Managing a Fluctuating Income |
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While the real estate business can be more lucrative than many, one of its drawbacks is that the income isn’t always steady. An agent usually lives from commission to commission. Thus, one of the lessons every agent must learn is how to manage their finances to get them through the lean times. A good idea for every new agent is to have a cash reserve on hand
before entering the business. It may take some time before you’re
able to support yourself strictly through commissions, so you may
have to live off your savings until your business takes off. |
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As you become more successful, many brokers allow their agents to borrow from future commissions to help them get by. There are also accelerated commission services that provide advances in exchange for a fee. Learning to budget.
This is an essential skill for every agent who intends to survive for the long haul. Once the money starts coming in you must make sure you set aside enough for taxes, business expenses, retirement accounts, insurance, future expansion, and, of course, to live on. Also, you should set up a separate business account, along with a business credit card, to establish your credibility and help track expenses. Buying a simple spreadsheet program, like Excel, can help immeasurably in this task. Filling the pipeline.This means always cultivating new clients to make sure you have as steady an income as possible. You should devote a portion of every workday servicing your current clients, checking in with pending clients, and scouring your market area for possible new clients. It’s important to keep prospecting for clients even in good times because you never know when the next lean time may be right around the corner. Improving market knowledge.If you want to stay ahead of the game, research is a key part of every successful agent’s regimen. First, you must figure out if the market you’ve chosen is adequate to support you. How many houses are in the area? What’s the average turnover rate? Next, what’s the competition like? For instance, it’s probably not a good idea to try and farm a market where there’s already a dominant agent. The Internet is an invaluable tool in research, as are various trade organizations that track such statistics. Remember that knowledge is power. And, in the real estate game, it’s also money. Know your market. Don’t let yourself be surprised by anything. |
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