of this plan, there was nothing like it available to the real estate community. The plan is customizable so that any brokerage can be comfortable in offering these benefits.
Managing Principal, Rosenbaum Financial