Selling more homes is not the only way real estate professionals can grow their paycheck at the end of the year.
Raj Bhaskar, the founder and CEO of expense tracking app Hurdlr, says that poor financial planning often makes agents overlook money-saving tricks that bring down taxes, maximize sales and, ultimately, leave you with more of your hard-earned money.
“As an agent, your personal and your business finances often go hand-in-hand,” Bhaskar said. “You have to be able to measure it all and link it to your income.”
Here are his tips on managing finances as a real estate agent at this year’s Inman Connect New York 2019:
Write Everything Down:
Yes, everything — income, business expenses, personal expenses, the number of client meetings and the number of sales. You may think you know it all already but having it on paper (or a device!) will give you a clearer picture of just where you stand in your work. The next step, then, comes naturally:
Set An Income Goal:
According to Bhaskar, most agents should have at least a vague idea of how much money they hope to bring in in a given year. That way, you will be able to quantify just what you need to do to make it happen.
“How many buyers do you need to have actually buying houses?” Bhaskar asked the audience. “You need to figure out how many appointments you need to get that one listing transaction.”
Link Your Activities To Your Income:
Are clients actually coming in to see you at that big office downtown? Are the people you’re taking to lunch bringing in business?
While it is not always possible to know just which meeting will lead to a sale, Bhaskar advises agents to keep track of their business expenses carefully — and then cut the ones that consistently fail to bring in value.
“You need to figure out how many appointments you need to get that one listing transaction,” Bhaskar said.
Streamline Your Tax Deduction:
If you’re not tracking your business expenses, you’re missing out on cutting down what you will have to pay come April. Bhaskar said that the most common deductible expenses agents forget are miles driven for work (58 cents for every mile can be deduced), client meals and client gifts such as chocolate, restaurant gift cards and wine.
“It’s like having a 50 percent off coupon for all your business expenses,” Bhaskar said. “But you have to track it to never miss a deduction.”
Get A Credit Card For Business Expenses:
Large numbers of agents just put business expenses on their personal credit cards. This is a major mistake as jumbled monthly statements make it easier to miss a tax-deductible purchase when you’re going through it all a year later.
(Pro tip: a business credit card does not have to be a business loan. A personal credit card that you use exclusively for business purposes also works nicely.)
If You Don’t Like Doing It Yourself, Get A Coach:
Accountants, financial advisers and treasurers exist for a reason. If numbers confuse you, you’re better off hiring someone else to help you out — it might seem expensive now, but will actually help save more money later.